Trade conflict suggests hard times ahead

The escalating China-US trade friction is unprecedented in the history of bilateral relations. True, when trade begins, trade friction begins, too. And the history of China-US relations since the establishment of diplomatic relations in 1979 has been a history of bilateral trade frictions. But the trade frictions in the 1980s were relatively small and less damaging.

The early 1990s, though, saw an abrupt chill in Sino-US relations and intensified trade frictions. Between 1992 and 1996, during the George H.W. Bush and Bill Clinton administrations in the US, the two countries had three difficult rounds of talks over investigations based on sections 301 and 307 of the US Trade Act of 1974 (market access and intellectual property) against China, which raised the threat of a trade war.

In each round of the talks, however, both sides argued extensively and ultimately managed to reach an agreement, and thus avoided a trade war. The key reasons behind the outcome were that, despite placing many harsh demands, the Clinton administration was seeking cooperation with China, and neither side wanted a trade war. And the fact that the Clinton administration supported globalization and World Trade Organization rules served as the common foundation for the negotiations and agreements.