（Reprinted from the official account of Oriental Finance Magazine, by Yan Ansheng, vice chairman of Hong Kong Journal Media Association.）
Since 2025, the Sino-US trade war has further escalated, and the game in the fields of tariffs, technology, and industrial chains has shown a multi-dimensional confrontation trend. The two sides have launched fierce confrontations around key areas such as semiconductors, new energy vehicles, and agriculture. On April 2, 2025, the US government announced that it would impose a "reciprocal tariff" on Chinese goods exported to the United States, with a tax rate of 34%. Combined with the 20% tariff since 2018, the comprehensive tax rate reached 54%. China is not much better. On April 4, China quickly introduced a "34% to 34%" reciprocal tariff policy, imposing a 34% tariff on all imported goods originating from the United States, involving agricultural products, energy, automobiles and other fields. At the same time, China has included 16 US entities in the export control list, prohibiting the export of dual-use items to them; and included 11 companies in the unreliable entity list, prohibiting them from engaging in import and export activities with China. In addition, China has suspended the export qualifications of 6 US companies for agricultural products to China, and implemented export controls on medium and heavy rare earth-related items.
From the latest round of the Sino-US trade war, we can see that China's countermeasures are getting stronger and stronger. So, who will win the Sino-US economic war in the end? It is not difficult to draw a conclusion by reviewing the Sino-US economic competition since 2018.
How much impact does the trade war have on the United States?
In 2018, the Trump administration, then the US president, launched a trade war against China, which became even more severe during the Biden administration. However, seven years later, the United States has not only failed to achieve its expected goals, but has suffered heavy losses, troubles, and exposed its naked buttocks. The US trade war has limited damage to China, but the damage to the United States itself has far exceeded the expectations of Americans, which is specifically manifested in the following aspects.
First, American politicians have suffered an unprecedented psychological blow. Throughout the trade war, China's foreign trade has improved overall, and it can be said that the more the war, the stronger it is. Except for the initial impact of the trade war on exports, China's foreign trade stabilization policy has played a role in a very short period of time. By strengthening cooperation and exchanges with platforms and mechanisms such as RCEP, the Belt and Road Initiative, and the BRICS countries, China has quickly made up for the gap in shrinking trade with the United States, and has been advancing all the way, with foreign trade continuing to grow year after year. Official data show that China's exports will reach 25 trillion yuan in 2024, and its trade surplus will exceed 1 trillion US dollars, which is not only the largest in China's exports, but also the largest in the world's trade. In this trade war, on the one hand, Americans see their position in China's foreign trade share rapidly declining. On the other hand, seeing that China's foreign trade is booming, American politicians are puzzled, and the psychological anxiety and blow they have suffered are unprecedented.
Second, the inflation rate in the United States has been pulled up and it is difficult to lower it, which has caused great harm to the American people. The trade war launched by Trump and his successor Biden against China was launched in the context of the lack of industrial substitution in the United States. Although the United States has strongly supported the production and manufacturing of Mexico, India, Vietnam and other countries in order to replace Chinese products, the core components of the manufacturing industry in these countries are heavily dependent on the supply of China's industrial chain. In fact, the United States's hope for import substitution in India, Vietnam and Mexico has seriously miscalculated. China's industrial chain has not been greatly affected by the trade war launched by the United States. On the contrary, the tariffs imposed by the United States directly and indirectly on Chinese imports are basically passed on to American consumers, and have become one of the main reasons for the high inflation in the United States. Since the Trump administration launched a trade war against China, especially since the outbreak of the COVID-19 pandemic, the U.S. inflation rate has been rising steadily, and everything has become more expensive. Although the U.S. government has taken extreme containment measures such as high interest rates, the inflation rate has never reached the control target. The American people are complaining bitterly, and various accusations and abuses against the U.S. government are endless. This result was not expected by the U.S. government.
