CHINA-U.S.

TRADE WAR :
THE CONFLICTS, RELATIONS
AND
NEGOTIATIONS
PREPARED BY:
LIANG CHOOI LING (PATRICIA) 1900114
OO YEW CHE YIN @ KATHY 1900682
TAI CHEE HONG (EDWIN)1900694
TOR LAY YEE (ANNS) 1702506
EILEEN ONG 1704169
 1.0 INTRODUCTION PATRICIA
LIANG
1.1 Background of the China-US trade war
1.2 Definition and the importance of negotiation

PRESENTATIO
1.3 Methods
1.4 Objective of the study

N OUTLINE
2.0 DESCRIPTION OF THE NEGOTIATION KATHY
OO
2.1 Background of the China and US Presidents
2.2 Situations and problems encountered
2.3 Reasons and terms for the negotiation
2.4 Roles and responsibilities of the negotiators
 3.0 STRATEGY AND PLANNING EDWIN TAI
3.1 Goals
3.2 Strategies and tactics
3.3 Planning process

PRESENTATIO
N OUTLINE 4.0 TOOLS AND RECOMMENDATION ANNS TOR
4.1 Context of the international negotiation
4.2 Recommendations


5.0 KEY LEARNING POINTS EILEEN ONG

5.1 Summary and the learning outcome
5.2 Concluding remark
 IDEOLOGY OF
CAPITALIST VS SOCIALIST

AMERICA FIRST CHINA DREAM

BACKGROUND OF THE TRADE WAR

The trade war was predominantly stemmed from:-

 The economic problems that hit the united states

with a huge trade deficit of us$879 billion in 2018
and the deficit continued to widen in second
quarter of 2019 to us$919 billion (Roach, S.S.,
2019).

 The fast-growing economy of china intensifies the

rivalry and poses a threat over the united states
as being the world’s number one in global
economic dominance (Andrew, l., 2018).
 WHAT IS NEGOTIATION?
Negotiation is a form of decision making in which two or more
parties interact to achieve mutual understanding and resolve
conflicting interests.
(Carnevale, P. J., Pruitt, D. G., & Seilheimer, S. D.,
1981)

Negotiation is a very complex social process, the end results of

the negotiation are not solely determined by the process taken
during the negotiation, but also includes the preparation
before the parties start to negotiate and the context in which
the negotiation occurs.
(Lewicki, R.J., Barry, B. & Saunders, D.M.,
2010)

Negotiation is basically a plan that offers a range of

alternatives and outcomes for conflicts solving and deals
agreements.
(Li, X., Liu, F., Li, A., & Xu,
L., 2018)
WHY IS NEGOTIATION
IMPORTANT?
The ultimate aim of an effective negotiation is:-

 To satisfy the goals expected by all of the

stakeholders taking into consideration the conditions
of closing the best accepted deal.
 To increase the cooperative intent between the
negotiating parties and defuse any uncertainty
attributable to the deal-making outcome.
 To exchange information, influence each other and
find ways that fit for both parties.
 To constitute as efforts made to meet each other’s
requirements at resolving the problems.
OBJECTIVE OF THE STUDY

The objective of the study is:-

 To comprehend and analyze the China-US trade war focusing on
the conflicts, relations and negotiations.
 To describe the problems of the negotiation.
 To evaluate the strategies, tactics, planning process and context
of the negotiation situation.

Our study is based on the review performed on the topic which

includes journals, articles, books, online news and other related
academic references. We also used quotes and examples from the
media for featuring the highlights and discussions on the aspects
of this topic.
BACKGROUND OF THE
PRESIDENTS
CHINA – XI JINPING UNITED STATES – DONALD TRUMP

 Born in Beijing on 15 June 1953  Born in New York on 14 June 1946

 Chinese politician serving as General  The 45th and current president of the United
Secretary of the Communist Party of States.
China (CPC), President of the People's  Was a businessman and television
Republic of China (PRC) and Chairman of the personality before entering politics.
Central Military Commission (CMC).  His political positions have been described
 XI has been Paramount Leader, the highest- as populist, protectionist, and nationalist.
ranking official in China and officially  His self-promotional style has built a high
received the title of "core leader" from the profile in both show and media business and
CPC in 2016. the financial world.
 Xi has been extremely cautious about  Trump's campaign platform emphasized
expressing his opinions in order to ensure renegotiating U.S.–China relations and free
that his path to the top job does not lead off trade agreements such as NAFTA and
a cliff. the Trans-Pacific Partnership.
 Under Xi’s leadership China was increasingly
powerful and has influence in international
affairs
SITUATIONS & PROBLEMS
ENCOUNTERED

