Abstract In the 1970s, Japan-US trade friction found that if the trade war is inevitable, opening the market to a certain extent seems to be a positive statement. The increase in US imports is similar to a voluntary export quota to the United States. Recently, with the hard-line Chinese and American traders joining Trang...
Studying the trade friction between Japan and the United States in the 1970s found that if the trade war is inevitable, opening the market to a certain extent seems to be a positive statement. The increase in US imports is similar to a voluntary export quota to the United States. 
Trump formed a cabinet to nominate many hawks who are tough on China, especially the nomination of two new White House countries that have published two special monographs to attack Sino-US trade relations and support the labeling of China’s currency manipulators. The Trade Commission highlights the possible tensions in Sino-US trade relations in the future.
How to evaluate the prospects of the Sino-US trade war and the costs of both sides? Once the trade war broke out, in which form? Which industries have the biggest impact? In the author's view, careful study of these issues and a good response to the "combat" strategy can only strive for initiative and prevent trade risks from expanding.
Possible damage to the Chinese economy caused by the trade war
From the Chinese side, once the Sino-US trade war emerges, it will inevitably have a direct negative impact on China's economic growth and labor market stability in the short term. At the same time, it may also impose deflationary pressure on China and further depreciation pressure on the renminbi.
First, China’s dependence on US exports is reflected in many aspects. In 2016, China’s exports to the United States accounted for 18% of China’s total merchandise exports and 4.4% of GDP. Exports to the United States are not only concentrated in traditional labor-intensive industries, such as toys, furniture, and textile exports to the United States, which account for about one-third of all exports in the industry, and with the upgrading of China's manufacturing industry, capital-intensive. Exports to the United States, such as electronics and machinery, have also increased substantially, and exports have surpassed labor-intensive industries. The employment opportunities created for China’s exports to the United States should not be underestimated. According to the “Global Value Chain and China's Trade Added Value Accounting Report†jointly issued by the Ministry of Commerce, Customs, the National Bureau of Statistics and the State Administration of Foreign Exchange, in 2012, every US$1 million of exports to the US could create 59 jobs for China.
In addition, the total value of Hong Kong's exports to the United States in 2015 was HK$342.2 billion, of which the value of re-exports reached HK$338.3 billion. Considering that the source of Hong Kong's re-exports is mainly in mainland China, it accounted for 67% of the total re-exports in 2015. The mainland’s share of exports to the United States through Hong Kong is about $30 billion.
Second, China has a certain dependence on the United States in technology import and financing. For example, many high-tech products imported from China are only held by the United States. Once the United States stops exporting such core technologies to China, it may have an impact on China's industrial supply chain. For example, Intel and AMD are very popular in the use of personal computer CPUs. Most of China's mobile phones also install GPS global positioning systems. Once a trade war breaks out, it will take some time for China to find alternatives to such technologies.
In addition, in terms of direct investment, the direct investment of the United States in China in the past decade accounted for 3.3% of all FDI in China. The author estimates that within a decade, the number of US-funded companies in China will reach hundreds of thousands. At the same time, Hong Kong, China, due to the soft environment such as taxation and legal system, has made a considerable part of Sino-US investment through Hong Kong as a “super contactâ€, including foreign investment and mergers and acquisitions by Chinese companies, taking into account the direct investment position of Hong Kong and the United States in 2015. Up to about 40 billion US dollars, including many Chinese companies investing in the United States and its reverse, therefore, the real Sino-US dual investment quota may be higher than the official statistics of China. Moreover, more and more Chinese companies are financing in the US capital market, and the outbreak of trade wars will also have an adverse impact on Chinese companies listed in the US.
Finally, it is difficult to find an alternative market that is close to the mass of the US market. In theory, after the Sino-US trade war broke out, China’s exports of goods to the United States will turn to other countries and regions. However, the author’s research finds that China’s exports to other major exporting countries are already high, further increasing the proportion of exports and market share. The space is extremely limited. For example, for the largest export of electronic machinery and equipment to the United States, exports to Japan accounted for 49.6% of its imports, exports to South Korea accounted for 40.7% of its imports, Germany accounted for 23.0%, and the United Kingdom accounted for 22.7%. Imports are relatively difficult, and the needs of the major trading countries are relatively limited.
For the above reasons, if there is a real trade war between China and the United States, it may cause a huge impact on China's demand side in the short term. The slowdown in economic growth and the increase in unemployment may force the policy to be more passive and will increase the pressure on the renminbi to depreciate. A more pessimistic situation is that the pressure of steady growth has forced the government to introduce further easing measures and miss out on structural reform opportunities.
Trade wars may damage the US economy
The trade war is obviously unfavorable to both sides. Once it has caused a counterattack from the Chinese side, it may lead to the end of "the wounding of one thousand and the loss of eight hundred."
