Trade war may further worsen US local infrastructural woes

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By Zhang Yi Source:Global Times

According to US media, House Minority Leader Kevin McCarthy blocked a bipartisan attempt to limit Chinese companies from contracting with US transit systems and so sparked frustration among lawmakers from both parties citing national security concerns.

McCarthy’s move came when Congress was trying to strike a spending deal to avoid the prospect of another government shutdown. This is perhaps one of the US’ weak spots that could be China’s opportunity in their trade friction. The US stays alert to China, but it also needs China at least for the sake of money. China can pressure local US governments given their need for China.

The US administration has kept grumbling about China reaping benefits from the developed US economy, which is the direct cause of the ongoing China-US trade war, but it forgets how much Chinese projects have saved for the United States.

The US has always been calculating. Behind the 90-day reprieve from restrictions imposed on Huawei, the US intention is to prevent the interruption of existing network operations and equipment. In populated areas such as Wyoming and Oregon that purchased network equipment from Huawei, it requires a lot of funds and resources to remove Huawei service and look for alternatives.

The US is clear about its losses and gains. As a column in The Atlantic noted, the national security directive is obscuring the profound economic asset China has become for Americans. Cheap made-in-China products have saved people money and made their lives easier. The US economy has maintained low inflation and stable growth by importing cheap goods from China. Trade is a voluntary exchange of goods and services to the mutual benefit of both sides. One chooses to sell goods that the other wants at an affordable price. China can produce many consumer goods at a lower cost than other countries. Its abundant labor force and experience in infrastructure construction are unparalleled in the world. China stands out from the competition, which is what a market economy is all about. But now the market-addicted US is using unfair means to stigmatize China. The US may have short-term gains from its imposition of tariffs, but will suffer when it no longer enjoys low inflation and high growth.

China’s countermeasures against the US-initiated trade war could aim at US sectors where China’s contribution carries a lot of weight, such as infrastructure and agriculture, by cutting supplies or raising prices. Only when these sectors feel the squeeze will US decision-makers seek solutions for what the US has lost.

The public spending of the US federal government and that of state and local governments function differently. Nowadays many states lack money to improve public services and Chinese products at reasonable prices are lending a helping hand. But if they don’t want help, then let it be.

Posted in: OBSERVER

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