Third, the weakness of the US industrial chain has been exposed, and the shortcomings of the manufacturing industry have become even weaker. One of the purposes of the US government to launch a trade war was to attract manufacturing back to the United States and make the US manufacturing industry strong again. However, the opposite happened. Judging from the results of the nearly seven years since the United States launched the trade war, not only has the manufacturing industry not returned to the United States, but the original industrial chain of the United States has also been disrupted. The efficient global industrial chain division system originally built by American companies has been disrupted. Finding alternative suppliers is time-consuming and cannot achieve the quality and cost-effectiveness of the original supply chain. Moreover, the uncertainty brought about by the trade war has also made many American companies hesitant in making decisions such as investment and expansion, affecting the long-term stable development of the industrial chain. For example, many American companies rely heavily on imports from China for raw materials, parts, etc. Take the electronics industry as an example. China is the main producer of many electronic components. The trade war makes it difficult for related American companies to obtain stable supply, increasing costs and disrupting production progress. Apple, for example, is facing a shortage of component supply. The trade war has hindered the import of domestic manufacturing companies in the United States, which has further highlighted the hollowing out of the US manufacturing industry in the context of the trade war.
Fourth, the United States has lost all its bargaining chips in negotiations with China and has become increasingly passive. Since China joined the WTO in 2001, the United States has often used the so-called imbalance in Sino-US trade to wield sanctions against China, forcing China to compromise and make concessions in many areas, such as demanding the appreciation of the RMB and even asking China to help the United States get rid of the financial crisis. However, in the past, the US sanctions were loud but ineffective, and the actual sanctions were limited, and the benefits the United States gained from China were huge. However, in 2018, the Trump administration completely tore off the fig leaf of the US government and took unprecedented extreme trade pressure measures against China, attempting to curb the development of China's industry through trade. After the trade war, the Trump administration and its successor, the Biden administration, also launched a technology war and a financial war against China, and pursued and intercepted Chinese technology companies around the world. So far, the containment strategy adopted by the United States against China can be said to be unscrupulous, and the trump cards have been played out. There is no bargaining chip left. In the end, the only attack and harm measures that the United States can take against China are public opinion smear and demonization, but they are also resolved one by one by China's visa-free policy. Now, after more than seven years of trade wars, technology wars, financial wars, and public opinion wars, the US government has suddenly discovered that it has gone from being proactive to being passive when facing China.
How much impact does the technology war have on the United States?
In 2018, after the US government launched a trade war against China, it immediately launched a technology war and joined forces with its allies to block Chinese technology companies worldwide. The technology war launched by the United States against China has lasted for more than six years, and it has been constantly increasing, but the pace of China's technological development has not stopped, but has been getting faster and faster. On the contrary, the development of the United States' own technology has been greatly affected.
First, the United States' technological advantage has been weakened. Due to the blockade measures taken by the United States against China, the two countries cannot communicate in science and technology. On the one hand, it has stimulated the potential for innovation and entrepreneurship of the Chinese government and enterprises, and made great breakthroughs in China's technological innovation in all aspects. On the other hand, the United States is at a loss in the face of China's rapid technological progress. 20 years ago, the United States had almost all technological advantages over China, but today, China has achieved rapid catch-up and even surpassing of the United States in most fields of technological innovation. Today, except for a few high-end sporadic fields, the United States still maintains its advantages, and almost all other aspects are tied by Chinese technology. Not only is the United States unable to compare with China in areas such as high-speed rail, shipbuilding, electricity, and new energy vehicles, but even the aerospace field, which is the most proud of the United States in the world, has been overtaken by China. In the chip field where the United States has always been leading, except for a few high-end chips that still have an advantage, other mid- and low-end chip industries and markets are almost controlled by China. Even Boston Dynamics, which has been developing robot dogs for decades, has been instantly surpassed by China's Yushu Technology. China and the United States are engaged in a tug-of-war in the field of artificial intelligence, but with the emergence of DeepSeek, the situation is evolving in a direction that is increasingly favorable to China.
