China Trade War Research Articles

Introduction: Theorizing the psychology of deglobalization

The unprecedented pace and scope of globalization over the past half century have had major impacts on the field of psychology. We observe that since the 2008 financial crisis, there have been increased academic and political concerns with “deglobalization,” which is often associated with terrorism, xenophobia, authoritarianism, Brexit, the US–China trade war, the Russian war on Ukraine, and the COVID-19 pandemic. We argue that the phenomenon of deglobalization is historically uncertain but intellectually and politically significant enough to warrant analysis. Thus, in this special issue, we begin to theorize the psychology of deglobalization by addressing several foundational issues: the major manifestations of deglobalization in relation to psychosocial life, the dialectical relations between globalization and deglobalization, and possible ways to respond to the challenges of deglobalization. In the meantime, we flesh out these theoretical perspectives using the cases of nationalism, neoliberalism, White supremacy, far-right politics, dehumanization, isolationism, and trade conflicts.

The United States–China Trade War: Timeline, Consequences, and Prospects for the US Economy. An Analysis Based on the Textile Industry

In this paper, we investigate the scale of the drop in American imports after it imposed punitive tariffs on Chinese goods. Our analysis spans the whole period of Donald Trump’s presidency (January 2017 – January 2021). In contrast to existing studies, which are mainly devoted to the impact of reduced trade flows on the key macroeconomic indicators, we focus on the specific market of textile products, which was among the most affected by the protectionism measures. The quantitative analysis allows us to conclude that the imposed duties severely hit the textile industry, bringing a noticeable drop in US imports of selected groups of products from China. Furthermore, the review of long‑term consequences indicates that the ongoing trade war has not only adversely affected the macroeconomic fundamentals of the US economy, but it is also likely to have a long‑lasting impact on global supply and production chains.

Event Space and Firm Value: Chinese Listed Firms in the US–China Trade War

Although past studies in crisis management usually have taken a geography-focused approach to study how physical proximity increases firms’ exposure to a crisis, this study draws on event system theory and proposes that independent of firms’ geographic locations, an event can have multiple spatial directions and proximities to the firms in the event space. To further unpack the effects of event space, we develop an integrated framework that considers how the event space interacts with entity attributes—which are found to help firms cope with external challenges affecting their market value. Using the shock of the 2018 US–China trade war on listed firms in China's stock market, we find that the trade war has significantly reduced the market value of firms that have spatial proximity to the product market (i.e., firms that belong to target industries) and to the geographic market (i.e., firms that export to the United States) in event space. This negative effect also spills over onto peer organizations with business activities related to target industries or the United States. Moreover, there are differential moderating effects from entity attributes, such as corporate political connections and corporate social responsibility, on the different event spatial directions, pointing to the distinct natures of event spatial directions. This study introduces a novel, multidimensional view of event space and uses it to develop an event space model for geopolitical events, and in so doing, we complement extant work on the role of crises in shaping corporate strategy and performance.

Economic Uncertainty and Firms’ Capital Structure: Evidence from China

This article assesses the effects of economic uncertainty on the corporate capital structure of Chinese-listed firms using a panel dataset of 1138 firms with A-shares traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange for the period 2006–2020 and fixed-effect regression analysis. Economic uncertainty had a negative influence on Chinese firms’ debt ratios, especially for non-state-owned enterprises. Furthermore, firms’ leverage decreased on average during the 2008 Great Recession, whereas it increased during the 2018–2019 US–China Trade War and the 2020 COVID-19 pandemic. The findings provide quantitative evidence of the effects of economic uncertainty on the capital structure of firms in a transition economy.

Trade war and corporate social responsibility: Evidence from China

Based on the shock of the US–China trade war, this study investigates the effect of trade tariff shock on corporate social responsibility (CSR). We find that Firms increase CSR activities in response to the trade war and results are robust when using alternative control groups and excluding firms that experienced changes in their main business. We further examine the economic consequences of CSR and find that CSR during the trade war leads to an increase in sales and a decrease in stock price crash risk. Overall, this paper offers timely policy implications on the role of CSR in global trade events.

The impact of the US–China trade war on domestic and multinational companies in China

AbstractThis short paper investigates whether the US–China trade war has a different impact on domestic and multinational companies in China. Using the Orbis database with the coverage of ownership structure, we can identify Chinese multinational companies that own foreign subsidiaries with at least 51% stake. Then, using a panel dataset of Chinese companies from 2011 to 2019, we compare revenues of multinational and domestic companies before and after the trade war. We have found that multinational companies have about 8% higher in revenue after the trade war than domestic ones. These findings are consistent with the recent literature on the real hedging channel that operation flexibility reduces the impacts of tariff shocks.

