• Korea Trade Review
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• v.44 no.3
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• pp.105-121
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• 2019

This study applies diverse game theories to the US-China Trade War. The US-China Trade War can be analyzed as a game situation because the strategic decision-making process to maximize one's profit while considering the reaction of the other party is a game situation. However, related research suffered from some mistakes in applying the US-China Trade War as it is to classic game theory, because while the prisoners dilemma is based on the situation of No Communication, No Trust, No Cooperation, the US-China Trade War has a precondition different from that of prisoners dilemma, since it mutually communicates information and negotiation is repeated several times in a cooperative situation. The result of the trade negotiation will likely end as 'cooperate-cooperate'. Further, considering trade volume, trade interdependence, bargaining power based on economy, and the scale of damage caused by the Trade War, the US-China Trade War is progressing with the bargaining power of the US being higher than that of China. Since the current US-China Trade War is in an asymmetrical situation under the dominant bargaining power of the US, it is likely to reach 'US defect-China cooperative' in the long run.

• Journal of Korea Trade
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• v.24 no.8
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• pp.153-170
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• 2020

Purpose - As the US-China trade war intensifies and lasts long time, there is growing concern about its potential effects on the global economy. In particular, for the countries like Korea that have a large economic dependence on the economy of the two countries, the US-China trade war may have a great repercussion in many ways. The aim of this paper is to investigate the global productivity and market structure implications of the US-China trade war for Korea, as well as for other surrounding countries and regions. Design/methodology - In this paper, we develop a full multi-country/region multi-sector computable general equilibrium (CGE) model of global trade incorporating heterogeneous workers and firms in individual skill levels and used technologies. We then calibrate the model using a global Social Accounting Matrix (SAM) dataset extracted from the recently released GTAP 10 Database, and assess the potential effects of the US-China trade war on the aggregate real productivity and the market structure for Korea, as well as for other surrounding countries and regions. Findings - We show that the US-China trade war may largely affect the aggregate productivity in each sector in each country/region, as well as the global market structure through entry and exit of firms, which results finally in considerable changes in the industrial comparative advantage of each country/region. Though the effects are diverse sector by sector, the results show that Korea may also be affected significantly: concerning the real productivity implications, it is shown that the machinery industry may be affected the most negatively; on the other hand, it is shown that the number of exporting firms may decrease the most in the other transports industry. Originality/value - As the US-China trade war intensifies, many studies have tried to estimate the possible implications, and for this usually the CGE models have largely been used as the standard tool for evaluating the impacts of changes in trade policies. Standard CGE models, however, cannot be used to assess the global productivity and market structure implications due to the symmetric and simplified base assumptions. This paper is the first to analyze and quantify the possible impacts of the US-China trade war on the aggregate productivity and global market structure using a CGE model incorporating endogenous skill-technology assignment of heterogeneous workers and firms.

• Korea Trade Review
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• v.45 no.1
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• pp.173-201
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• 2020

As the US's trade deficit with China and China's manufacturing industry has risen rapidly, the US has begun to regulate trade items as part of China's checks. Four rounds of reprisal measures have greatly altered the trade structures of both countries. In particular, Korea, which is highly dependent on the US and China, has been directly affected by US-China trade disputes. The purpose of this study was to analyze the effects of US-China trade disputes on the stock price of Korean export firms by performing an event study. This study analyzed stock price fluctuations for 7 days before and after entry into forced [Please check] retaliatory tariffs on Korean exporters' export items subject to retaliatory tariffs. According to the analysis results, among companies that produce goods with major tariffs imposed on China by the US, such as electronic appliances, semiconductors, machinery, and automobiles, those producing electronics and semiconductor products were positively affected by the tariff incident. Secondly, among the companies producing steel, chemicals, and machinery, which the main tariffs imposed by the United States, companies producing steel and chemicals were negatively affected by the incident due to the stagnation of trade between China and the US. The results of this study suggest future trade policy directions for Korea and help to establish an export strategy for major industries.

