Trade Conflict Research Articles

Visible Fists: Political Risks and the Performance of Taiwanese Businesses in China, 1995–2022

Abstract This article explores the performance of Taiwanese business groups in China before and after Xi Jinping’s rule. It delves into the relationship between an authoritarian regime and foreign direct investment, an area where empirical research of firms in China is lacking. Utilising data from 1995 to 2022 encompassing 550 Taiwanese business groups and the top 5,000 firms, our analysis reveals that firms with higher pre-2012 investments in China experienced higher revenues and profits; however, companies investing in China experienced a significant decline under Xi’s leadership. Factors such as the US–China trade conflict, restricted political freedoms, and increased Chinese military spending further impacted Taiwanese firms negatively. These findings highlight how China’s aggressive foreign policies and repressive domestic measures, acting as ‘visible fists’, have adversely affected Taiwanese businesses.

Digital Services Tax (DST) and Global Trade Conflicts: Balancing Fairness and Trade Relations

This study examines the impact of the Digital Services Tax (DST) on global trade, tax fairness, and international tax reforms. Using a qualitative approach and a Systematic Literature Review (SLR) method, the research evaluates DST’s role in addressing tax base erosion while highlighting its economic and geopolitical implications. Findings reveal that DST increases government revenues, particularly in developing nations, but also exacerbates trade conflicts and legal uncertainties, deterring Foreign Direct Investment (FDI). While the OECD’s Pillars One and Two offer a multilateral alternative, their implementation remains complex and politically contested. The study concludes that achieving a sustainable digital tax system requires a balanced, cooperative framework to mitigate trade tensions and promote tax fairness.

Investigating the impact of Sino-US trade conflict on the co-movement of stock market between China, US and other East Asian Economies in the perspective of biomechanics and bioinformatics

The Sino-U.S. trade conflict on 22 March 2018 the global system of trade and also the international stock market. This paper introduces the theories of biomechanics and bioinformatics to construct a dynamic analytical model based on Vector Auto-Regression (VAR) to investigate the impact of Sino-U.S. trade conflict on the stock markets of China, U.S. and other Asian economies. By employing concepts from biomechanics, the key variables in the co-movement of stock markets in China, the United States, and East Asia are analogized. The co-movement of stock is treated as a “state variable,” and the “stress and strain” experienced by each country’s stock market under the influence of other markets are analyzed. This approach reveals the patterns of variation within these stock markets and provides a quantitative basis for understanding their dynamics. The granger causality and co-integration analysis are conducted on the empirical daily stock price data from 21 September 2016 to 22 September 2019. Benchmarking on Sino-US trade conflict on 22 March 2018, the data is divided into two phases, including 21 September 2016 to 21 March 2018, and 22 March 2018 to 22 September 2019. The results of this study show that the Asian stock markets seems to be more independent with the U.S. stock market after the Sino-U.S. trade conflict. And the results of the dynamic analysis model based on VAR also suggest that the tariff and the trade barriers not only hurt the relationship between China’s stock market and U.S.’s stock market, but also hurt the relationships of stock markets among U.S.’s and other Asian economies. The results of this empirical study can provide information for both investors and policy-makers to have a sound understanding of the stock market.

Exploring the Impact of China’s Retaliatory Tariffs on US Soybean Exports with Machine Learning Techniques

Abstract The 2018/2019 trade conflict between the United States and China impacted a broad array of agricultural products, including soybeans. Previous trade studies using gravity models fail to account for trends and complex seasonal patterns observed in the data. This study uses a machine learning (ML) approach to estimate losses in soybean export value and volume from the trade war. We find that models using ML techniques outperform traditional models and estimate losses in the value of soybean exports of $10.16 billion/year. The ML models fit the complex export trade data series well, highlighting the importance of utilizing improved modeling approaches.