First, China is the third largest exporter of the United States after Canada and Mexico. According to US statistics, in 2015, US exports to China reached US$116.1 billion, accounting for 7.7% of US total merchandise exports and 0.7% of GDP. US exports to China include not only high value-added industrial products such as aircraft, automobiles, and electronic equipment, but also resource-based commodities such as logs and grains. In addition, the United States exported about US$27 billion to Hong Kong in China in 2015, and there is also a considerable portion of mainland demand. In fact, the vast majority of large multinational companies in the United States regard China as an important market.
According to the statistics of the US Department of Commerce, US merchandise exports to China have created at least 678,000 jobs for the United States, accounting for 10% of all exports.
The export of China's service industry is also very important to the United States. In 2015, US service industry exports to China amounted to 48.4 billion US dollars, with a surplus of 33.3 billion US dollars. According to the US Department of Commerce, exports to China's service industry created 273,000 jobs for the United States in 2014.
China’s direct investment in the United States has also grown year after year, with an annual record of $8 billion. According to data from the Ministry of Commerce of the People's Republic of China, in 2015, China's direct investment in the United States created 13,000 jobs, and all of China's investment in the United States created 90,000 jobs. At the same time, as mentioned above, if we consider the role of Hong Kong's “super-contactâ€, there will be a considerable amount of Chinese capital use of Hong Kong as a platform for mergers and acquisitions and investment, and the real impact will be even greater.
In summary, China’s exports to the United States and China’s investment in the United States have created at least 1 million jobs for the United States, accounting for 0.7% of the total non-agricultural employment in the United States.
Second, the United States also relies on imports from China. US imports of goods from China account for 21.3% of total US merchandise imports. Among them, mechanical and electrical equipment imported from China accounted for 40.8% of the total imports of such products, and machinery and machinery imported from China accounted for 32.4% of such total imports. Labor-intensive industries account for a higher proportion of imports from China, and some industries are even as high as 80%. From this perspective, it is relatively difficult to find a complete substitute made in China in the short term. The trade war will push the living costs of the American people and increase the risk of inflation.
Finally, although globalization has had a polarized impact on the US labor market, unless the United States conducts a trade war with all countries that export labor-intensive goods at the same time, the return of the US to low-end manufacturing will be difficult to achieve.
Japan-US trade war mirror
Once the outbreak of the trade war has a negative impact on China, the United States may not be able to get real benefits. But in reality, Trump is now using hawks for China to show that the possibility of a trade war cannot be underestimated.
The possible situations and paths are the focus of discussion. Taking history as a mirror, the trade friction between Japan and the United States from the 1970s to the 1990s is very similar to the current Sino-US trade friction. Studying it can provide a reference for understanding the possible consequences of the Sino-US trade war.
After joining the General Agreement on Tariffs and Trade (GATT) in 1955, Japan gradually implemented the “going out†strategy. With the rapid rise of Japanese manufacturing, it began frequent trade frictions with the United States in the mid-1960s.
The first round of trade friction began with textile disputes. Due to the rapid development of Japanese textiles, its exports to the United States and its market share have gradually increased, posing a threat to the US domestic textile manufacturing industry. In order to avoid contradictions, Japan accepted the US government's request, implemented voluntary restrictions on US exports, and signed the "Japan-US Textile Agreement" in 1971, setting limits on the scope of export growth to the United States on the basis of 1969.
Japan-US trade friction did not stop there. After entering the 1970s, Japan and the United States began to dispute in the steel field. In 1974, the US government asked Japan to voluntarily restrict the export of steel to the United States; in 1976, the United States and Japan signed a special steel import quota restriction agreement; in 1977, the United States filed a dumping lawsuit against five Japanese steels; until 1978, the United States implemented the steel start price. The system, that is, the automatic initiation of anti-dumping lawsuits against Japanese imports of steel below a certain price, caused the friction between Japan and the United States to cool down.
The most intense trade frictions occur in the automotive industry. In 1978, Japan exported more than 1.5 million cars to the United States, and in 1980 it reached 1.92 million. US cars imported from Japan account for 80% of total car imports, and Japanese cars account for 20% of the US market. Competition from Japan has forced the US government to provide $1 billion in subsidies to the domestic auto industry. In 1979, the US government asked Japan to fully open the Japanese auto market, Japanese automakers set up factories in the United States and voluntarily accept export restrictions. In May 1980, the Japanese government unanimously reduced import tariffs on US cars, and in 1983 agreed to set an upper limit on the number of export vehicles to the United States. In 1981, the export ceiling was 1.68 million, and in 1991 it was 2.3 million.
In 1985, in order to reduce the US trade deficit with Japan, the United States asked Japan to sign a "plaza agreement" to agree to the appreciation of the yen against the dollar. Although the yen has risen sharply, its effect on reducing the US deficit with Japan is only reflected in the first few years after signing. In 1990, the US export deficit to Japan accounted for three-quarters of the US total deficit with Japan and one-half of the overall US trade deficit. In 1992, after President Bush’s visit to Japan, Japan will cut the US automobile export cap from 2.3 million to 1.65 million. In 1993, the Clinton administration demanded that Japan open its domestic automobile market more comprehensively. In 1995, the United States imposed additional tariffs on Japanese cars under the 1974 Trade Act.
