Predrag Petrović

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Institut društvenih nauka, Beograd, Srbije



In 2018, US merchandise imports from China was $540 billion with export from the US of only $120 billion. China has a large positive trade balance with the US and has used its dollar surplus to purchase US Treasury bonds – in that way holding the value of the dollar. The flight of production from the US to China and other countries has brought significant loss of jobs in America. Namely, the number of employees in US manufacturing industry has decreased by 34% in the period 1998-2010. The Chinese ownership of US debt provides it with prospective capacity to have an effect on US financial policy, as a rapid sale of Treasury bonds would diminish the US dollar and very likely carry out an increase of interest rates thereby making crediting more expensive. Having a huge and constant trade deficit with China, the US have hoped, which proved unrealistically, that raising tariffs and make stronger economic threats against China would push Beijing to make reforms that would decrease trade deficits and reinforce the position of US firms in China via the leaving of subsidies and the termination of mandatory technology transfer and intellectual property rights. Being in more difficult positions, Chinese firms - aming to minimize costs - are receding from global value chains that are susceptible to U.S. sanctions, producing inputs either domestically or within China’s sphere of influence. The prolonged trade conflict between the world‘s two largest economies will send shockwaves that will sweep through the entire global economy. Global competition between Washington and Beijing will intensify regardless of progress in resolving trade issues having in mind that the US policy is promoting a division of the world economy into two competing blocs. The ‘battle’ for dominance in the world economy will unfold in the next decades between those two powers, especially in communication and quantum technologies, AI (artificial intelligence), robotics and bioengineering. It will be almost impossible to avoid structural and very dangerous competition. This will undermine the inclusive geo-political strategy of so-called Western triad (the US, the EU, and Japan). The possible benefits of military action against China are, according to recent estimates, far outbalanced by the expenditures. The present logic of global politics is that Western powers could possible acknowledge the rise of China. It implies to include the state in the hegemonic core. Alternative is to be ready for the appearance of another hegemonic power. Generally, it seems that the West will have to accept that the world economic pole has shifted to China and the interests of this country cannot be longer ignored, as the cost of the possible conflict can be intolerably huge for all major global participants.