China–United States trade war background :

China and the United States have been engaged in a trade war through increasing tariffs and other
measures since 2018. Hong Kong economics professor Lawrence J. Lau argues that a major cause is the
growing battle between China and the U.S. for global economic and technological dominance. He
argues, "It is also a reflection of the rise of populism, isolationism, nationalism and protectionism almost
everywhere in the world, including in the US

There are multiple areas of disagreement which preceded the trade war. In justifying some of the tariffs
that the Trump administration would eventually impose Peter Navarro, White House Office of Trade and
Manufacturing Policy Director, provided a number of the administration's explanations among them are
that they are "purely defensive measures." He claims that the cumulative trillions of dollars Americans
transfer overseas as a result of yearly deficits, are then used by those countries to buy America's assets,
as opposed to investing that money in the U.S. "If we do as we're doing . . . those trillions of dollars are
in the hands of foreigners that they can then use to buy up America." After a seven-month investigation,
U.S. trade representative Robert Lighthizer said that the value of the tariffs imposed was based on U.S.
estimates of the actual economic damage caused by alleged theft of intellectual property and
"[requiring or pressuring] foreign companies to transfer technology as a condition for securing
investment or other approvals".

A further area of disagreement concerns foreign direct investment; under policy devised under Deng
Xiaoping, foreign companies are restricted from entering some business sectors (such as the automotive
industry ) unless they establish a joint venture majority-owned by a domestic partner. In these ventures,
the Chinese company often receives rights to use intellectual property from their foreign partner, so
they can produce domestic product based on it. The European Commission filed a complaint with the
World Trade Organization over these rules in 2018, arguing that foreign companies are forced or
induced to transfer IP to their Chinese partner, and establish research and development in China, as
"performance requirements" to receive government approval in sectors such as electric vehicles. The EU
believes that this violates WTO rules requiring fair treatment of domestic and foreign companies.In a
2018 survey of members of the American Chamber of Commerce in the People's Republic of China over
half its members thought that "leakage of intellectual property" was an important concern when doing
business there.

How did the US-China trade war start?

The basis for the dispute lies with the US President Donald Trump wanting to “Make America Great
Again”. Part of that is to redress what he sees as unfair trade deals the US has agreed to in the past.

He wants to bring more production back into the country as a way to protect US jobs, he believes such
past agreements have been a rip-off for the US.

During the 2016 election campaign, Trump accused Beijing of “raping” US workers.

Chinese Premier Xi Jinping has also said he does not want to be seen backing down, with both leaders
seeing the honour of their nation at stake.
China's response to US allegations :
The Chinese government has denied forced transfer of IP is a mandatory practice, and acknowledged
the impact of R&D performed in China. Former U.S. treasury secretary Larry Summers assessed that
Chinese leadership in some technological fields was the result of "huge government investment in basic
science" and not "theft" of U.S. properties.In March 2019, the National People's Congress endorsed a
new foreign investment bill, to take effect in 2020, which explicitly prohibits the forced transfer of IP
from foreign companies, and grants stronger protection to foreign intellectual property and trade
secrets. China had also planned to lift restrictions on foreign investment in the automotive industry in
2022. AmCham China policy committee chair Lester Ross felt that the draft text of the bill felt "rushed"
and "broad", and also showed concern for a portion of the bill that grants the country power to retaliate
against countries that impose restrictions on Chinese companies.

Reason for Huawei to be in the trade war :

Huawei has become so big that it now sells millions of smartphones annually, prompting several
countries to grow concerned that the company may use its technology to spy on customers. The fact
that CEO had been a member of the People's Liberation Army has added to concerns of individuals and
governments who already are inclined to mistrust China's political leadership. Huawei has insisted that it
has no ties to the Chinese government and that it acts as an independent company.

Espionage allegations first surfaced in 2012. A U.S. congressional panel concluded that both Huawei and
ZTE Corporation, a rival Chinese telecom company, could pose a security threat. In early 2018, a Senate
Intelligence Committee hearing warned about potential national security threats and discouraged
American companies from conducting business with Huawei and ZTE. U.S. intelligence agencies have
alleged that Huawei equipment could contain "backdoor" applications which would allow the Chinese
government to spy on customers internationally. As of this writing, no evidence of these secretive tools
has been released publicly, and the company has repeatedly denied these allegations.

