Effects of the US-China Trade War on Russia. Essay Sample

The US-Chinese trade war, better known as the Sino-American trade war is an ongoing economic conflict between China and the United States of America, the two largest economies in the world at present. The onset of the war can be traced to the current US president, Donald Trump, who claimed that the move was a response to unfair trade practices by China. The claims of the US about the unjust trade border on forced transfer of US technology to China, intellectual property theft, and the growing trade deficit (Li, He, & Lin, 2018). This trade war has had impacts on almost all countries of the world, albeit in different degrees. The paper looks into how it will particularly impact on Russia.

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Experts on the world economy have often looked into what the Sino-American trade war could mean to Russia, especially in the fronts of Russian-Chinese economic corporations. Li, C., He et al. (2018) opine that Russia stands to benefit a great deal from the fallout, arguing that it could take the opportunity to replace the US in Chinese markets. This claim could be valid, especially considering that Russia's soybean and pork exports to China have increased significantly in the last few months. It points to the fact that there could be a void left in the Chinese markets that Russia is currently filling. Even so, a different perspective arises from the same idea. The soybean market in China is 100 million tons (Thiebaut, 2018). Of these, Russia's export in 2017-2018 was 900,000 tons, which represent a 25% increase from the previous year. It then means that Russia may not single-handedly fill the gap left by the US in terms of importation. America performed better in terms of the tonnage of soybeans exported to China. Each year, China imports 30 million tons of soybeans from America, a figure that represents 30% more soybeans compared to Russia (Carvalho, Azevedo, & Massuquetti, 2019). It reveals the fact that the Russian economy is limited and may not be a sole replacement of the United States in regards to the exportation of foodstuffs to China.

Russian companies will also benefit considerably from this war since the war will hasten the decision-making process and improve flexibility on Russian goods. Initially, Russian companies found it difficult to export to China because of various hurdles like the legal and sanitary regulations (Prasad, 2019, February). However, this is bound to change now that China may consider Russia to fill the void left by the US. The decision-making process will thus be faster to give the Russian companies the green light to export their goods to China. It is imperative to highlight that China and Russia have been having talks on the regulatory requirements long before the trade war with America started. These negotiations will be fast now that America is cutting back on its exports. The Sino-Russian talks have also been a plus for Russia as its currency has seen a boost since the agreement with China was established. The Russian Central Bank revealed that Sino-Russian trade payments in US dollars had declined from 75% to a mere 54% in just six months. Similarly, payments in yuans and rubles had moved from 16% to 22% within the same period, which is a good thing for both countries (Prasad, 2019, February).

On other fronts, some experts have revealed that the Sino-American war will have dire impacts on Russia, particularly in the prices of its energy resources. One of the most significant implications of the war is the decline in demand for energy resources such as coal and mineral ore, and oil in china. At the same time, the fact that the global market for non-raw materials has declined due to the US-Chinese war, Russia is bound to be hit as one of the major exporters of the same.

I think that Sino-US trade may lead to devastating effects in the future, and the sooner its stops, the better it will be not only for Russia but also for different consumers, companies, and nations. Informed by the various economic analyses from across the world, I am convinced there are many underlying complex realities of the economic impact of the Sino-US trade war. Inflation is one of the surest costs of the war. A highlight of this war is the increased imports tariffs. When tariffs increase, it is the consumers that bear the burden. It then means that consumers will have to shoulder the rising costs of commodities. However, a significant portion of this burden will be absorbed by lower corporate profits both in China and America. In Russia, the problem may majorly be a financial recession. It is because the war may reduce the demand for non-raw material goods as well as energy resources, which are some of Russia's biggest exports. In the end, the nation will suffer financial stress. China may be the biggest loser if America wins the trade war because of the impact on the GDP. As it stands, the tariffs imposed by the US on China affects Chinese GDP by 0.1% to 0.2% (Prasad, 2019, February). These percentages represent big numbers are bound to impact on the livelihoods of the people of China. Therefore, the Sino-American trade war can only cause devastating effects on economies across the world, and remedies should be found in the shortest time possible.

References

Carvalho, M., Azevedo, A., & Massuquetti, A. (2019). Emerging Countries and the Effects of the Trade War between US and China. Economies, 7(2), 45.

Li, C., He, C., & Lin, C. (2018). Economic Impacts of the Possible China-US Trade War. Emerging Markets Finance and Trade, 54(7), 1557-1577.

Prasad, E. (2019, February). The effect of the crisis on the US-China economic relationship. In Testimony to the US-China Economic and Security Review Commission, US Congress (Vol. 17).

Thiebaut, R. (2018). An analysis of The US-China Trade War: how the Section 301 China Intellectual Property case may impact new Directives to promote the "Made In China 2025".