The real “trade war” between the United States and the Chinese regime is just starting. Right now, the playing field is merely being laid out in a way that allows companies to compete on fairer grounds, with honest businesses able to win through rule of law.
The United States has begun to fight back against the Chinese Communist Party’s (CCP) decades-old trade war of currency manipulation, intellectual property theft, and policies that made it nearly impossible for foreign companies to compete with Chinese companies. In 2018, the U.S. trade deficit with China was $419 billion, and until recently, it didn’t appear this would change.
For the Chinese regime, trade policy is war. Trade has been regarded even publicly as a method to occupy and overtake the United States through nonmilitary means. According to the CCP’s “Unrestricted Warfare” doctrine, which uses financial warfare, trade warfare, and other nonmilitary systems to achieve dominance, “There is now no domain which warfare cannot use, and there is almost no domain which does not have warfare’s offensive pattern.”
Previously, U.S. companies were frequently under attack from Chinese military hackers, who stole U.S. intellectual property for the benefit of Chinese companies. The CCP used tools such as currency manipulation to make more profits from trade, at the expense of foreign countries. State subsidies made it impossible for foreign companies to compete with Chinese companies on pricing, since the Chinese companies could bid below cost. Various other unfair systems also were at play.
The CCP was allowed to continue all of these practices, relatively uninhibited, by previous U.S. administrations and by governments around the world. But all of this is now changing under President Donald Trump, who has called out the CCP’s use of unfair trade practices and now has engaged the CCP in a trade war meant to even the playing field. After the current stage wraps up, the “trade war” will become an industrial war—and without foul play, it’s a battle the CCP can’t win.
The reality is that the CCP doesn’t have many options for lasting sanctions against U.S. goods. The foreign big businesses still allowed in China are mainly the ones the CCP still needs, as the CCP otherwise is quick to penalize or kick them out once a domestic company is able to meet or exceed their foreign competitors’ production. The regime then moves the competition into the international field, where it uses state subsidies and other unfair practices to allow the Chinese companies to undercut competition.
We’re now seeing this with the CCP’s state-owned rail company CRRC. When CRRC was bidding for a recent rail contract in Boston, the lowest bid from a normal competitor was from Bombardier, at close to $1 billion. CRRC was able to bid at $569 million—cutting the next lowest bid by about half. It was able to do this because it is financed by the CCP and thus can bid at a loss. We witnessed the trajectory of deals like this in Australia, where CRRC now controls the market after it put the next two competitors out of business and acquired the third.
This highlights another important point: The CCP has long been engaged in a trade war against not just the United States, but most of the world. In this global trade war, it has exploited every gap, violated every agreement possible, and capitalized on large-scale forms of state-run theft.
Now that all of these practices are being targeted, the CCP has little room to maneuver. Since it was already exploiting every option, it has no more options to exploit and is set to lose on every front. The United States, on the other hand, which was losing on every front by allowing the CCP to act with nearly no consequences for decades, is set only to gain.