US-China Trade War: A ‘Peace Treaty’ in Sight?

Recent news highlights a shift in trade policy between the United States and China, with the US easing export restrictions on three significant manufacturers of electronic design automation software. In addition, the reinstatement of exports for specific products like ethane and aircraft engines illustrates a turn of tides. These developments were confirmed by China’s Ministry of Commerce on Friday, as China initiated reviewing of export license applications for goods with regulatory controls.

In line with established laws and regulations, America appears to be unwinding some of the restrictive measures it had previously put in place. This action seems to point towards the implementation of a ‘peace treaty’ in the long-standing trade war between these two global powers. This indicates that the plan to ease bilateral trade tensions is going as scheduled.

Through the ongoing progress of the London Framework, both the United States and China are signaling a positive trajectory, both technologically and strategically. Avoiding further escalation of trade disputes has turned into a shared objective, with both nations opting for dialogue and cooperative resolution over heightening confrontations. The impact of this decision is broad, boosting not just stocks in the US but also such in Asian markets.

These positive developments are well-received within the international community, especially in the business sector, which greatly anticipates a stable, constructive relationship. Notably, the implementation of the London Framework emphasizes that trade relations fundamentally thrive on collaboration and shared victories. This mutual benefit principle is an integral part of international commerce.

Records show that in 2024, the Chinese market formed a crucial part of the revenue for many international corporations. The ever-expanding Chinese marketplace, coupled with its consistently evolving industrial demands, offers US firms a nearly unmatchable room for growth. Conversely, the uninterrupted supply of American high-tech products is vital for China as it continues to build a modern industrial system.

Constructive interaction between the two nations has the potential to stabilize global expectations and provide protection against systemic risks. Lessons can be learned from the repeated bilateral talks over the past few months revealing that escalating pressure tactics are counterproductive. This becomes even more crucial given that collaborative efforts prove advantageous for both, while conflicts bring harm to both parties.

Further lessons include an understanding that attempts to achieve decoupling do not foster safety or prosperity. Another aspect to recognize is that even with positive steps towards conciliation, in sectors like semiconductors, biotechnology, and new energy, many previously set restrictions on China are still in place. Several of these limitations continue to pose challenges for both countries, impacting the stability of global industrial and supply routes.

However, the recent relaxation of certain export restrictions can be viewed as a promising starting point for comprehensive policy revisions. This raises hope that the US will rectify past errors and gradually eliminate more baseless constraints. The symbiotic relationship between China and the US, driven by diverse elements, is not only practical but also essential for industries and consumers alike.

The inter-linkage of both countries in sectors like upmarket manufacturing, digital economy, agricultural produce, and energy have created a network effect. For average American households, the affordability and productivity of ‘Made in China’ goods serve as a ‘price safety valve’, effectively alleviating inflationary pressures and maintaining their standard of living. Chinese consumers, in turn, stand to benefit from ‘smart manufacturing in the US’ and ‘US services’ as these contribute to their growth and innovation.

A trend towards ‘strategic competition’ could potentially inflict damage on the bilateral relationship. Unilateral pressure to alter market rules has proven to be unproductive. Only through mutual respect and collaboration based on equality can these two countries achieve beneficial and mutually profitable results.

Both China and the US boast significant portions of global economic output and population. Therefore, maintaining a healthy, resilient, and sustainable bilateral economic exchange is pivotal. This is true not only for these two nations but carries global implications, as the world’s economic stability is nested within this relationship. The pursuit of steady and prolonged economic and trade relations development is critical in this context.