Does deglobalization affect the withdrawal of foreign-invested enterprises? -Evidence from the US-China trade conflicts

Does deglobalization affect the withdrawal of foreign-invested enterprises? -Evidence from the US-China trade conflicts

Systemic financial risks in an era of geopolitical tensions, climate change, and technological disruptions: Predictive analytics, stress testing and crisis response strategies

Systemic financial risks have become increasingly complex and unpredictable due to the interplay of geopolitical tensions, climate change, and rapid technological disruptions. Financial markets and institutions face heightened uncertainty, driven by shifting global power dynamics, trade conflicts, and regulatory changes that impact economic stability. Concurrently, climate-related risks, including extreme weather events, resource depletion, and the transition to sustainable energy, pose long-term threats to financial assets, investment portfolios, and economic resilience. Technological disruptions, particularly those stemming from artificial intelligence, cybersecurity vulnerabilities, and digital financial innovations, further complicate risk management by introducing new vulnerabilities and systemic contagion pathways. In this evolving risk landscape, predictive analytics and stress testing have emerged as essential tools for identifying vulnerabilities, quantifying financial shocks, and developing proactive mitigation strategies. By leveraging machine learning models, big data analysis, and scenario-based forecasting, financial institutions can assess the potential impact of geopolitical instability, environmental shocks, and technological disruptions on financial systems. Additionally, stress testing frameworks enable regulators and policymakers to evaluate the resilience of financial institutions under extreme conditions, ensuring adequate capital buffers and liquidity measures. This research explores how predictive analytics, stress testing, and crisis response strategies can be effectively integrated to enhance financial stability in an era of escalating global uncertainties. It examines case studies of past financial crises, emerging threats, and best practices for mitigating systemic risks. By providing a comprehensive approach to financial risk management, this study contributes to the development of adaptive strategies that safeguard economic stability amid an increasingly volatile global environment.

Research on the Impact of Trade Wars and Protectionism on the Global Economy and South East Asia’s Coping Strategy

This study looks at how the U.S.-China trade conflict is affecting Southeast Asia, a region that depends largely on international commerce. Since the start of the trade war in 2018, nations in Southeast Asia, such as Vietnam and Malaysia, have seen a change in foreign direct investment (FDI) and disruption of global supply networks. The region faced both possibilities and problems as a result of this transformation, with long-term worries about labour markets, environmental degradation, and sustainability offsetting short-term economic advantages. The study identifies three main problems: the FDI inflow, the deterioration of multilateral trade institutions, and the disruption of global supply networks. Various approaches are suggested in response, such as fortifying regional trade networks, encouraging sustainable foreign direct investment, and advocating for more robust international trade frameworks like the World Trade Organisation. The results highlight how important it is for Southeast Asia to create robust and sustainable economic policies in order to lessen the impact of future interruptions to global commerce. In order to further hone these techniques, future research should concentrate on gathering primary data through surveys and interviews.

The spillover effect of US and China’s economic policy uncertainties on RMB internationalisation

ABSTRACT Utilizing the TVP-VAR-based connectedness approach, this paper investigates the spillover effect of the US and China’s categorical EPUs on RMB internationalisation. The results show that the EPUs have a negative disturbance on RMB internationalisation which has been strengthened since the RMB exchange rate reform in 2015. Specifically, the RMB internationalisation is vulnerable to China’s foreign exchange policy and monetary policy uncertainties. Furthermore, since the launch of the series of ‘America First’ policies and the escalating trade conflicts with China, the spillover effect of the uncertainties relating to US trade policy and China’s trade policy has increased significantly.

The codpiece with a charm: coffee and sexual anxiety in 1670s England

ABSTRACT Coffee was an object of both social and political anxiety in 1670s England, culminating in a short-lived ban on coffeeshops in 1675. Claims made in contemporaneous pamphlets, specifically ‘The Women’s Petition Against Coffee,’ about coffee’s possible impact on male fertility need to be taken more seriously than have previously been in existing scholarship. Due to the changes in England’s population levels in the third quarter of the seventeenth century, the question of coffee’s impact on reproductive ability would have been relevant to the English public. Given the larger context of the on-going military and trade conflicts with the Dutch, the suggestion that coffee could prevent men from fully partaking in reproduction had ramifications that went into the political sphere, making coffee drinking tied to the future of the English national project.