U.S. and U.S. became the Such large-scale U.S. argued that Another
largest trading trade relations the structure of important
China have partner of China led to a very the Chinese concern was
been each in 1998, while unbalanced economy helped the forced
other’s China became
trade in keeping the
the largest technology
largest trading partner
relationship commodity transfers from
trading with the United prices lower
of the United the American
partners for States in 2015 States facing making it
companies
with a total trade major trade difficult for the
decades. deficit with American
investing in
figures reaching
China. manufacturers China.
500 billion
dollars. to compete.
 Both the U.S. and China have been hurt by the trade
war.

REASONS
$27 billion of U.S. agricultural exports have been
FOR adversely affected by Chinese tariffs.

NEGOTIATI While China has eased up on credit growth in the last month to
offset the negative consequences of U.S. tariffs, effectively

ON suspending its efforts to reduce the debt-GDP ratio which stands

at the dangerously high level.

Negotiations is needed to resolve the problems and

dispute between the parties.

U.S. and China need each other to achieve their

preferred outcomes or objectives. This mutual
dependency is called interdependence.
 Their
As a leader responsibilities
both Trump and are to not only
Xi has a role to engage with
coordinate the their
actions of their counterpart on
team and to be the other side
ROLES AND the main face
of the
of the table,
but to also
RESPONSIBILI negotiating
team.
oversee and
manage the
overall process.
TIES OF THE Both of the
presidents’ roles in Both
NEGOTIATIOR the negotiation are
further complicated
when the
presidents act
not only for
S negotiation involves
not only the
interests and needs
themselves
but for their
of these two people constituents
but it also includes who are the
the constituencies
that they represent,
American and
the bystanders, the Chinese
audiences and the citizens.
third parties.
 GOALS
Goals are often linked to other party’s goals and concerns of their
needs.

What U.S. wants from China?

 U.S. is concerned of the specific practices' endemic to China’s economic
model that has systematically tilted the playing field in favor of Chinese
companies domestically and globally. U.S. Wants china to revamp its
currents policies and practices that have resulted in U.S. Huge trade
deficit.
What China wants from U.S.?
 China wants U.S. To take a complete approach to the negotiation based
on market-orientated solutions which can reinforce the global trading
system in addition to the withdrawal of the tariffs increase imposed on
its exports to united states. They want to achieve the mutual agreement
based on win-win situation outcome.
STRATEGY AND TACTICS
The strategy and tactics applied:-

1) Use international diplomacy skills

 Long-term and short long-term objectives
 Focus group among stakeholders
 Special committee meeting among national advisors,
officers, ministers to discuss agenda, position and
desired outcome
 Courtesy call and meeting among two country leader for
bilateral agreement
STRATEGY AND TACTICS
The strategy and tactics applied:-

2) Intervention of the third party

 WTO – world trade organization
 Central to resolving trade tension

3) Bilateral negotiation
 State-owned enterprises (SOEs)
 Cross-border data flows
 Non-market economy (NME)
 Arbitration under Article 25 of the Dispute Settlement
Understanding (DSU)
PLANNING PROCESS
How both U.S. and china can work together in accordance to WTO
trade commitment rules?

 Firstly, an in-depth review at the WTO in relation to the compliance with

its WTO commitments.

 Secondly, how to ensure that China gives a full credibility of its SOE
activities and subsidies as required based on its protocol of accession.

 Thirdly, how U.S. work with allies and China regarding its ongoing use
of “non-market economy” (NME) methodology until such time that
China is able to substantiate that it has become a market economy.
The progress on this issue could be the results of a negotiated settlement
of the WTO case that China has brought against the EU and U.S. Regarding
their continued use of NME methodology in trade remedy cases.
PLANNING PROCESS
How both U.S. and china can work together in accordance
to WTO trade commitment rules?

 Fourthly, U.S. is reviewing the reformation of the WTO dispute

settlement system to ensure quicker dispute settlement
proceedings, including potential injunctive relief for unfair
trade practices, would be an institutional change that could
be faced throughout China.

