Everyone is worried about the US-China trade war. The United States including Australia, New Zealand and Canada are sabotaging Huawei, a China manufacturing tech company, the biggest in the world. Just the announcement of tariffs on Chinese goods and announcement of sanction on Huawei's products by president Trump and Chinese retaliation moves have created a loss of trillions in US stock market. The world markets suffer the same fate.
Who are most likely to suffer from the trade war in the long run? Every dark cloud has a silver lining.
Some countries will benefit. Who are most likely to benefit from this trade war?
But after visited China big cities recently and talked to some of the local academicians and executives, I am convinced that if this trade war had happened 10 years ago, China would have been in great trouble.
But today, China is a modern country with 1.386 billion people. So far China middle class had grown from zero a couple decades ago to 430 million people and by middle 2020, the number is expected to reach 780 million. This middle class is buying and spending. China's not just a manufacturing exporter ( ten or fifteen years ago China was the factory of the world) anymore. Over the past decade, growth in private consumption has outpaced the overall economic growth rate. And household consumption accounted for about four-fifths of GDP growth last year. GDP growth was 6.6% in 2018. Will the trade war affects this figure significantly? I do not think so. The little effect will be felt temporary.
Trump is cutting off Huawei's 5G technology in the United States (including Australia and New Zealand) and also cutting off supplies and chips to the China giant tech company. Huawei has no alternative route but to intensify its R& D to manufacture its own products. It's a temporary setback but a long term blessing. Why?
Necessity is the mother of invention and China may be forced to innovate and create its own technologies. Number is China's strength ( 1.4 billion people) and don't forget the hundreds of million of over-sea Chinese who still feel and support China's growth. The emotion is awaken and many oversea restaurants are having special discount on foods serving to people using Huawei phones and technologies. The boycott of i-phone and other US products may spread widely and this does not speak well for USA. The population of the western countries USA, Australia and New Zealand is small compared to Asia, Africa and middle East. American sanction may have counter effect on US economy.
The United States and China are having two different political system. Trump is fighting to be reelected next year but president Xi is president for life. America is a democratic country but China is a one party capitalist country (no longer a communist country). You have to visit China cities to find out the truth.
The recent visit by the oldest prime minister of the world Dr Mahathir from Malaysia sounded support for China and Huawei technologies. Many African and Asia countries are influenced by China initiatives in transport innovation especially fast and bullet trains. China is helping many of the developing countries like Indonesia, Malaysia and African countries in innovations and transport. Bilateral trades is prospering between China and these countries. A time will come when China no longer needs the western countries like USA, Australia and New Zealand (smalL population except USA).
This trade war may be just short storm and may be over next year. Who know?
Who will suffer if this trade war last a long time?
People in America will immediately feel the effect of inflation as the tariffs bite. Importers and companies will pass the extra cost to the consumers. American farmers will be affected most as their products cost more in China and sell less. Trump has to subsidize heavily for his actions.
Immediately, countries supporting American technologies like South Korea is facing problems. This unintentional side effect is happening when two elephants collide. What are other countries getting this side effects? You know them. Will Malaysia benefit or suffer from the trade war?
Trump claims that some big companies are leaving China to set up their bases elsewhere. Which are the countries benefiting from these moves? Most likely countries are Vietnam, Thailand and Burma.
Will China benefit from these moves? China manufacturing companies will certainly fill these gaps.
China survival instinct will finally prevail.
Many developing countries in South East Asia, Africa and the Middle East will benefit from China cheap technologies and innovations. Huawei 5G technology is far superior and cheaper than any other country.
China bullet trains will soon be the main transport in South East Asia and Africa. China will remain the biggest trading partner for most of the developing countries. Looking East is now looking at China no longer Japan.