Since the U.S. launched a trade war against China, a lot of discussions about trade wars and its negative impact, on both sides, leading to potential inflation, shortage of goods and decreased quality of life, have appeared. Yet, the present US Administration seems to believe that, it can dictate the consequence of the trade war ignoring the historical lessons and China’s resilience. This attitude seems to prevail among the White House leadership. China as the largest country in population has suffered from trade wars for 100+ years with bitter memory. Hence, China is extremely conscientious about trade frictions, not only eager to avoid trade conflict but also mentally and physically prepared for trade wars. Observing the past six months since President Trump initiated a tariff on aluminum and steel imports followed by two waves of tariffs on $250B of Chinese imports; China has taken cautious and calculated counter-measures to respond to the trade war and vowed to fight it to the end and never to give in. In this article, we first review the last trade wars China endured during the 19th century (launched by the British eventually evolved to include the eight nations including the U.S. and Japan, ganging together against a militarily weak China), then we discuss the present anti-China trade war initiated by the U.S. (hoping to gain allies to jointly punish China). We hope that, by studying the history, we can draw lessons from the past trade wars so we may make wise decisions to avoid future trade wars that may lead to the collapse of world economy and possibly the downfall of a nation.
Silk Road was a symbol representing trade between China and the West anf the mid-East. Silk routes were established during the Han Dynasty of China (130 BCE -1453CE) by its strong emperors such as Han Wu Di. The silk routes linked the commerce regions of the ancient world between Asia and Europe. The West is familiar with the European explorer Marco Polo (1254-1324 CE), who traveled along these routes and described them in his famous work but this network of roads were actually coined as silk routes by the German geographer and traveler, Ferdinand von Richthofen, in 1877 CE, ('Seidenstrasse’ or 'Seidenstrassen’). Polo and later von Richthofen categorized the goods transported back and forth on the Silk Road including horses, camels, animal products, fruits, gold and silver, …armors and slaves (from West to East) and silk, tea, dyes, gems, china, spices, rice, bronze and gold artifacts, medicine, perfumes, ivory, paper and gunpowder (East to West).
China was the world’s largest economy from 17th and 18th century up to the 1820s while the British Empire has become the world’s greatest military power with colonies all over the world. The trade imbalance between England and China grew simply because China’s tea, silk and porcelain etc were in high demand in the West. Pressured by this trade imbalance and burdened by her big military expense, England resorted to opium trade backed up by her military power. History taught us that China resisted the opium trade but lost to England in two Opium Wars (1839-1842 and 1856-1860) resulted in some of the world’s worst unequal treaties which not only required China to pay huge sum of war reparation but also forced China into opening free trade ports to England, waiving tariffs and leasing the Hong Kong Island to England for 99 years. Opium is addictive which can destroy one’s ability to live a normal life, thus, an opium trade is a sin. Following the Opium Wars, the West powers all descended in China seeking the same unfair treaties from China. During the 19th century, colonialism coupled with militarism were at the peak, even the small Japan, had embraced such doctrines and became an imperialist nation setting her eyes on conquering China. The first major Sino-Japan war began in 1894 resulted in another unequal treaty, paying Japan war reparation equal to six times of Japan’s annual national budget, ceding the Taiwan island to Japan for fifty years and permitting Japan to encroach the Korea Peninsula and territories in North East China. China was a sad victim of trade wars during 19th century. The trade wars not only destroyed her economy but devastated her as a sovereign nation way into the 20th century.
Fortunately, the ambitions of imperialistic Japan and Germany were finally checked as they were defeated in WWII. Colonialism and imperialism were denounced allowing many former colonies to gain independence and pursue economic development. China was briefly united after WW II but divided as the civil war wounds broke again eventually resulting in a split of Mainland and Taiwan allied with the Soviet Union and the United States respectively. Cold War formed almost immediately between the U.S. (NATO allies) and the Soviet Union (WARSAW allies) right after WW II. Mainland China and Taiwan caught in between. Mainland China experimented with communism with poor result then gingerly embraced capitalism under the dominating party (CCP) producing a fast economic growth. Taiwan experimented with democracy and gained prosperity during the Korean War and the Vietnam War in Asia. The economic success of Mainland and Taiwan should be credited more to the Chinese people’s strong work ethics rather than the political system or the U.S. financial aid to Taiwan or Mainland China’s admission to the world trade organization (WTO). China has maintained a double digit economic growth over several decades; hence, her becoming the world’s second largest economy should surprise no one.
Today, China sells household goods like toaster and dryers to the world and maintains a significant trade surplus with the U.S., in fact with most of her trading partners. This trade imbalance is now a pressure to the U.S. because she has run a national budget deficit since 1970’s except briefly during 1998-2001. The U.S. has built a huge national debt (> $19 trillion surpassing her GDP) which is held by her trading partners, China being the biggest holder. When the U.S. launches a trade war against China today, it reminds the Chinese and us of the vicious trade wars British launched in 19th century. England was the strongest nation in the world then but burdened by a large military expenditure and suffered with a trade deficit and a stagnant GDP. The British Empire chose to use her military power to solve her trade imbalance by enforcing opium trade onto China. Today, the U.S. is in a similar situation having to maintain a huge military force outreached worldwide under a deficit national budget. The US trade imbalance and huge national debt are probably worse than those of the British Empire’s two century ago. The real difference is that the U.S. has weapons with hi-tech which the British Empire did not have. So the U.S. appears to use weapons (instead of opium) to solve her trade imbalance. The recent approval of sales to Taiwan $37 billion worth of weaponry is a suspicious motive. If the intention is to stir up a war between Mainland China and Taiwan then the weapon sale is more evil than selling opium.
Of course, China is very different now than in 19th century. China is modernized with a solid industrial base and a large patriotic population willing and ready to fight trade wars. The bitter trade war experience in the past has imprinted on the minds of Chinese people and given them the will and right to build a strong nation. Therefore, naturally China will continue her nation building, reacting forcefully when threatened or pressured by an foreign power. The more pressure the U.S. applies to China with whatever means, the more will China resis for survival. If the U.S. is concerned with ‘the China Manufacture 2025’ development plan, pressuring her to stop is just the wrong strategy. China has always stressed her desire for a peaceful rise but vowed to fight the U.S. initiated trade war to the end. China emphasizes win-win collaboration and seeks cooperation with the U.S. If the U.S. accepts that and maintains her self-confidence as a strong nation (better endowed with natural resources and well advanced in technologies than China), a planned collaborative US-China relation is the obvious winner, beneficial to both countries economically, politically and helpful in keeping world peace and prosperity. A premeditated war plan will likely destroy both and the world!