Chapter 3 – An analysis Sino-US Taiwan and Sino-US Brazil trade relations This section will be focusing on analysing the relations on each dyad negotiation, trade history, most traded products in the years of 2017 and 2018 as well as the outcomes of their interaction. There will be line graphs to analyse the trade value and also pie graphs to expose the most traded products of each dyad and it will be divided in two parts.
Firstly, the analysis will focus on the US, China and Taiwan relations regarding their latest values and how the trade war might have affected the relation of the three nations. And secondly, the relation between the US, China and Brazil as to analyse whether has had any considerable impact on its trade market due to the Sino-US trade war.
This chapter is divided in two main sections, the first one explores the relation of Sino-US and Taiwan and the second section explores the Sino-Sino-US and Brazil aiming to evaluate whether Brazil-Taiwan relationship has had any impact due to the trade war.
3.1 Sino-US and Taiwan
The USA as the largest economy in the world has already traded trillions of dollars altogether with China alone, their bilateral trade resulted in more than $500 billion in 2017 as the USA imported Chinese goods and the US only exported its good to China at the value of
$129.8 billion, a trade surplus for China, as shown on Figure 3.1 (p.26) (OEC, 2018).
In their bilateral trade, the USA exports to China include “oil seed, fruits, grains, seed, etc. ($14.9 billion); unspecified commodities ($14.9 billion); and vehicles other than railway and tramway ($13.3 billion)” and the other way around as China exported to the USA were
“electrical and electronic equipment ($127.1 billion); machinery, nuclear reactors, boilers, etc.
($105.3 billion); and furniture, lighting, signs, prefabricated buildings ($25.5 billion)”
(Johnston, 2015), an important factor in their trade is that with the devaluation of Yuan, the USA tends to buy a lot from China as its products becomes cheaper to the USA (OEC, 2016).
In 2017 computers are number one product imported to the US from China and Soy beans the number one exported product from the US to China, in figure 3.2 (p.27) you can find the top 10 products exported from the US to China and figure 3.3 (p.28) the top 10 imported products to the US from China. As for 2018 after the Trade War started, the outcome of it was the contrary of what Trump expected it to be, China had an even greater profit over US’ trade
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once again, which in 2017 China’s surplus was of US$376 billion and in 2018 it overpassed the year before amount totalling US$420 (Figure 3.1, p.26).
Whether it is the USA or China the strongest in the global trade, a slowdown of one or the other nation will affect not only both China and USA, but also the other two main China’s main partner Hong Kong and Japan, moreover it will affect many other nations as a cause and effect cycle.
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Figure 3.1 – USA and China Trade (2007-2018)
Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019
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Figure 3.2 – USA Top 10 exports to China (2017)
Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019
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Figure 3.3 – USA Top 10 imports from China (2017)
Source: Data from The Observatory of Economy, 2019, https://atlas.media.mit.edu/en/ retrieved in May 2019
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In between the Sino-US Trade war Taiwan was involved due to the USA targeting its potential market, as the conflict between China and the US becomes more intense Trump still has other markets to use as an escape to keep the US’ exportation flowing and the closeness between US and Taiwan might not please China.
Although Taiwan and China have a rather heated political friction between themselves for many years, Taiwan started investing in China in 1970 in order to build a trade relation, which is today known as Cross-Strait relation.
According to Council on Foreign Relations, the bilateral trade of China and Taiwan are significantly important, as China is Taiwan’s main trade partner with 30% of its trade directed to China with the majority of Taiwanese businesses investment in China since 1988. The Bureau of foreign Trade (BOFT) affirmed that Taiwan has reached US$155 billion exported to China and US$43 billion import from China as shown on Figure 3.4 (p.30).
BOFT in Taiwan reported the dominance of products imported to the island from the mainland China as shown on Figure 3.5 (p.31), which I shall detail further in the development of this research, and the variety of exported Taiwanese products to China as on Figure 3.6 (p.32) showing both nations’ 10 most traded goods.
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Figure 3.4 – China and Taiwan Trade (2007-2018)
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Source: Data from Bureau of Trade (Taiwan), 2018, https://cus93.trade.gov.tw/FSCE030F/FSCE030F retrieved in May 2019
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Figure 3.5 - China Top 10 exports to Taiwan (2018)
Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019
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Figure 3.6 - China Top 10 imports from Taiwan (2018)
Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019
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Taiwan and China have kept their trade as smooth as before the Sino-US trade war as Figure 3.4 clearly shows that trade value keeps increasing between them and the variety of the 10 most traded products certifies that so far, China-US conflict hasn’t soured the trade relation between China and Taiwan, at least for now.
Also, Taiwan has impressively worked its way into the global market and played a great role in the international trade regardless its size and political friction with China, the biggest trade player in Asia. Yet Taiwan managed to develop a prosperous trade relation with another great powerful economy, the United States of America which according Da-Nien Liu Taiwan was ranked the 14th nations in exporting products accounting 2.3% of the world trade, “In 1990, the United States was Taiwan’s largest export market and its second-largest source of imports.”
(Liu, 2016).
However, Liu reported that the trade relation between Taiwan and the US hasn’t been very successful over the last 20 years at least, which is not what the reports from BOFT has shown, the Taiwanese institution has reported a steady trade relation between the two nations, referring to Figure 3.7 (p.34) to compare the trade relation of US and Taiwan from 2007 and 2018, which in 2017 the USA exported US$30 billion to Taiwan and imported US$36.9 billion followed by an increase in 2018. The following figures 3.8 (p.35) and 3.9 (p.36) represent the 10 most traded products between both nations.
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Figure 3.7 – US and Taiwan Trade (2007-2018)
Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019
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Figure 3.8 - USA Top 10 exports to Taiwan (2018)
Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019
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Figure 3.9 - USA Top 10 imports from Taiwan (2018)
Source: Data from Trade Map, 2018, https://www.trademap.org/Index.aspx retrieved in May 2019
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Taiwan has stood steady for the running process of the trade war between China and the US, if the US had the plan to approach Taiwan as a strategy to provoke China either politically or economically, these figures reveal that Sino-US Trade war hasn’t affected trade in values between the US and Taiwan as yet.
The most traded products haven’t changed much, expect for the order of priority of them but the importation and exportation between Taiwan and the US has increased over the year, including 2018 which could have had a greater increase but the number aren’t too impressive. Taiwan and China have managed to keep their trade relation healthy and growing for the past years too and it has not been affected by the conflict.
However, the results for China and the US aren’t as expected by the US government, with the taxation implemented by Trump, it was expected to control China’s surplus over the US by decreasing China’s export to the US and increasing the US’s export to China for a fairer trade relation that Trump has been fighting for, as China’s trade surplus increased in 2018 it has shown that the tariffs threats and tariffs implementations haven’t had a positive effect to the US but a positive effective to China based on Figure 3.1 (p.30) as China exported more and the US export less than expected.