 Lastly, U.S. has proposed to China to use a bilateral deal or a

bilateral investment treaties (BIT) as the basis for re-structure
the negotiation of new rules at the WTO on areas such as
technology transfer, SOEs, and digital trade.
 
 CONTEXTS OF INTERNATIONAL
NEGOTIATIONS

China and US authorities have released conflicting statements verbally through

their spokesman on rolling back tariff by cancelling the tariff increase in stages as
part of new trade deal that aims to end the trade dispute
 However, the US President Donald Trump gave contradict statements to reporters to deny.
 He and his negotiators had been quiet on the details of the negotiation.
 US negotiators seem to just focus on competitive to create win-lose situation using
bargaining skills instead of achieving win-win situation by negotiation to mutually reduce
the trade issues.

 There are many factors that influence the international negotiations processes
 namely due to cross cultural and national differences.
 The two main contexts are the environmental context and the immediate context.
CONTEXTS OF INTERNATIONAL
NEGOTIATIONS
Inclusive of those who have an interest or The extent the government regulates industries & organizations.
stake in the outcome of the negotiation: Foreign
• US business firms has greater flexibility
• Citizen Governme • China has begun to open its foreign trade &investment
• Trade Union nt

• Business/Industry Associations
• Government External Trump administration and his
• Finance provider stakeholde negotiators indecisiveness hinder
Instability
rs
• Embassies the negotiation process and create a
• Trade alliance vacuum of instability.

Both countries are applying different

codes of contract law and standards Environment To regain the upper hand in the
al Context ideological struggle with China,
of enforcement in domestic
Political & US should reform its
and international trade. legal Ideology democratic system to set a new
pluralism
trend for democracy.
The differences in the political orders
of both countries are irreconcilable
which making it seem difficult to leading
to stable relations.
Internatio
nal Culture US & China : Low uncertainty avoidance
• The US operates as a highly developed and economics • comfortable with ambiguity;
mixed economy. • adaptable and entrepreneurial.
• China focuses on market-oriented policies by
playing a major role to become the largest trading nation
and exporter.
  IMMEDIATE CONTEXT
1 Relative bargaining power
• Chinese exports to the US are mostly affordable low-value-add goods, such as furniture and bedding, toys and sports equipment
and parts that are designed by American companies but cheaply produced in China and sold back to US consumers : US does not
rely on Chinese imports
• China imports food, high-value-add goods, such as aircraft, vehicles and electrical machinery, for its enormous consumption
markets; China rely on US import
2 Relationship between negotiators
• The history of relations (New or old) and the quality of relationship (good or bad).
• Recent: Complex economic relationship
• 1979: diplomatic relations signed a bilateral trade agreement. (US News, 2019)
3 Levels of conflict
• Trade Conflict that hurting both countries & affecting world economy
4 Desired outcomes (long term objective)
• US: Bringing manufacturing back to the US by increasing China’s good tariff. To encourage Americans buying goods from non-
tariffed countries instead of China.
• China : To offset Trump’s tariffs by reducing the dollar cost of Chinese exports, raise prices of imports to encourage local
production and discouraging the purchase of foreign goods. 
5 Immediate stakeholders
The negotiators themselves and the people they directly represent, such as their managers, employers and boards of directors :
Government and citizens
 Understand and work to improve BATNA
• What is the Best Alternative for either China or U.S. to reach a
Negotiated Agreement?
• It seems like U.S. keep applying walk away point in the negotiation
process but take measure to not simply default to a level slightly above
Trumps’ walk away point. In fact, the President want to reach an
RECOMMENDATIO agreement that is nowhere close to his walk-away point.
N ON HOW THE • In trade war between U.S. and China, China is trying the best to adopt
a problem-solving approach, but U.S. stonewalls and stubbornly insists
U.S. AND CHINA on an extreme position as the only possible resolution.
CAN IMPROVE • China probe for underlying interests and suggest mutually preferable
THE position, but it seem the cooperative approach is not working well. At
that point, both sides may now face a credibly worsened BATNA.
NEGOTIATIONS • Both sides must learn the “give and take” process. By apply integrative
skill, both sides will be able to maintain mutual gain situation and
make appropriate concessions.
 RECOMMENDATION ON HOW THE U.S.
AND CHINA CAN IMPROVE THE
NEGOTIATIONS

Utilize Better Negotiation Power

From the surface, it seems that China currently has lesser power than United States. China needs more power
to increase their negotiation power to work together with a stronger nation.