In addition to trade frictions in the automotive sector, from 1970 to 1980, electronic products such as color TVs, semiconductors, computers, and telephones were also involved in Japanese-American trade disputes. While the United States continues to impose trade restrictions on Japan, Japan also restricts imports of agricultural products from the United States, including beef and organic food.
The trade friction between Japan and the United States has lasted for nearly 30 years. Until the mid-1990s, the proportion of GDP in the US trade deficit began to decline, and the trade relationship between Japan and the United States improved. After 2000, most trade frictions were resolved under the WTO framework.
From the perspective of impact, the measures imposed on high tariffs and the implementation of export quotas have actually had relatively limited impact on the overall economy of Japan. In fact, the Japanese-American trade warfare of the 1970s and 1990s was much smaller than the impact of the US Smoot-Hawley Tariff Act in 1930. For example, in 1992, Japan was asked to reduce the automobile export cap from 2.3 million to 1.68 million, but Japan’s export value to the US car decreased by only 1% in the year.
At the same time, the adjustment of the US trade surplus through the appreciation of the yen has not been effective. The yen has appreciated sharply against the US dollar since the 1980s, but Japan’s trade surplus with the United States has only expanded. However, the trade war has undoubtedly affected the industrial layout of the Japanese industry. For example, Japanese automakers are required to build factories in the United States, and export quotas have prompted Japan to shift the manufacturing of high-end products to the United States.
More far-reaching is the signing of the "Plaza Agreement." Due to the sharp appreciation of the yen, the Bank of Japan had to implement a loose monetary policy, lower interest rates, release a lot of liquidity, and the appreciation of the yen attracted a large amount of hot money into Japan, and Japan’s domestic liquidity was rampant. What followed was a surge in asset prices and a bubble formation. The bursting of the bubble in the early 1990s brought Japan into the "lost 30 years."
Studying the trade friction between Japan and the United States in the 1970s found that if the trade war is inevitable, opening the market to a certain extent seems to be a positive statement. The increase in US imports is similar to a voluntary export quota for the United States. In this case, the United States High-tech companies, service companies, and China's high-end product export companies will have some profit, seize this opportunity, and cooperate with reforms to further open up the domestic market. It is also beneficial to China's market-oriented reforms and changes in the monopoly of state-owned enterprises.
The experience of Japan-US trade friction also shows that China should avoid adjusting trade through large exchange rate fluctuations. The Plaza Accord is an important event in the Japanese crisis. The current global monetary policy is in a difficult position. If the Sino-US trade war is unavoidable and China’s exports are seriously damaged in the short term, the Chinese government should also avoid using excessively loose monetary policies to stimulate the economy, especially if the current asset price is too high, otherwise it will only It will delay the structural transformation, create a bubble, and even trigger an economic crisis.
In addition, if the Sino-US trade war breaks out, the form of implementation will not be an overall increase in tariffs for all industries, and the adjustment may not be raised to 45%. The possibility of 10% and 15% is great. If the industry that is most likely to be sanctioned is judged according to the following three criteria, that is, the industry with a low proportion of domestic production in the United States; the second is the industry with comparative advantage in the United States; and the third is the industry with a large amount of Chinese exports to the United States. The author predicts that the computer, electronic equipment and machinery equipment industry is most likely to become a trade warfare concentrated industry, and should be focused on prevention.
(The author of this article: Ph.D. in Economics, currently Managing Director of Mizuho Securities Asia, Chief Economist. Visiting Professor of School of Economics, Fudan University, member of the 50-member Forum of China New Supply Economics.)
As we all know, many servers, storage devices, network devices and so on in the data center are running for 24 hours, and they emit huge heat at the same time. Using conventional cooling and air conditioning system to cool down not only increases the energy consumption of the whole data center, but also increases the cost accordingly. Therefore, how to cool the data Center at low cost has always been a hot topic. In the past, mineral oil cooling systems and seawater cooling were used, if you don't have a good geographic location like Google, and ebay's the "non-mainstream" way of cooling hot water. The use of fluoride will be the first choise to you, future development trend of data center cooling is the Fluoride Solution. The use of low-cost and efficient cooling methods will play an active role in reducing costs, saving energy consumption and improving the utilization of energy in data center. If you happen to need a solution in this area, please contact us by email.
Refrigerant For Data Center Server
Dielectric Paint,Dielectric Spray Coating,Liquid Solution For Data Center,Refrigerant For Data Center Server
Guangdong Giant Fluorine Energy Saving Technology Co.,Ltd , https://www.tuwtech.com