Tax reform and corporate vertical integration: evidence from China

ABSTRACT Vertical integration involves expanding a firm’s business activities across multiple interconnected sectors, serving as a crucial strategy for securing scarce resources and strengthening core competitiveness. This study uses a difference-in-differences approach to examine whether and how tax reform that reduces value-added tax (VAT) rates affects corporate vertical integration. Using a sample comprising 21,356 firm-year observations from Chinese firms, the results reveal that VAT tax reform significantly enhances corporate vertical integration primarily by mitigating internal and external financing constraints. The effects of the tax reform are more pronounced among enterprises that are state-owned, in the manufacturing industry, that have high tax burdens or elevated debt levels, and those exposed to Sino-US trade conflicts. These results highlight that targeted tax strategies can effectively promote industrial development and reinforce supply chain resilience, especially during periods of deglobalization. These findings deepen our understanding of how fiscal policy shapes corporate behaviour and industrial structures.

Capital liquidity and abnormal returns in the Taiwan stock market: The impact of the US-China trade conflict and the COVID-19 pandemic

ABSTRACT Liquidity plays a crucial role in the risks associated with capital flows. This study points out that, in addition to transaction costs that may hinder liquidity, increased external risk can also contribute to a reduction in liquidity. A slowdown in liquidity can lead to abnormal returns in the stock market, resulting in sharp increases or decreases. The research investigates the relationship between liquidity of capital flows and abnormal returns within the Taiwan stock market, with particular emphasis on the periods preceding and following the US-China trade conflict and the COVID-19 pandemic. The results reveal that both events exerted a considerable influence on the risk dynamics within Taiwan’s stock market. Specifically, during the US-China trade war, there was a notable increase in capital liquidity in Taiwan’s stock market. Conversely, the period of the COVID-19 pandemic was characterized by a decrease in liquidity. Additionally, our analysis indicates that illiquidity significantly impacts abnormal returns.

What drives China’s continuation of trade conflict with the U.S.? Taking China’s foreign policy ideology seriously

What drives China’s continuation of trade conflict with the U.S.? Taking China’s foreign policy ideology seriously

Analyzing WTO's Path to Balancing Developing and Developed Countries in Globalization: A Study Based on Cross-Domain Rule Interaction Theory

The World Trade Organization was established to support cooperation in trade policy to achieve common economic goals. In the area of cross-rule interaction, however, international competition has intensified, making it difficult for the WTO to balance the responsibilities and obligations, and the costs and benefits, of developed and developing countries. The governance of the international economic and trade system has fallen into a new dilemma, with the gradual rise of minorilateralism and bilateral trade conflicts causing cracks in globalization. Based on this, this paper will analyze the drivers of the current dilemma faced by the WTO and provide suggestions for a balanced approach. At present, the rules of global economic and trade governance are lagging behind the needs of the new international trade model, as the WTO has not clearly apportioned the responsibilities and obligations to be borne by the countries of the South and the North and is facing a crisis of legitimacy in its dispute settlement mechanism. Therefore, WTO needs to strengthen its internal mechanisms as well as its organizational functioning to assign obligations to States on a case-by-case basis. In addition, the WTO should clarify its economic and trade policies according to different areas and strive to make the multilateral trading system more equitable and fair.