• Korea Trade Review
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• v.43 no.5
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• pp.47-66
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• 2018

This study analyzes the potential economic effects of a trade war between the U.S. and China. The CGE model is used to estimate the macroeconomic variables of each country and the change in imports/exports by industry by considering three different scenarios: (i) the US imposes a 25% of tariff on China; (ii) the US and China impose a 25% tariff bilaterally; (iii) the United States expands protection in vehicles and metals to Korea, Japan, and the EU. According to the results of the study, when the US and China initiate a trade war, GDP and welfare of both countries decline. China's decline in GDP and welfare are larger than those of the United States, which implies a trade war is more favorable to the U.S. than to China. In the long run, China's GDP and welfare decline widens further. While the trade volumes of the US and China are greatly reduced, the trade volumes of other countries does not significantly fluctuate. Finally, if the US extends protection policy to Korea, Japan and the EU, it creates undesirable effects on the US. In particular, damage to the US jeopardizes its advantageous position in a trade war with China. In order to emphasize the unfairness of protectionist policy and the damage to Korean industry, Korea needs to establish a strategy to counter US protectionist policy.

• International Journal of Advanced Culture Technology
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• v.7 no.4
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• pp.63-68
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• 2019

Recently, the United States and China have declared a 25% retaliatory tariff for the partner country products of 50 billion dollar scale. "Trade war" is getting full swing. Such conflicts between economic powers may spread to Japan like the domino phenomenon following the EU (European Union) and become bigger in the global trade war. As a result, Korea has an economic system with a high degree of external dependence, and there is an expert's analysis that it will become the largest victim of the global trade war. If the WTO Dispute Settlement Authority approves this US 301 retaliation measure in the same way as the past case (US-EU hormone-treated beef imports), the United States will not import any Chinese imported products Chinese products) can be imposed. If the US launches a special 301 or super 301, which is stronger than the regular 301, then China is very likely to enforce US retaliation against it, and the trade war between the two countries could become a reality. This phenomenon is likely to have a negative impact on Korean companies. In particular, Korea, which is highly reliant on intermediate goods exports to China, is expected to suffer a great deal of damage. Therefore, Korea needs flexible response at home and abroad, it is necessary to enhance the autonomy of companies and protect export industries. Adjusting corporate tax rate as well as domestic industry height will be one way. The long-term (21 months) trade war between the United States and China has resulted in economic uncertainty. The resulting damage must be compensated. It is necessary to prepare the compensation through the economic council between countries. In the future, the punitive damage compensation system should be introduced.

• Journal of the Economic Geographical Society of Korea
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• v.24 no.3
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• pp.243-258
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• 2021

By using the trade in value-added(TiVA) database and employing social network analysis, this paper analyzes changes in global trade to be triggered by the Belt and Road Initiative (BRI) and the US-China trade war. The main results are summarized as follows. First, the BRI will help maintain China's core position as the world's manufacturing hub, and will strengthen Europe's service industry capabilities within the global value chain(GVC) network. Second, the US R&D industry, US wholesale and retail industries, and Germany's automobile industry were considered the most influential industries in the GVC network during the 1995-2011 period, and will retain their status until 2049, when the US-China trade war and the BRI are reflected. Third, the increase of the number of communities shows that the BRI might spur fragmentation of the production process. Finally, community structures of inter-industry trade relations, including China's electronics industry, Germany's automobile industry, and US R&D, show important features that are related to the competiveness of each country's service industries.

