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  January 23rd, 2017 | Written by

US, China Trade Places at Davos

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  • The World Economic Forum at Davos attracts, heads of state, CEOs, and celebrities.
  • The possibility of a trade war between the US and China consumed a great deal of attention at Davos.
  • Chinese populism could limit the ability to enact economic reforms.

The World Economic Forum, an exclusive gathering that attracts, heads of state, CEOs, and celebrities, took place in Davos, Switzerland, last week.

The possibility of a trade war between the United States and China, thanks to President Trump’s complaints about China’s trade practices and his threat to impose a 45-percent tax on Chinese products, consumed a great deal of attention at the event.

U.S.-China trade issues made headlines out of Davos, thanks to a speech by Chinese President Xi Jinping, which sounded like a western free trader, and another by a Trump representative who called for retreating from the trade policies advocated by the US since the end of World War II.

Xi’s speech signaled that China will step into the trade leadership role vacated by Trump through his rejection of TPP and other of his policy prescriptions. Xi’s soaring rhetoric embraced globalization and rejected protectionism. He said China does not want a trade war with the US but also observed that current trade rules have not kept pace with global commercial practices and that China will continue to promote its own development in its own ways.

Anthony Scaramucci, representing the Trump administration, denied that Trump wants a trade war with China. But he added that the US wants to put an end to the “asymmetric” trade deals it has put together since 1945. Those deals, said Scaramucci, worked “phenomenally well” to promote global prosperity and avoid global conflict. But as working Americans have become worse in recent decades, the Trump administration will be asking for more symmetry in its trade agreements.

The Chinese leadership is most concerned about is having to respond to aggressive Trump trade policies with a surge of economic nationalism in China. That kind of populism, if it should manufest itself in China could have the opposite of the effect Trump desires, because it would limit the ability of the Chinese leadership to enact the kinds of economic reforms that Trump would be pushing for.