Second, the loss of scientific and technological talents in the United States is becoming increasingly obvious. As we all know, the prosperity of the United States is due to the fact that the United States has become a global melting pot of talents in the past 100 years. Talents from all over the world have immigrated to the United States and made great contributions to the development of American science and technology. Among them, Chinese students, Chinese-American scientists, and Chinese-American technical researchers have performed the best and are the vanguard of the American science and technology army. However, in recent years, the political infighting in the United States has escalated, the society has been severely torn apart, and racial conflicts have intensified. In particular, people of Chinese background, including Chinese students, Chinese and Chinese-American researchers, have been increasingly discriminated against in the United States. What's more, in order to cut off the channels of scientific and technological exchanges between China and the United States, American politicians have not only restricted the export of American technology to China, but also restricted the exchange of talents between China and the United States. The US government has also specifically suppressed and persecuted Chinese students, Chinese and Chinese-American scientists and engineers with Chinese backgrounds, not only blocking their promotion channels and prohibiting them from holding important positions in the US government and enterprises, but also restricting their study and employment scope in the United States. Some science and engineering majors explicitly prohibit students with Chinese backgrounds from studying, and many important scientific research and technical positions and institutions are not open to Chinese students and Chinese and Chinese-Americans. Chinese students and Chinese and Chinese-Americans are increasingly troubled in their study, work and life in the United States. In recent years, more and more Chinese students and Chinese and Chinese-American scientists and technical personnel have chosen to leave the United States and go to all parts of the world. Among them, some scientists have chosen to return to China to serve their motherland. For example, Professor Yin Zhiyao, chairman and president of Shanghai Advanced Micro-Semiconductor Equipment Co., Ltd., who returned to China in 2004 to start a business, once said that in the past 40 years, the United States has developed at least 10 kinds of internationally advanced semiconductor equipment, 70% to 80% of which were developed by Chinese students, and 80% to 90% of these talents have returned to China and played an important role in various fields. A glimpse of the whole leopard, the example cited by Chairman Yin Zhiyao just reflects the situation of talent loss in the United States. According to data from Stanford University in the United States, the number of Chinese scientists leaving the United States has steadily increased from 900 to 2,621 between 2010 and 2021. A survey by the US media shows that among more than 1,300 Chinese scientists, 61% of them still want to leave the United States. Data shows that although the United States still has the largest number of top scientists in the world, its number is getting worse and worse, and the number of top scientists in the world owned by China is catching up with the United States.
Third, the U.S. technology industry is severely constrained by the U.S. government. Before the U.S. launched a technology war against China, the division of labor between China and the U.S. in the chip field was very clear, that is, the U.S. was responsible for designing and manufacturing chip products, and China provided the world's largest consumer market for the U.S. chip industry. However, the technology war launched by the U.S. against China broke this pattern. In order to curb the development of China's chip industry, the U.S. adopted measures such as building a small courtyard with high walls and prohibiting the export of high-end chips to China. This move not only forced China to work hard, be self-reliant, and self-sufficient in the chip field, but also completely separated China's huge consumer market from the U.S. chip industry, leaving U.S. chip companies with nothing but sighing at China's consumer market. Even if U.S. chip companies have advanced chips that are ahead of China's technology, due to the lack of sufficient customers in the Chinese market, the so-called advanced chips of the United States have lost their profitability and can only become decorations. Since the United States launched a technological war against China, China's technology industry, represented by the chip industry, has not only not suffered a heavy blow, but has become stronger and stronger. China's self-produced chips at all levels, including medium, high and low, have not only greatly met the domestic market demand, but also have seen a substantial increase in annual exports. In 2024, China's chip exports exceeded one trillion yuan, which amazed the world. On the contrary, the profits of the chip industry and a number of chip manufacturers in the United States have dropped sharply, suffered heavy losses, and lacked development momentum. Data show that Intel, a well-known chip company in the United States, had annual revenue of US$54.228 billion in 2023, a year-on-year decrease of 14.00%, and a net profit of US$1.689 billion, a year-on-year decrease of 78.92%. In the second quarter of 2024, Intel's revenue was US$12.833 billion, a year-on-year decrease of 0.90%; its net loss was US$1.610 billion, in sharp contrast to its profit of US$1.5 billion in the same period of 2023. In the third quarter of 2024, Intel's revenue was US$13.284 billion, a year-on-year decrease of 6.17%; its net loss was US$16.639 billion, a year-on-year decrease of 5702.36%. For another example, Qualcomm, another chip manufacturer in the United States, basically lost the Chinese market in early 2023 due to the United States' expansion of chip export restrictions, and China is the source of more than 60% of its revenue. Qualcomm's net profit in the second quarter of 2023 plummeted 52% year-on-year, setting a historical low in recent years. Intel and Qualcomm are like this, and Nvidia and AMD are no exception. They are a microcosm of the entire US chip industry at present. The technology war launched by the US government has made them lose the Chinese market, thereby losing their source of profit and the motivation for further development. The technology war launched by the United States against China has limited damage to China, but the trauma caused to American technology companies is visible to the naked eye.
How much impact does the financial war have on the United States?
In the United States' containment strategy against China, launching a financial war is a very sinister weapon of attack. The United States intends to launch a financial war against China, detonate Chinese real estate, short the RMB, and suppress the Chinese stock market, so as to achieve the goal of curbing China's economic development while harvesting Chinese assets.