EFFECTS OF ECONOMIC AND GEOPOLITICAL RISKS ON THE SUPPLY CHAIN: AN ECONOMETRIC ANALYSIS

Purpose- The lockdowns and restrictions imposed as part of the response to the COVID-19 pandemic, which first emerged in China, the Russia-Ukraine conflict and its broader geopolitical implications, and tensions in other geographies have exacerbated an already problematic global supply chain situation. While freight markets have limited direct contact with Russia and Ukraine, global logistics have exposed supply chains to an increasing number of risk factors, including airspace restrictions, uncertainty about the future path of consumer demand, and China’s ongoing interventions regarding the COVID-19 process. The effects of various economic and geopolitical risks on the supply chain are the main analysis subject of this study. Methodology- In accordance with the scope of the study, the causality analysis suggested by Toda Yamamoto was applied between the Baltic Dry Cargo Index (BALTIC) and Brent oil prices (BRENT). In the study, data covering the period 2020:1-2023:12 at monthly frequency was used. In order to examine the relationship between Baltic Dry Cargo Index (BALTIC) and Brent oil prices (BRENT), data regarding the causality analysis proposed by Toda and Yamamoto are shared in tables. Extended Dickey-Fuller (ADF) unit root test was used to analyze the data. The results are presented in tables and interpreted. Findings- The effects of risks, conflicts and crises that arise in different ways in different geographies on the supply chain are examined in detail with country examples. The problems experienced by countries against supply chain problems, steps taken towards solutions, the effects of crises experienced in the supply chain, and future scenarios are presented in detail in different regions. This study clearly states that geopolitical tensions and the pandemic have dealt a significant blow to the supply chain, and that the disruptions in the supply chain have reached a level that will leave countries helpless Conclusion In the study, the relationship between the Baltic Dry Index (BALTIC) and Brent oil prices (BRENT) was empirically examined. Contrary to studies in the literature, no significant causality relationship was found between the two variables. In the study, it was emphasized that the cost increases in the supply chain and transportation axis were not due to oil prices, but geopolitical and economic risks. Geopolitical and economic risks arise from pandemics, political instability at international borders, trade conflicts and legislative changes. Increases in risks, tariffs, trade restrictions and sanctions disrupt supply chains, increase costs and hinder market access. The increase in risks experienced in recent years has been a determinant in the disruption of supply chains and the increase in costs. Keywords: Economics, supply chain, Toda Yamamoto, geopolitical risk, cost of economic risk JEL Codes: A10, E00, R40

The Development of China’s Exports – Is There a Decoupling from the EU and the US?

Abstract Some observers warn that a high level of economic dependence on China could negatively affect the economic resilience of western economies and therefore recommend reducing such dependence by gradually decoupling from China. On the other hand, industry leaders emphasise the economic importance of China and warn against any kind of trade conflicts. Against this background, this article briefly analyses the development of China’s export strategy. It finds that the export intensity of the Chinese economy is diminishing and that exports are becoming more diversified overall. In addition, the relative importance of the United States and the European Union as export markets has been reduced, indicating a gradual decoupling of China from western economies. Conversely, exports to China have become more important for both the EU and the US. Although the figures remain at a non-critical level, Europe’s export activities could be more diversified as well.

The Impact of China/US Trade Friction on China's Electronic Product Exports

China and the United States, as leading global powers, have faced ongoing trade disputes. From 2003 to 2005, the U.S. triggered several trade frictions with China, marking a period of significant conflict. In 2018, the Trump administration’s trade war reignited tensions, and these frictions have since evolved alongside shifts in international relations. Recently, the U.S. imposed restrictive measures on Chinese exports, affecting China's electronics sector-a vital component of its high-tech industry and economic growth.This study analyzes data on Chinese electronics exports in the context of these trade tensions, using a Difference-in-Differences (DID) model to assess changes over the past decade. The results show a statistically significant positive impact of U.S.-China trade friction on China’s electronics exports, despite the challenges posed by restrictive U.S. policies. Ultimately, this study emphasizes that while trade conflicts may strain relations, balanced policies and open communication are essential to avoid further escalation. Both countries could benefit from a cooperative approach, recognizing the advantages of mutual trade development.

