On Friday 25 October, Dr Elizabeth Ingleson and Professor Yeling Tan joined us for a lecture on ‘What’s at stake in the US-China Trade War?’ as part of the Cutting Edge Issues in Development Lecture Series for 2024. The discussant was Professor Robert Wade, and the chair was Dr Laura Mann. Read what MSc student Sattrawut Bunruecha took away from the lecture below.
You can watch the lecture back on YouTube or listen to the podcast.
Confronted with a mix of opportunities and challenges, developing nations find themselves at a crossroads, as the US-China trade war intensifies. A recent seminar demystifies this ongoing conflict while revealing its implications for the developing world.
From Made in Germany to Made in China
For audience members with minimal background in history, Dr. Elizabeth Ingleson’s opening comparison between today’s China-U.S. tensions and the 19th-century trade rivalry between Germany and the UK served as an enlightening starting point to unpack this mystery. Ingelson drew our attention to the “Made in Germany” label, introduced under the UK’s Merchandise Marks Act of 1887. This measure was aimed to protect British industry by clearly identifying German imports, perceived as an escalating threat to Britain’s economic dominance. This historical episode, Ingleson argues, is vital for understanding the current “Made in China” narrative.
This historical lens set the stage for the Ingleson’s analysis of the economic shifts from the 1970s onward, an era characterised by China’s extensive economic reforms. This period saw American companies attracted by China’s low-cost labour pool, sparking waves of offshore manufacturing. As Ingleson noted, the convergence of interests enabled the hitherto communist nation to transform into a capitalist powerhouse while shaping the present landscape of global capitalism. But this alignment of interest also had unintended consequences, as America was largely unaware that, decades later, China’s remarkable growth would become a source of its anxiety.
Security Dilemma
While Ingleson framed the trade war in historical terms, Prof. Yeling Tan approached it through a security lens. Tan underscored the indispensable role of security in driving both nations’ trade policies, meaning economic and foreign affairs are inextricably intertwined. But perhaps the most important question Tan posed for us, future developmentalists, was: While security is a prerequisite for development, can development alone ensure security? This question calls for a nuanced re-examination of ongoing conflicts worldwide. For development studies students, the question suggests we need to steer our discipline towards security considerations to address today’s development challenges.
Technological Self-Sufficiency and Trade Diversification
The US aims to “rebrand” domestic labour in hopes of reducing its overreliance on China, but the shift faces substantial hurdles, particularly the decline in the American workforce engaged in labour-intensive industries. In stark contrast, China has made substantial investments in clean energy, with nearly 40% of its GDP growth in 2023 derived from this sector. I can’t help but wonder about the sustainability of this growth, though, in light of recent declines in electric vehicle sales, impacted further by the EU’s tariff increases. Tan also pointed to the Chinese government latest overhaul aimed at strengthening the Chinese Communist Party’s grip on science and technology. This pivot to technological autonomy and clean energy investment, alongside its active role in multilateral trade institutions, may provide insulation against the impact of tariffs imposed by the American alliance.
Implications for the Developing World
For those from Southeast Asia, including myself, Tan highlighted the stakes for “connector countries” like Vietnam, Thailand and Singapore. While nations like Vietnam are benefiting from increased investments from China and growing exports to the US, central questions raised during the discussion were: Does the volatility outweigh potential gains? And what strategic stance should these nations adopt to best position themselves within this intensifying geopolitical rivalry? This unsettling anxiety is, Tan emphasised, palpable among Southeast Asian elites who are reluctant to align themselves in this trade war. Instead, they are pursuing unity through multilateral coalitions and resilience in hopes of crafting a more stable, alternative order amidst this volatile geopolitical architecture.
Lessons from History and Towards Multidisciplines
Yet history offers a cautionary tale. Discussant Professor Robert Wade highlighted the lessons we can learn from the Group of 77 (G-77), which in 1964 sought to reform global trade to safeguard their interests. Their initiatives ultimately faltered against the might of economic superpowers. The panellists implied global behemoths, armed with wealth and influence, will always make it challenging for developing countries to redistribute global economic power.
The ongoing US-China trade war presents a dual-edged sword for developing nations. As these countries navigate their paths amidst the tensions, they must draw on historical insights and diverse disciplinary lens to inform their pursuit of development.
The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science.
Featured image credit: LSE Department of International Development
