China and the United States: Trade Conflict and Systemic Competition

Policy Brief
18-21
October 2018

The current trade war between the United States and China is a central dimension of the emerging Cold War between the two superpowers. The conflict also highlights and threatens to aggravate the contest for global economic leadership between the two countries, which ranges far beyond their disputes over trade balances and level playing fields. Bergsten analyzes the links between the immediate clash and the far more important systemic confrontation and offers three suggestions that could address the two problems simultaneously: First, China should join the current US-EU and US-EU-Japan initiatives to reform the rules of the World Trade Organization to effectively address the systemic issues central to the present trade conflict. Second, China should indicate an interest in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which probably would induce the United States to rejoin the arrangement and provide another venue to open markets and write new rules. Third, the United States and China should work together to reform the International Monetary Fund to shore up its financial resources and amend its governance structure to better reflect the evolving balance of international economic power.

Data Disclosure: 

The data underlying this analysis are available here.