Since 2012, other countries have also grown suspicious that the Chinese government may be spying on
customers through Huawei products. In July of 2018, the U.K. government released a report indicating it
had "only limited assurance" that the company's telecommunications equipment would not pose a
threat to the country's security. Australia and New Zealand followed by excluding Huawei and ZTE from
their 5G networks.

On May 15, President Trump issued an executive order banning all U.S. companies from utilizing
information and communications technology from any party considered a national security threat. The
order also declared a national emergency related to this matter. Although the order did not explicitly
mention Huawei, it was largely seen as being focused on the Chinese company. The U.S. Commerce
Department also added Huawei and 70 of its affiliates to its existing "Entity List." This blacklist bars
anyone on it from purchasing parts and components from U.S. companies unless they have prior
government approval.
Consequences :
In April 2018, China announced that it would eliminate laws that required global automakers and
shipbuilders to work through state-owned partners. President of China and General Secretary Xi Jinping
reiterated those pledges, affirming a desire to increase imports, lower foreign-ownership limits on
manufacturing and expand protection to intellectual property, all central issues in Trump's complaints
about their trade imbalance. Trump thanked Xi for his "kind words on tariffs and automobile barriers"
and "his enlightenment" on intellectual property and technology transfers. "We will make great progress
together!" the president added.

From 2018 the US government imposed tariffs on Chinese products and import exports on different
occasion resulting on the Chinese economy and US economy as well. But China faced greater problems
with the ongoing tariffs which had negative impact on their economy. The Chinese government asked to
life these tariffs which were declined by the US. China also made some exemptions to over pass these
tariffs which made US government angry and they put new tariff to pressurize them.

By early July 2018, there were negative and positive results already showing up in the economy as a
result of the tariffs, with a number of industries showing employment growth while others were
planning on layoffs. Regional commentators noted that consumer products were the most likely to be
affected by the tariffs. A timeline of when costs would rise was uncertain as companies had to figure out
if they could sustain a tariff hike without passing on the costs to consumers.

On July 6, 2018, when the tariffs went into effect, markets rebounded and rallied due to positive jobs
report in the U.S. Asian markets similarly rebounded, ending the day in a high note. According to the
Associated Press, the positive reaction to the tariffs in U.S. and Asian markets was because of an end to
uncertainty and, according to Investor's Business Daily, because "markets had largely priced in the
impact".

On December 4, 2018, the Dow Jones Industrial Average logged its worst day in nearly a month as it
declined nearly 600 points, to which some argue is in part due to the trade war.

The trade war forced China to import soybeans from Brazil and other producers instead of from the U.S.
Forbes suggested that U.S. farmers should reduce soybean production instead of depending on China.
President Trump responded that he would spend the tens of billions of dollars in tariffs from China to
buy products from "Great Patriot Farmers" and distribute the food to starving people in nations around
the world.

According to a January 14, 2019 article in the Wall Street Journal, despite US-imposed tariffs, in 2018
China's annual trade surplus was $323.32 billion, a record high. On February 6, 2018, The New York
Times reported that in 2017 the trade deficit had also reached a record high. In March 2019, the U.S.
Department of Commerce stated that in 2018 the U.S. trade deficit reached $621 billion, the highest it
had been since 2008. On May 23, 2019, President Trump announced a $16 billion welfare to U.S.
farmers hurt by the trade war with China. According to a study by the National Retail Federation of the
United States, a 25% tariff on Chinese furniture alone would cost US consumers an additional $4.6 billion
in annual payments.

At the same time that China implemented retaliatory tariffs against the United States, there was a
reduction in tariffs on all other exporters, which put U.S. exporters at a competitive disadvantage.

The International Monetary Fund’s World Economic Outlook report released in April 2019 lowered the
global economic growth forecast for 2019 from 3.6% expected in 2018 to 3.3%, and said that economic
and trade frictions may further curb global economic growth and continue weaken the investment.

On June 1, 2018, after similar action by the United States, the European Union launched WTO legal
complaints against China's alleged forced ownership-granting and usage of technology that is claimed to
discriminate foreign firms and undermine the intellectual property rights of EU companies. They are
allegedly forced to establish joint ventures in order to gain access to the Chinese market. The European
commissioner for trade Cecilia Malmström said "We cannot let any country force our companies to
surrender this hard-earned knowledge at its border. This is against international rules that we have all
agreed upon in the WTO." American, European and Japanese officials have discussed joint strategy and
taken actions against unfair competition by China. The 2018 G20 summit stated that the multilateral
trading system "is currently falling short of its objectives... necessary reform of the WTO to improve its
functioning."