• East Asian Journal of Business Economics (EAJBE)
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• v.7 no.1
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• pp.27-38
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• 2019

Purpose - Recently, the trade war between China and US has been escalating, which has also attracted worldwide attention. Based on this background, this paper sets China and US as an example to explore the determinants of bilateral trade between China and US. Research design, date, and methodology - A quarterly data from the 2000-Q1 to the 2017-Q4 will be used to perform an empirical analysis under some econometric approaches such as the fully modified least squares and the vector error correction estimates. Result - The results illustrate that the two economic entities of China and US have the greatest positive effect on bilateral trade between China and US. The real exchange rate has a positive effect on bilateral trade between China and US. The nominal exchange rate has a negative effect on bilateral trade between China and US in the short run. US's average price has a positive effect on bilateral trade between China and US in the short run. China's average price has a negative effect on bilateral trade between China and US in the short run. Meanwhile, the bilateral trade between China and US also suffers from the economic crisis happened in 2008. Even through the bilateral trade between China and US in the short run is deviate from the long-run equilibrium, there exist an error correction mechanism back to the long-run equilibrium. Conclusion - This paper provides some empirical evidences for both governments. Based on the results of this paper, both governments should take corresponding measures to promote the development of bilateral trade between China and US.

• East Asian Economic Review
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• v.25 no.3
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• pp.233-272
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• 2021

The Regional Comprehensive Economic Partnership (RCEP) agreement, signed in November 2020, comes shortly after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force and the US-China Trade War escalated. We use a computable general equilibrium model to assess the long-term effects of these three developments on income, trade, economic structure, factor returns and employment across the world, and especially in Asia-Pacific countries. The results suggest that RCEP could generate income gains that will be almost twice as large as those of the CPTPP, and that the two agreements together will largely offset the substantial negative effects of the US-China Trade War for the world as a whole. All three policy developments, but especially RCEP, will deepen East Asian production networks and will raise productivity and increase wages and employment in much of East Asia. At the sectoral level, regional trade in non-durable and durable manufactures will experience the most growth.

• The Journal of Economics, Marketing and Management
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• v.12 no.2
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• pp.73-81
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• 2024

Purpose: South Korea is a close ally of the US and an important partner of China. Caught between the two most powerful countries, South Korea's strategic directions are critical. This article emphasizes that the deeper core of the US-China trade war is to improve the business environment to attract foreign direct investment (FDI) to boost the economy, rather than engaging in the trade war. Research design, data, and methodology: Considering the complexity of this issue, this article applies a systematic analytical tool, the ABCD (Agility, Benchmarking, Convergence, and Dedication) model, to provide strategic guidance for inducing investments into South Korea in the context of the ongoing US-China trade war. Results: Specifically, South Korea needs to provide a more attractive business environment along the four points: expedite commercial activities through deregulation (Agility); adopt global standards of the flexible labor markets and technological developments (Benchmarking); integrate various industries and connect them to global value chains (Convergence); and create more economy-friendly policies rather than politics-oriented ones such as protectionism (Dedication). Conclusion: This study stands out not just by utilizing the ABCD model but, also by providing more systematic analysis and practical implications, particularly within the context of the escalating US-China competition. Unlike many existing studies that analyze the broader impacts of this geopolitical rivalry, this research delves into specific strategic guidelines for South Korea to attract FDI. The findings also provide implications for multinational corporations (MNCs) in choosing the locations for their overseas operations, particularly in South Korea.

• East Asian Economic Review
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• v.24 no.4
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• pp.349-388
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• 2020

The US-China trade war forced a reluctant semiconductor industry into someone else's fight, a very different position from its leading role in the 1980s trade conflict with Japan. This paper describes how the political economy of the global semiconductor industry has evolved since the 1980s. That includes both a shift in the business model behind how semiconductors go from conception to a finished product as well as the geographic reorientation toward Asia of demand and manufactured supply. It uses that lens to explain how, during the modern conflict with China, US policymakers turned to a legally complex set of export restrictions targeting the semiconductor supply chain in the attempt to safeguard critical infrastructure in the telecommunications sector. The potentially far-reaching tactics included weaponization of exports by relatively small but highly specialized American software service and equipment providers in order to constrain Huawei, a Fortune Global 500 company. It describes potential costs of such policies, some of their unintended consequences, and whether policymakers might push them further in the attempt to constrain other Chinese firms.