Since the opening process of the RMB capital account has been in a gradual process controlled by the Chinese government, and the Chinese government has built a strong financial firewall, China's financial market can be said to be impregnable. Against this background, the effectiveness of the United States' financial attack on China is very limited, and even in many ways it is completely opposite to what the United States expected. The United States can be said to have shot itself in the foot.
During a period of booming real estate market in China, people saw that the United States continued to increase its holdings of overseas bonds of Chinese real estate companies through the so-called international financial institutions it controlled, attempting to dig holes and create debt traps for Chinese real estate companies. However, the Chinese government had already predicted the domestic real estate market and had taken a series of counter-cyclical regulatory measures at the peak of the real estate market boom. Among them, some large domestic real estate companies were restricted from blindly expanding overseas through debt and other means, thus avoiding the possible collapse of the Chinese real estate market due to overseas debt traps. For example, in order to short the Chinese stock market, on the one hand, the United States used unwarranted investigations on Chinese concept stocks and issued unfavorable reports to suppress Chinese companies listed in the United States, thereby dragging down the A-share market. On the other hand, the United States, through some international rating agencies controlled by the United States, issued a series of false negative reports that were bearish on the Chinese economy, Chinese companies and the stock market, attempting to mislead international investors to leave the Chinese stock market. However, the outstanding performance of the Chinese economy, which is the only one in the world, has cracked the US conspiracy to short the A-share market. At the same time, the A-share market is huge and has many investors. In addition, the US's Sima Zhao's intentions are well known to everyone. Therefore, the US attempt to short the A-share market did not succeed. China's A-share market still operates in an orderly and autonomous manner according to its own rhythm and trajectory.
The main wishful thinking of the United States in launching a financial war against China is to suppress the RMB exchange rate through a strong dollar, so as to absorb Chinese funds and reap Chinese assets. The United States believes that as long as it raises interest rates and creates a dollar tide, it will be able to make capital from all over the world, including China, flow to the United States. Therefore, starting from March 2022, the United States has started a new round of interest rate hikes. Although the first few interest rate hikes caused the depreciation of the RMB, they had almost no impact on the flow of Chinese capital. As a result, the Federal Reserve took violent interest rate hikes, allowing the United States to maintain an interest rate of nearly 6% for two years, creating a new high in the history of the Federal Reserve's interest rate hikes. Although the depreciation of the RMB exchange rate once exceeded 17% under the influence of the Federal Reserve's violent interest rate hikes and the strong dollar, what the United States did not expect was that, relatively speaking, compared with other international currencies, the RMB exchange rate is still the most stable leader. What is particularly disappointing to the United States is that Chinese capital has not only not flowed to the United States, but has attracted global funds to roll in. In recent years, China has been one of the countries that attract the most foreign capital investment. China's huge market, stable political situation, rapid development, huge potential, and increasingly improved and enhanced business environment have made China increasingly attractive to international capital. Against this background, China not only did not follow the United States in raising interest rates, but instead took interest rate cuts in the opposite direction of the United States. China's economic cycle, China's monetary policy, and China's capital flows have not been affected by the United States's huge interest rate hikes and strong dollar policies.
Today, the strong dollar is no longer sustainable. In 2024, the United States has reluctantly taken the step of reducing interest rates, which puts the United States in a dilemma. If the United States stops cutting interest rates and continues to maintain high interest rates, the heavy interest rate burden will make it difficult for American companies and the US government to bear. Take the US government as an example. The current US government debt is as high as 35 trillion US dollars. At the current interest rate level, the US government must spend up to 2 trillion US dollars on debt interest each year, but the US government's annual fiscal revenue is only 4 trillion US dollars. The huge interest expenses are already an unbearable burden for the US government and American companies, so cutting interest rates will be a helpless move by the Federal Reserve. However, if the Fed continues to cut interest rates, the strong dollar will lose its position, and international capital will flow out of the United States in large numbers, causing the U.S. economy to bleed. Once the dollar bubble bursts, the dollar hegemony may never recover, and the United States' attempt to reap the world by creating a dollar tide will be difficult to carry out.
It can be said that the financial war launched by the United States against China has a huge and far-reaching negative impact on the United States, and the negative impact on the United States will become increasingly apparent as the U.S. economy declines.