Zhu Ying: Trumps trade war disrupted the global economy

Zhu Ying

Frank Middot; Frank Hyneman Knight is one of the founders of the Chicago school in the United States. He has a famous saying: It is risks that can calculate the probability, and even the probability cannot be calculated.The Trump Trading War staged a scene of uncertainty of global trade, because you can't know who Trump will impose tariffs on who will be imposed tomorrow, and he doesn't know what measures he will take to China tomorrow.

For example, the world knows that China and the United States will hold economic and trade negotiations around October 10th, and everyone still has a little hope.However, on October 4th, the US Department of Commerce announced that in the name of anti -dumping, 28.7%to 251.6%of additional tariffs were levied to US $ 4.4 billion of Chinese wooden cabinets and combined crickets.The U.S. government shot like this and caused Chinese exporting companies to be hit.

Three economists including Hites Ahir have compiled the World Trade Uncertainty (WTU) index.Trade uncertainty.Studies have found that the increase in uncertainty indicates a significant decline in output.According to the increase in trade uncertainty observed in the first quarter of 2019, it is enough to reduce the global growth rate by 0.75 percentage points in 2019.

In September this year, the Federal Reserve's research report pointed out that the uncertainty of trade policies driven by the Sino -US trade war led to the loss of hundreds of billions of dollars in the United States, and the global loss will be up to $ 850 billion.Economists use variables to analyze the negative impact of uncertainty on trade and output. The improvement of tariffs and the reduction of trade policy uncertainty have reduced investment and output, and the decline in investment and output will reduce trade volume.

In October, a report issued by the World Trade Organization pointed out that the global economic policy uncertain index that comprehensively reflects the uncertainty of currency, fiscal and trade policies has risen from 289 points in January 2019 to 348 points in August, which is the highest level in history.It is estimated that the world trade growth rate in 2019 is between 0.5%and 1.6%.If trade tensions continue to intensify, trade growth may fall below this scope.

In October, the International Monetary Fund issued a report stating that the tension between the United States and China will lead to a cumulative decrease of 0.8%of the global GDP (GDP) level by 2020.The reason for the weak growth is that manufacturing activities and global trade have deteriorated sharply, the improvement of tariffs and the uncertainty of continuous trade policies have harmed the demand for investment and capital.

Different from economic research, enterprises have practiced the impact of uncertainty on trade through practical operations.For example, in early September 2019, China International Union Petrochemical Corporation imported crude oil from the United States. During its transportation, China learned that China began to impose tariffs on US crude oil.The company sold some US crude oil that originally sold to China to India and South Korea buyers.Such a resale behavior will definitely not increase profits to the company, but it provides cases for the negative impact of uncertainty on trade.

For another example, Reuters reported on August 7 that after the United States announced a new round of tariffs on Chinese goods, China subsequently announced that it would stop purchasing American agricultural products.Chinese buyers will switch to soybeans in Brazil and other places, which promotes Brazilian soybeans to rise.The price of soybeans exported by Brazil to China has risen to $ 400 per ton in early August, and the price at the end of July was $ 380.The interaction between the two governments of the two countries has damaged the interests of the enterprise and directly leads to the rise in trade costs.In 2018, China imported soybean was 88.03 million tons.One ton of price increases by one dollar, and the annual increase of expenditures is also a large number.

The Trump trade war disrupted the global supply chain and is the consequence of trade policy uncertainty on the negative trade.Due to the uncertainty of the uncertainties of duties in the supply chain link, multinational companies will transmit variables such as costs, output and exports that are transmitted to the enterprise, so that the accounting and expectations of the enterprise are uncertain.

All South Korean Samsung mobile phones have been withdrawn from China. It must be affected by the tariffs under the Sino -US trade war. In addition, in recent years, Sino -South Korean relations have taken the initiative to withdraw from China.From April 2018 to October 2019, Samsung mobile phones closed factories in Shenzhen, Dongguan, Tianjin and Huizhou.At the same time, Samsung transferred production capacity to India and Vietnam. Samsung's current smartphone production in Vietnam is 200 million. In 2018, Samsung's mobile phone sales were the world's first.

The Trump trade war should be responsible for disturbing global trade, but it is not just the United States that resort to trade protectionism worldwide. After all, the United States is a rule of law country.The most open pattern in the economy.

Some countries with sang trade liberalization may not be really an open country.On November 22, 2018, the World Trade Organization (WTO) issued a report on the trade restriction measures of the G20 (G20) Group (G20), which states that 20 economies have applied during the review period (May 16 to October 15, 2018).40 new trade restrictions, including increased tariffs, imports and export tariffs.This is equivalent to an average of eight restricted measures per month.

That is to say, in the context of economic globalization into a political correctness, a country where trade liberalization is fully implemented, or very few countries or regions with high openness, such as Singapore and Hong Kong.Developed economic powers have not really achieved trade liberalization, let alone a large country with the level of economic standards that cannot reach the degree of development.The purpose of saying these is to tell everyone: don't trust high -profile slogans, depending on action.

To give a German example, Germany, which has the reputation of global export championship, should not engage in trade protectionism?In February 2019, German Economic Minister Peter Middot; Alder announced the German 2030: the national industrial strategy, which is considered a return of protectionism.

The goal of this strategy: 1. Increase the production of manufacturing output accounting for GDP, from the existing 23%to 25%, while the French or US manufacturing output accounts for only half of the existing level in Germany.2. Advocating a closed EU value chain only allows EU countries to participate in the value chain.Third, specify specific German companies to become national support enterprises.4. Modify the EU Competition Act to facilitate the creation of EU support enterprises.5. Allows the state to buy enterprise shares to prevent foreign acquisitions.6. Extensive national support for industrial sectors with great economic significance.It is not difficult to find that Germany's strategy is targeted at China.

It can be seen that when people are widely criticized Trump's trade protectionism, don't forget that many big powers are also engaged in trade protectionism.

The author is a professor of economics at Shanghai Normal University Business School

The Trump trade war should be responsible for disturbing global trade, but it is not just the United States that resort to trade protectionism worldwide. After all, the United States is a rule of law country.The most open pattern in the economy.