The Biden Administration’s Trade Policy: Promise and Reality

AbstractThis Article critically analyzes seven elements of the Biden administration trade policy: (1) buy American; (2) tariffs; (3) World Trade Organization; (4) free trade agreements; (5) China; (6) technology; and (7) Russia. Although President Biden has made a clean break from Trump policies in many areas, this is not the case when it comes to international trade. Regretfully, Biden has chosen to keep in place most of the failed trade policies of his predecessor—the Trump tariffs and the China trade war. It is not too late to shift ground, to negotiate mutual abolition of the Trump tariffs, to open free trade negotiations with the EU and UK, to join the Comprehensive and Progressive Trans-Pacific Partnership, to adopt a multilateral strategy with allies to check Chinese trade excesses, and to reengage with the World Trade Organization. Topping the list of needed reforms of the multilateral trading system are: (1) subsidies; (2) state-owned enterprises; and (3) forced technology transfer. These are best addressed through a WTO plurilateral agreement and/or preferential trade agreements. The Biden administration should prioritize these urgent reforms. Rather than promoting “free” trade and multilateral trade reforms, the Biden administration continues its predecessor’s nationalistic policies so that trade serves domestic political ends. Such state intervention in trade policy consists of the strategic use of tariffs, subsidies, “buy American” rules, and regional trade arrangements without regard to the rules of the multilateral trading system. These new policies represent a decisive retreat from globalization and openness to trade.The Congress, directed by the Biden administration, has adopted a far-reaching industrial policy in the form of four laws that subsidize key sectors of the U.S. economy: American Rescue Plan Act ($40 billion); Infrastructure and Jobs Act ($1.2 trillion); Inflation Reduction Act ($369 billion); and Chips Act ($252.7 billion). This subsidization coupled with “buy American” protectionism constitute a departure from the free trade ideal that has characterized U.S. policy since the end of World War II.

Competition and trade policy in the world cotton market: Implications for US cotton exports

AbstractCotton is a cornerstone of global fiber markets, and many importing and exporting countries play important roles in the global cotton market. The US cotton sector has long been one of the world's largest. However, Brazil's cotton production has rapidly grown, and the country has become one of the leading cotton producers, accounting for an ever‐increasing share of world cotton production and trade. This meteoric rise has put Brazil's cotton sector in frequent competition with the United States over export sales and market share. We empirically investigate how the expansion of the Brazilian cotton sector has impacted the US cotton sector's position in world markets by quantifying the extent to which rising Brazilian production has caused reallocations of US exports. We also explore how the recent US–China trade war affected these market dynamics by assessing the impacts of China's retaliatory tariffs on US cotton. Our results show that Brazil's cotton production has caused a major disruption to US cotton exports, resulting in a significant reduction in US exports to large cotton importers such as China, Vietnam, and Pakistan, and that these trends were reversed (at least temporarily) by the US–China trade dispute. By illustrating how competitive forces and trade disputes have shaped recent market dynamics for this key commodity, our work adds to the growing literature examining the interplay between competition and trade policy in the global agricultural sector.

The Birth of a New China: How the U.S. - China Trade War Affected the Economy and Foreign Policies of Vietnam in 2016 – 2020

Following the U.S. – China Trade War, Vietnam has been recognized as one of the biggest economic beneficiaries, showing significant economic increases from 2018 – 2020. However, the empirical causal extent of the Trade War’s impact on Vietnam’s economy has largely been ignored, as well as how Vietnam will craft its foreign policies regarding the U.S. – China conflict. Using the difference-in-difference regression approach, this paper attempts to verify the causal impact of the Trade War on Vietnam, focusing on the Vietnam – U.S. export and the Vietnam – China import datasets. The paper also explores Vietnam’s foreign policy strategy for the Trade War and the U.S. – China conflict by conducting traditional qualitative analysis on six qualitative interviews. This paper confirmed that the Trade War had a positive causal effect on Vietnam’s export to America at the country level and Vietnam’s import from China at the tariff level. However, it could not confirm whether the Trade War had such an effect on Vietnam’s import from China at the country level and Vietnam’s export to America at the tariff level. Along with quotes and anecdotes collected from policy experts, this paper suggested that Hanoi must maintain its political neutrality in international affairs while continuing to capitalize on Vietnam’s economic success and enhance its trade relationship with the U.S. and China.

