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As the intensifying US-China trade war plunges the world into an economic slowdown, Thailand urgently needs to review trade policies to save its export-dependent economy.
One thing is clear: Trade conflicts between the world’s two biggest economies will drag on for a long time.
The result is an economic slowdown across the globe and severe impacts on supply chains. The sooner we act to minimise the fallout and seek new trade opportunities, the better.
Since our economy is heavily dependent on China, we will inevitably be affected by the slowdown.
But there are a number of things we can and must do to lessen the impacts of this protracted trade war.
These include the need to reduce economic risks from our current over-dependence on China’s economy while also expanding trade in Asean, which is now Thailand’s biggest export market. Thailand must also expand access to other markets through active trade negotiations.
At the same time, it must help the private sector prepare for change. Additionally, the country must ensure fair distribution of costs and benefits of trade by addressing legitimate public concerns that include the rising costs of healthcare and farming.
UNDERSTANDING TRADE WARS
The US-China trade war is only the tip of the iceberg of larger structural conflicts in world politics. That’s why the tensions will not end soon. One year after the tit-for-tat trade battle began, US exports to China have declined by 38% while China’s exports have fallen by 13% in the face of higher US tariffs. Both economies are suffering from the trade war.
So are the countries and businesses which operate in their supply chains.This kind of rivalry is nothing new. Conflicts have occurred throughout history, whenever a hegemonic power is challenged by a rising rival. This is sometimes referred to as the Thucydides Trap, after the ancient Greek conflict between Sparta and upstart Athens.
Over the past five centuries, such geopolitical rivalries have produced 12 wars, including two world wars, according to Graham Allison of Harvard University. Now, the world is reeling with anxiety over how the latest political and ideological confrontation will unfold.
The US trade deficit with China is often pinpointed as the reason why Washington is slapping higher tariffs on Chinese goods. In reality, the move was spurred by China’s rapid economic growth, technological prowess, and increasing global influence that challenges America’s status as sole superpower.
Surveys from leading institutions indicate that China’s influence in Asia has already exceeded that of the US on all fronts except for American “soft power” in the cultural and education sectors.