Power based on position in an organization

• Trump is using a strange approach to his presidential power by announcing that the China-U.S. trade war
was done with his executive power. Through his declaration about the trade war, he started using his
executive orders to control the formation and communication of foreign policy which also direct the
nation’s diplomatic to stop any trade with China.
• China negotiators must understand that Trump’s power is not for his nation neither whole world economy
benefit, but it’s just to save his own political mileage.
• In this case, China can play an important role to counter Trump’s dominance by position itself as the
vanguard for Asia’s interest.
 RECOMMENDATION ON HOW THE U.S.
AND CHINA CAN IMPROVE THE
NEGOTIATIONS

Utilize Better Negotiation Power

.
Power based on relationship

• China can form coalitions among Asia members in order to strengthen their bargaining position
through collection action.

• This temporary trade alliance of distinct countries can work together to determine the US tariff issue,
come together to pool efforts and resources in pursuit of collective goals. To negotiate with opponents,
allies must affirm agreement on collective vision or objective, acknowledge the issues and vulnerability
with respect to achieve visions, becoming China network and source of power to tie strength and trade
power to re-negotiate with US.
Key Learning
Points
 Summary & Learning Outcome

Launched new round of talks in mid-October 2019 aimed at resolving the two
nations' 15-month trade war, with neither side showing any signs of giving ground.

Deputy-level trade talks between the US and China aimed at laying

the groundwork for high-level negotiations this week did not yield any
progress on critical issues (“US-China deputy-level trade talks get underway in
tense atmosphere | The Star Online,” n.d.).

The Chinese refused to talk about forced technology transfer, which is  a 

major U.S. concern about China's  economic policies
 Summary & Learning Outcome

 The US-China trade war highlights a culture clash between Chinese patience and Trumpian
instant gratification.
 The Chinese have a term known as “Guanxi” that is used to describe relation-based networks
that play an important role in shaping interpersonal and political relations. There is a focus on
tacit mutual commitments, reciprocity, and trust, which are the grounds of guanxi and guanxi
networks.

Hofstede’s Cultural Dimensions Theory:

 Individualism indicates that there is greater importance on attaining personal goals. A person’s
self-image in this category is defined as “I.”
 Collectivism indicates that there is greater importance on the goals and well-being of the
group. A person’s self-image in this category is defined as “We”.
 Summary & Learning Outcome

 Culturally, we are dealing with two differing fundamental ideologies; – China built
upon ideologies such as Guanxi, which are based on Collectivism, with a top-
down hierarchical structure. And the U.S., with a deep sense of individualism
based on democracy with social and political freedoms.
 President Trump’s approach to the trade war fundamentally opposes these
Chinese norms, where “losing face” is a very real risk and one that is not to be
taken lightly. 
 The problem with President Trump is that he sees only distributive bargaining in
an international world that requires integrative bargaining. He can raise tariffs,
but so can other countries.
 Summary & Learning Outcome

 When we approach international negotiation, in a world as complex as ours, with

integrated economies and multiple buyers and sellers, you should use integrative
bargaining. If you attempt distributive bargaining, success is impossible.
 Trump has raised tariffs on China. China responded, in addition to raising tariffs
on US goods, by dropping all its soybean orders from the US and buying them
from Russia.
 President Trump sees every negotiation as distributive. China saw it as
integrative, and integrated Russia and its soybean purchase orders.
 Summary & Learning Outcome

The early stages of the U.S.-China trade dispute would have benefitted from the
following diplomacy and negotiation skills:
 Seek diverse opinions—and then draw your own conclusions.
 Promote team cohesion - Get your team on the same page. If the other team
detects chaos and conflict within your ranks, they are liable to take advantage.
 Size up the other side - Research individual negotiators’ areas of expertise,
perspectives, and influence. continually update your assessments and work
on managing cultural differences.
Conclusion
The trade war is
An understanding more than just a
of cultural dispute over China
Culture can have a gaining unfair
influences and a
large impact on advantages. China’s
willingness to meteoric rise to the
the success of
bridge and world’s second-
international
accommodate largest economy (or
business, and
differences is first in purchasing
negotiations power parity) has the
therefore central
between U.S. concerned about
to successful
companies doing its status as the
business
business across world’s lone
partnerships superpower; a role it
borders.
involving U.S. and has played for the
China. better part of the last
quarter-century.
THANK
YOU