Deteriorated trade relations between the United States and China to cost $ 875 billion
Deteriorated trade relations between the United States and China to cost $ 875 billion

Deteriorated trade relations between the United States and China to cost $ 875 billion

A recent report has shed light on the dilemma facing US industrial planners as they draw attention to anti-competitive market practices in China but also strive to continue to play a guaranteed role in the development of China’s massive aviation complex.

The report, published in November by the China Center at the US Chamber of Commerce and entitled “Understanding US-China Decoupling: Macro Trends and Industry Impacts”, seeks to tackle the consequences of a severe or complete break in relations with China for airlines and those in three other spheres – semiconductors, chemicals and medical devices – that play a central role in US trade.

“A complete loss of access to China’s market for US aviation and commercial aviation services would create a production loss in the United States ranging from $ 38 billion to $ 51 billion annually,” the report said. “Of this figure, fleet growth sales will represent about $ 340 billion, MRO services about $ 120 billion and other commercial services $ 415 billion.

Any number of threats could increase the likelihood of further breaches of constructive trade ties between the United States and China: U.S. arms sales to and possible support for Taiwan in any future conflict across the Strait; the unilateral establishment of Chinese military bases in disputed waters of the South China Sea; or even data espionage carried out by Chinese actors in the United States. The report outlines potentially serious consequences.

In the field of aviation, decoupling between the US and China will at least mean reduced air sales to China, resulting in lower US production production, slimmer revenues for the companies involved and consequent job losses in the US and reduced R & D costs – leading to a long-term reduction in United States competitiveness.

“Each of these elements affects the competitiveness of the United States in a sector where competition is already intense,” it said. “Relaxation between the US and China in aviation would generate unilateral US losses in favor of competitors, including China’s own domestic industry. Decoupling risks to US leadership in advanced aviation technologies is not hypothetical. Unpredictable policies make US aircraft, engines, equipment, manufacturers and suppliers to unreliable business partners in an industry built on long-term global partnerships. “

It seems clear that in the fight against the dilemma of how to deal with China, the political debate has not only raged, but the implementation of the government fiat has also zigzagged, with the Biden administration ignoring possible military end-use problems in China’s aircraft development programs . despite previous sanctions.

After approving the US-French GE-Safran joint venture CFM International to export products to the Commercial Aircraft Corporation of China (Comac) in April 2020, one of Donald Trump’s last actions as president was to add Comac’s name to a blacklist of Chinese companies that also included China National Aviation Holding Company. In June 2021, the Biden administration released a new list of 59 Chinese devices, added several new names, but removed Comac’s.

The sharpening of US views on China was not just a Trump phenomenon, but reflected “a growing skepticism of the benefits of globalization of science and technology and supply chains, the blurring of civilian-military dual-use technologies, and the growing perception, especially in the US, that the distinction between the public sector and the private sector in China means much less than it had in previous reform periods, ”said Adam Segal of the US Council on Foreign Relations, who spoke at an Oxford University Said Business School. forum in March 2021.

Appointed in March last year as the point woman in efforts to drive trade relations with China forward as US Trade Representative and the first Asian-American to hold the position, Katherine Tai gave a speech last October at the Center for Strategic and International Studies (CSIS) in which she outlined the administration’s new approach to bilateral trade and stressed the difficulties the United States is facing in restoring relations with the once former partner.

“We are very clear about the patterns we have seen,” Tai told French television that month. “Many governments and stakeholders have hoped and worked to bring China into the community of countries and economies that have adopted open market standards. We have not seen that this is the path that China is on.

“It’s really about the choices that China has to make. If China does not want to make those choices, then the challenge we have is how we react. How do we take steps to effectively defend our economies, our workers, our companies, the interests of our farmersand our opportunity thrives in a world economy where we will continue to compete and coexist?

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