Translating into Chinese of the following article


A Trade War Fuelled by Technology



The year 2018 saw the outbreak of a rapidly escalating trade war that is global in nature; the commercial relationship between the United States and China is the prime battlefront. It is widely considered to demarcate a profound change in the global economic and political order.

The trade war has many potential roots. Parallels are being drawn between the US-China conflict and the Anglo-German rivalry that led to the breakdown in 1914 of the Concert of Europe. A litany of narrower complaints have been made about the impact of China on the global economy following its accession to the World Trade Organization (WTO).

However, these considerations alone do not provide a fully satisfactory explanation for the Trump administration’s preparedness to shut down trade with China at great cost to its own economy and companies. Something more powerful, however, could be fuelling the trade war: the technological revolution being generated by big data, artificial intelligence and machine learning. These transformative technologies create the grounds for strategic trade and investment policies and open a new theatre for geostrategic rivalry.

This diagnosis is troubling: the year-long tension has been expensive, to say the least, and it is impacting trade, investment, asset values and geopolitics globally. Meanwhile a solution cannot simply focus on ironing out the longer-standing nominal irritants in US-China economic relations. Rather, it must address the elemental forces being unleashed by the technology at the core of this historic trade war — a much more difficult proposition.


The Cost of the Trade War


The measures taken to date have already generated palpable damage to the warring parties and created negative impacts on third parties. A recent paper, “Trade Wars #2018: The Likely Trade and Economic Impact so Far” (written by this article’s author, Mengchun Ouyang and Jingliang Xiao), estimates that the first rounds of tariffs and tit-for-tat retaliation have had a larger relative impact on China than on the United States (about –0.4 percent of GDP compared to about –0.2 percent for the United States; and welfare losses of about US$100 billion for China versus about US$50 billion for the United States). China is also more exposed to US export restrictions since its flagship technology firms (ZTE and Huawei) still rely on critical US technologies; this gives the United States additional leverage to extract concessions from China. These considerations explain China’s eagerness to seek an early truce.

However, if the United States and China continue to escalate the conflict through higher and wider-ranging tariffs and restrictions on American or Chinese firms operating in each other’s markets, the negative impact will likely rise. As the Brexit negotiations have shown, even peaceful divorces are damaging to a deeply integrated global economy. In the event of a total breakdown of trade between the United States and China — the equivalent of a new iron curtain descending across the Pacific — both economies would suffer a negative impact on the order of –2 percent of GDP, and welfare losses on the order of US$400 billion each (these figures are from preliminary unpublished simulations by the author and Xiao).