Are R&D-Intensive Firms More Resilient to Trade Shocks? Evidence from the U.S.–China Trade War

Are R&D-Intensive Firms More Resilient to Trade Shocks? Evidence from the U.S.–China Trade War

REALISTIC VIEW ON TRADE WARS: US-CHINA TRADE CONFLICT & IMPACT ON EMERGING ECONOMIES

The United States former President Donald Trump announced in July 2018 that the United States had imposed tariffs on specific Chinese goods. This led to increased tensions between the two countries and eventually set the ground for the US-China trade war, as both nations contributed fairly to the rise in import duties on one another’s goods. The strife has had serious knock-on effects on global trade. According to the chief economist of the Asian Development Bank, China is expected to lose 0.5% of its Gross Domestic Product, while the United States will lose less than the above-mentioned percentage. The US–China trade war serves as a benchmark for examining the outcomes of conflicts between two major nations of this scale. The objective of this research article is: to analyze war from the perspective of the realistic theory in international relations; to shed light on and identify the opportunities for developing economies to seize a substantial share of United States imports; possible scenarios for developing and struggling economies in case this war prolongs and how much it has impacted the protagonists.

Vietnam’s geoeconomic features: advantages and problems

Geographical features which are mostly considered as privileges to Vietnam are now dragging the country into some international issues namely the South China Sea, The US China trade war and COVID-19 pandemic. The research points out unique geographical features of Vietnam and how they have been used to Vietnams national interest. Then, the research underlines some note-worthy impacts of specific current geographical issues on Vietnams and regional economy. By stating and analyzing these issues, the evaluation of the government's economic policies in response can be further clarified. Ultimately, the research provides implications for foreign governments and investors in future cooperation or investment in Vietnam.

Politics behind the law: unveiling the discursive strategies in extradition hearings on Meng Wanzhou

AbstractDeciphering the hidden political implications in legal discourse has become hot foci in the study of international politics to unravel the political roles and positionings of various stakeholders in law as well as its enforcement and adjudication. Drawing on CDA approach, this study provides a text mining of 12 extradition hearings on Meng Wanzhou case. The findings of the present study indicate that the case is in the name of law but actually with the nature of politics in the context of the U.S.–China trade war. It also demonstrates evidence of manipulation of political power and reframing of the event occurrences throughout the texts of the 12 hearings, by exerting the repetitive use of a bundle of legal discursive strategies. The violation of justice and equality in the legal discourse around the present case is based on the superior status of the U.S. in contrast with Canada in the discursive practices as well as the political contemplation of Canada, resulting in challenges to the fundamental principles of rule of law around the world. This research furthers the understanding of the strategies and entanglement of justice and injustice, power and control in the process of discourse construction.

The Political Economy of Technology Transfer Rules of the US-China Phase One Trade Agreement: Competition of Global Technology Leadership

Over the past four decades, Intellectual Property (IP) has been one of the main controversies of US-China trade relations. But the current US-China trade war contains a new focus – technology transfer. This article adopts a socio-legal and economic approach to examine the current technology and trade tensions between these two countries and why China became an Information Technology (IT) powerhouse. It first provides an overview of IP and technology transfer rules under the Phase One US-China Economic and Trade Agreement (POA). It then explores different forms of forced technology transfer activities and the in-depth reasons for the US to shift its main IP concerns from IP enforcement to technology transfer. It explains why the US and China trade war is inevitable, why the current US-China IP-trade war is significantly different from previous ones, and the economic and political reasons behind the global technology leadership competition by the two countries. Finally, the author concludes that the POA and its technology transfer rules are not the ends of the game but just the start of the global technology leadership competition between the US and China.

Do export quality and destination income matter for exchange rate pass-through? Evidence from China

This study explores how export quality and destination income affect the degree of exchange rate pass-through (ERPT). While the literature has well documented various determinants of incomplete ERPT, we provide more insights by identifying factors from both supply and demand dimensions. Using Chinese export data over the 2002–2019 period, our empirical results indicate that export prices in home currency increase (decrease) with depreciation (appreciation) of the home currency. Chinese exporters tend to adopt a pricing-to-market (PTM) strategy, resulting in an incomplete ERPT rate of approximately 70%. Export quality and destination income are found to be crucial determinants. The ERPT is asymmetric to exchange rate movements and susceptible to uncertainties. Notably, the exporters subject to high additional duties still have PTM ability during the US–China trade war (2018). For China, these findings help explain the exchange rate disconnect puzzle and highlight the significance of adjusting the exchange rate policy.

