China and Japan Understand the Intricacies of a Trade War

China and Japan have understood the intricacies of a trade war that could have the potentials to harm the economy throughout the world. This was the net result of high-level discussions between the second and third biggest economies in the world. Japan’s foreign minister, Taro Kono, and China’s Foreign Minister and State Councilor, Wang Yi co-chaired the discussions that focused on increased concerns of a possible escalation of a trade war between the United States and China.

America Criticizes

The two countries, the Americas and Asia’s biggest economy, have been at loggerheads over the trade issues. As a result, both have resorted to tariffs threats to impact each other country’s economy. However, it would be China, which could stand to gain the most by resolving the issues. The American president also criticized Japan on trade and slapped tariffs. As a result, it was hit on steel and aluminum through the country is yet to react with counter-tariffs, Reuters reported. For the United States, the fight is with the two Asian’s big economies.

Following the first discussions with Chinese authorities on Monday in over seven years, Kono told the media that “We have shared understanding that a trade war, no matter which country has brought it about, would have a very large impact on the prosperity of the international economy.”  The discussions assumed significance as both China and the United States have been holding backdoor discussions about the ways to defuse the tensions. The developments clearly underscored the need to resolve issues amicably rather than slapping tariffs on a tit-for-tat basis.

Following the tariffs war between the top two economies of the world, financial markets were under turmoil fearing that it could lead to a full-blown trade war. This was viewed as a bad sign and had every potential to shatter international trade and economic growth. Later this week, the American president, Donald Trump, and Japan’s Prime Minister, Shinzo Abe, is likely to focus more on the trade issues during a summit meeting.

The Asian country is keen to avoid being pushed into a corner on a two-way free trade deal with the objective of market access while it wants to focus on monetary and currency policies too. Japanese foreign minister also hinted that it was quite possible to work with another Asian country especially on belt and road projects on a case-by-case basis. However, the country wants any cooperation to be based on global standards.

Reset Relationship

Last year, Abe and Chinese president, Xi Jinping, assured to reset the two countries touchy relationship. The premier also unveiled belt and road initiative in 2013 with the objective of establishing a modern-day Silk Road. This would link the nation through land and sea to Africa, Europe, the Middle East, Central Asia and Southeast Asia.

For his part, China’s foreign minister indicated that the changing climate in respect of economic activities offered new opportunities. He sounded optimistic when he pointed out that the reopening of the talks would lead to fresh starting points to discuss cooperation for future too. This is expected to boost economic upside for both the nations.

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