The confrontation between the United States and China continues to cast dark clouds over the global economy. In the latest in the series of punitive tariffs on China, the U.S. government earlier this month announced a 25 percent tariff on imports from China worth roughly ¥33 trillion. China has responded by unveiling its own plan to impose retaliatory tariffs on imports from the U.S. The tit-for-tat exchange of tariffs by the world's largest and second-largest economies immediately led share prices to fall in stock markets around the world.
The confrontation between the two countries is often described as trade war. However, the U.S.-China conflict is no longer just a trade dispute. It needs to be taken as a confrontation over a more fundamental question — concerning the ways of a state.
Earlier, many economists in the U.S. and Japan predicted that China's economy, after its rapid growth on the strength of its huge population, would gradually slow down because of poor freedom of information or rule of law in the country. For example, a forecast given by an influential think tank in Japan has said that growth of the Chinese economy would go down to half the current rate by around 2030. Such a forecast typically concludes that China would sooner or later be ensnared by the middle-income trap, in which a country that has achieved a certain income level of its people struggles in the transition to become a developed economy.