The Fama-French five-factor model and the US-China trade war: An empirical investigation of the Indonesia, US, and China stock market

Despite numerous studies of the US and China trade war effect being published over the last seven years, this topic has remained equivocal. The portfolio formation model that underlies the arbitrage pricing theory is still relatively small, especially for the portfolio performance of the Fama-French five factors (5FF) model that examines the global economic crisis. Focusing on the trade war year, the study aims to examine the effect of accounting information on portfolio performance by using the 5FF model. This study employs a dummy panel least square regression model, the data are analyzed from Indonesia, US, and China stock markets with 864 portfolio monthly combinations ranging from 2016 to 2019. The result of the study shows that the US-China trade war strengthens the beneficial impact of market risk on portfolio performance in the Indonesian Stock Exchange. On the other hand, the war has no impact on the relationship between market risk and the performance of a portfolio of US stocks. However, it lowered the beneficial impact of size on portfolio performance for both the US and China stock markets. The robust 5FF of accounting information within the study is size and investment. According to the study, systematic risk and idiosyncratic risk should be given more consideration by both investors and companies to prevent unneeded economic losses and manage the risk that could have a greater impact on the stock market.

U.S.‐China trade war and competitive advantage of Vietnam

AbstractChina has been losing international competitiveness in labor‐intensive industries due to various factors, including the trade war with the United States and globalization. Vietnam, however, has rapidly expanded its labor‐intensive exports. The paper proposes to explore the future of labor‐intensive industries in Vietnam due to the U.S.‐China trade war. The paper examines export performance data from United Nation Comtrade for 10 specific labor‐intensive industries that serve the U.S. market between 2000 and 2020 to assess the possibility of Vietnam overtaking China's position as the world's largest manufacturer. Using situation analysis, the paper compares the competitive advantage of Vietnam in labor‐intensive industries due to the U.S.‐China trade war. The paper found that China's competitiveness was negatively impacted for the final two periods, while Vietnam's competitive advantage increased.

The US–China Trade War: Economic Statecraft, Multinational Corporations, and Public Opinion

The US–China Trade War: Economic Statecraft, Multinational Corporations, and Public Opinion

Can treasury inflation-protected securities safeguard investors from outward risk spillovers? A portfolio hedging strategy through the prism of COVID-19

Documenting the interlinkages among assets that are widely used to hedge against inflation is crucial for investors, as the necessity to protect the investment portfolio is stronger under inflationary conditions. For this purpose, we investigate the volatility spillovers between treasury inflation-protected securities (TIPS) and a battery of other assets perceived as inflation hedges, including bonds, gold, real estate, oil and equities. The applied methodology comprehends the time-varying parameter vector autoregressive (TVP-VAR) extension of the Diebold and Yilmaz (Int J Forecast 28:57–66, 2012, 10.1016/j.ijforecast.2011.02.006) approach for the period 1/1/2010–3/31/2022. Our results indicate that the assets under consideration are moderately interconnected and subjected to several exogenous shocks, such as the US–China trade war, the COVID-19 pandemic and the Russia–Ukraine war. Furthermore, we assess the hedging effectiveness of TIPS against each asset by estimating hedge ratios and optimal portfolios weights, before and after the spread of COVID-19 pandemic, by using conditional variance estimations (DCC-GARCH). The empirical findings show that the short position in the volatility of TIPS is proved to be an excellent hedge for all the sampled assets, with the exception of short-term Treasury bonds, and their hedging ability was improved during COVID-19.

Impact of the U.S.–China trade war on the operating performance of U.S. firms: The role of outsourcing and supply base complexity

AbstractMultinational corporations have benefited tremendously from free trade in the past few decades. However, the dynamism of international relations, paired with the global recession, has rekindled the debate over frictionless trade. In this study, we examine how trade friction, created by tariff trade barriers, affects the operational performance of domestic firms which source from the affected countries. We also investigate how various supply chain characteristics and strategies can moderate the impact of such trade friction. Motivated by the 2018 U.S.–China trade war, we conducted a difference‐in‐difference analysis to examine the impact of trade tariffs on performance indicators of U.S. firms with direct supplier connections in China. Specifically, we found that U.S. firms with direct supply partners (i.e., first‐tier suppliers) in China had a worse performance than the U.S. firms without direct supply partners in China in terms of inventory (i.e., days of supply) and profitability (return‐on‐assets). We further found that the negative impacts were more severe for firms with a higher degree of outsourcing, and horizontal and spatial supply base complexity. We discuss the implications for international operations management, supply chain networks, supply risk management, and provide suggestions to supply chain practitioners and trade policymakers.