The U.S.-China Trade War - Explaining it to a 10-Year-Old
Let's suppose the United States and China are two excelling students studying in the same school in the same class.
They both do best to outperform each other and become the highest ranked student in their class.
For all this while, there had been a cold competition going on between the two students. They’ve done every possible crooked thing to stay ahead of each other.
However, none of the two really did anything big against each other so openly so as to make the matters be known to the school’s principal (the media and the world).
The United States says that despite the academic competition, it has done best within its interest to help China become better at its academics (technology and trade), which, to some extent, is true.
The United States never stopped China from taking a look into its study materials (businesses), nor did it stop it from coming to its home to study along with him (doing business in America). However, when the U.S. needed to do the same, China wouldn’t let it.
It would restrict the United States saying that its strict parents (trade policies) do not allow friends at their home.
This gave China an unfair advantage.
It benefitted from America's study material as well as its own while America was only able to benefit from only its own.
Now that you know some background, let’s stop the story here for a bit of specific explanation.
So, getting to the point, China has quite restrictive policies in place which, in many ways, hinder the growth of American businesses in China.
To understand how big this issue in terms of trade and business growth of American companies, consider the fact that China bans almost all major American internet products such as Facebook, Google, Instagram, WhatsApp, and Twitter from being used within its territory.
This cuts off these American businesses from almost one-seventh of the world, or 1.38 billion people to be more precise.
Though Chinese use VPN services to use these products, it hardly makes much difference to business growth.
Ask a businessman and he'll tell how important that number is.
On the other hand, Chinese businesses have always quite openly been able to expand to American states.
Now, combine this fact with the Bloomberg stats that rank China at #19 in terms of technological growth while the United States is ranked at #11. And the gap is closing up quite rapidly.
Any country would be worried about this considering its arch-rival was closing up on it to replace it as the world tech leader.
Back to the story.
So, the tension was already at its peak when a new, charming girl (the 5G network) got admitted to the same class. As was expected, both the students wanted to be the first to woo her and win her heart.
Unlike for every other girl (2G, 3G, and 4G), this time China started to take the lead over the United States.
The U.S. couldn’t tolerate it anymore. It has been used to being the ladies' guy, but poor U.S. was being thrown to the dirt this time.
Things escalated. Tension increased. And so, both students, the U.S. and China, started taking steps that sent waves across the school.
Everyone in their class started to condemn their moves.
To make their steps seem legit and bear more weight, they started to reach out to other students (countries) to gain support from them and work in their support.
But China was too determined to not let this girl too slip from its hands. So, it took the help of the most charming guy friend, Huawei (the tech giant of China), to learn the best wooing techniques.
And, well, Huawei helped China win the race to woo the 5G girl and get in a relationship with her.
Unsurprisingly, the U.S. couldn’t tolerate seeing that. It loved 5G more than anything.
It would have helped him gain more attention across the world. That girl had real charm and power (technological capabilities). Every other student would need her help and the U.S, along with her, could have made billions, and billion, and billions (add the Donald Trump accent here. lol) of dollars.
But the truth was, China already had her.
The U.S. got pissed off with Huawei as well as China. So, to take its revenge, it boycotted (banned) Huawei and also requested all his friends (major European and American nations) to boycott it.
As mad as the U.S. is at China, it is now taking every severe step to bring China to its knees. It has restricted China from coming to its home to study anymore. It no more shares study materials with it.
With neither of the two ready to bend before each other, the U.S.-China trade war's conclusion is nowhere close to the horizon.
New tariffs and sanctions are being imposed by Donald Trump from time to time on China and Chinese products. This is making it tough for Chinese businesses to leverage the American market, just like it has so far been for American businesses in China.
The current scenario is so intense that the French Finance Minister Bruno Le Maire fears that there might be an economic crisis if situations were to escalate any further.
What is your take on the U.S.-China trade war? How do you think will this conclude? Do let everyone know your thoughts in the comment below.