Research on Innovation and CSR of Small and Medium Textile Machinery Enterprises

This study focuses on small and medium-sized textile machinery enterprises in China, exploring how they can optimize sales performance through innovation and corporate social responsibility (CSR) practices, combined with organic online traffic and word-of-mouth recommendation strategies. Amidst the backdrop of fierce global competition in the textile industry, shifting consumer preferences, and heightened environmental requirements, the COVID-19 pandemic and Sino-American trade conflict have further exacerbated challenges faced by the industry. As a crucial link in the textile supply chain, textile machinery enterprises have also been impacted. Despite these difficulties, small and medium-sized textile machinery enterprises play a significant role in industry development and competitiveness. By integrating modern marketing strategies with CSR practices, this study aims to reveal how enterprises can effectively communicate their CSR commitments to expand market influence, boost sales growth, and strengthen brand reputation. The findings indicate that innovation and CSR play a pivotal role in enhancing corporate competitiveness, differentiating from competitors, and fostering brand loyalty. Based on interviews with a family-owned enterprise, this study observes that while the enterprise has achieved notable success in CSR practices, there is room for improvement in its marketing and communication strategies. Therefore, this paper proposes improvements such as optimizing the official website to highlight CSR, increasing investment in social media marketing, and combining CSR with offline word-of-mouth recommendations, with the aim of helping enterprises more effectively convey their CSR philosophies, attract potential customers, and drive sustained business growth.

Domestic and foreign cap-and-trade regulations, carbon tariffs, and product tariffs during international trade conflicts: A multiproduct cost-efficiency analysis

Domestic and foreign cap-and-trade regulations, carbon tariffs, and product tariffs during international trade conflicts: A multiproduct cost-efficiency analysis

From Shock to Adaptation: Evaluating the Mechanisms of Trade Friction on Firms’ Total Factor Productivity Through the Lens of Digital Transformation

Against the backdrop of frequent global trade conflicts and accelerated competition in the digital economy, we investigated how trade friction shocks affect firms’ total factor productivity (TFP), with a focus on the role of digital transformation. We employed a statistical analysis method based on the multi-period difference-in-differences model with anti-dumping and countervailing measures as quasi-natural experiments to analyze firm-level panel data for Chinese exporters from 2003 to 2016. The results indicate that trade frictions compel export firms to enhance their TFP, while digital transformation further promotes this growth. This main conclusion still holds after a series of tests such as parallel trend checks, placebo tests, and variations in primary variables. The mechanism analysis shows that, in response to trade friction shocks, firms aiming to boost productivity have strategically reallocated internal resources by increasing exports of alternative products and expanding into overseas markets rather than solely relying on innovation. Additionally, digital transformation mitigates the negative effects of trade friction on firm innovation and facilitates faster internal resource reallocation during such challenges. The heterogeneity analysis reveals that digital transformation proves more beneficial for firms that are multi-product, non-state-owned, engaged in general trade, and operating in highly competitive industries. This paper contributes to the understanding of trade friction and productivity at the micro level, offering valuable insights into digital transformation strategies for firms navigating these challenges.

Article: Redefining Global Trade: The Interplay of Geopolitics, Economic Resilience, and Sustainability?

This paper explores the shifting dynamics of global trade amid rising geopolitical tensions between the United States, the European Union, and China. It traces the evolution from post-World War II American-led globalization to hyperglobalization, where China emerged as a global manufacturing powerhouse. While hyperglobalization spurred economic growth and lowered consumer prices, it also led to job losses, income inequality, and environmental degradation in developed economies.The COVID-19 pandemic and the ongoing US-China trade conflict have accelerated a shift towards economic resilience and national security. The US has responded by decoupling from China, particularly in critical sectors like technology and clean energy, viewing economic policy as integral to national security. Meanwhile, the EU, though aligned with the US in geopolitical concerns, remains economically dependent on China and has adopted a more regulatory approach. The EU seeks to balance its economic ties with China by leveraging trade regulations, such as the Carbon Border Adjustment Mechanism (CBAM) and the Corporate Sustainability Reporting Directive (CSRD), to encourage Chinese investment while promoting higher environmental and social standards.The paper also examines the increasing influence of environmental policies on trade, noting how both the US and EU are integrating sustainability into their trade frameworks. However, this trend raises concerns about the potential for environmental regulations to become trade barriers, further complicating international relations.