Impact of US-China trade war on Asian economies: neural network multilayer perceptron approach

PurposeThis study aims to find the impact of the trade war between the USA and China on Asian economies. Apart from macroeconomic variables associated with trade, this study explicitly creates a trade war scenario and trade war participant dummies. Using the neural network multilayer perceptron, this study checks for the causal linkages between the predictors and target output for the panel of Asian economies and the USA.Design/methodology/approachA conceptual model of the after effects of trade war in a quadrant is developed. Variables related to trade and tariffs are included in the study for a panel of 19 Asian economies. The feedforward structure of neural network analysis is used to identify strong and weak predictors of trade war.FindingsThe hidden layers of the multilayer perceptron reveal the inconsistency in linkages for the predictors' services exports, tariff measures, anti-dumping measures, trade war scenario dummy with gross domestic product. The findings suggest that to curtail the impact of the trade war on Asian economies, predictors with neural evidence must be paid due weightage in policy determination and trade agreements.Originality/valueThe study applies a novel and little explored AI/ML technique of Neural Network analysis with training of 70% observations. The paper will provide opportunity for other researchers to explore techniques of AI/ML in trade studies.

Study on the Spatial Evolution of China's Pulp and Paper Product Import Trade and Its Influencing Factors

The purpose of this research is to study the changes in the market structure of China's pulp and paper product imports. In particular, the import trade environment and market layout of Chinese pulp and paper products have changed under the international context of the coronavirus pandemic and the Sino-US trade dispute and the domestic policy context of zero imports of Chinese waste paper. This study attempts to fill the gap regarding the influencing factors of market structure, while contributing new ideas on China's trade in pulp and paper products. Based on pulp and paper product import and export trade data from 2005 to 2021, a trade gravity model was used to explore the changes in the share of China's trade partners for pulp and paper product imports and their influencing factors. The results indicated that the outbreak of COVID-19 led to a significant increase in China's imports of packaging paper products, bringing about an increase in Indonesia's status as a partner in China's pulp and paper product trade. The US-China trade dispute had an impact on pulp and paper product trade between the two countries, with China's tax countermeasures causing the US to lose its status as a trading partner in China for pulp and paper product imports. The center of gravity for paper product imports has moved from the US and Japan to Indonesia and Russia. The restrictions on waste paper imports have shifted the focus of China's paper raw material imports, with the US no longer being the main importer of China's paper raw materials. Specifically, the main importers of wood pulp are Brazil and Chile, while the main importers of waste paper pulp are Thailand and Malaysia. In the future, China needs to continuously strengthen dialogue with the United States to resolve trade disputes and create a favorable environment for trade in pulp and paper products. At the same time, China's paper enterprises should strengthen the expansion of the Southeast Asian market and reduce dependence on the US market, and China should continue to improve the waste paper recycling system and improve the utilization rate of domestic waste paper.

Economic Uncertainty and Firms' Capital Structure: Evidence from China

This article assesses the effects of economic uncertainty on the corporate capital structure of Chinese-listed firms using a panel dataset of 1138 firms with A-shares traded on the Shanghai Stock Exchange and Shenzhen Stock Exchange for the period 2006–2020 and fixed-effect regression analysis. Economic uncertainty had a negative influence on Chinese firms' debt ratios, especially for non-state-owned enterprises. Furthermore, firms' leverage decreased on average during the 2008 Great Recession, whereas it increased during the 2018–2019 US–China Trade War and the 2020 COVID-19 pandemic. The findings provide quantitative evidence of the effects of economic uncertainty on the capital structure of firms in a transition economy.

The Covid 19 Exogenous Shock and the Crafting of New Multilateral Trade Rules on Subsidies and State Enterprises in the Post-Pandemic World

This Article discusses existing WTO rules on subsidies and state enterprises, relevant caselaw and reform prospects in light of key geopolitical developments and changes in the global economy emerging in the aftermath of the Covid-19 pandemic. Following a general introduction, the Article critically analyzes present WTO rules on industrial subsidies, focusing inter alia on the new problems raised by activist industrial policies pursued by global trading powers, foreign subsidization, the climate change shock and environmental exigencies. It then shifts attention to the application of WTO rules on subsidies to the state sector and the increasing demands for new international trade rules on non-subsidies measures to address the negative spillover effects on trade from government influence on state-owned enterprises (SOEs). With respect to each of these matters, the Article first clarifies the terms of the problem in relation to existing WTO rules and caselaw, and next examines the question of how, and to what extent, "deeper” free trade agreements (FTAs)—those that experts designate as models for WTO reforms on the matter—establish new rules that permit to adequately address the trade concerns raised by SOEs' commercial and financial activities. Based on this multi-layered analysis, the article concludes by examining prospects of reform of WTO rules on state interventionism.

Causes and Consequences of Global Supply Chain Disruptions: A Theoretical Analysis

Supply chains lack global resilience and break down in the face of multi-country disruptions due to crises. The impact of Supply Chain Disruptions (SCD) has become all too familiar across the world: shortages, inflation, factory closures, goods waiting at ports to be unloaded, etc. They weaken macroeconomic indicators, hamper economic growth, and impact national security. Over the past five years, the world has seen many crises that have rattled global markets, beginning with the US-China trade war in 2018. This was followed by the Covid19 pandemic, the blockage of the Suez Canal, environmental issues, and the ongoing Russia-Ukraine war. The combination of these events has abruptly frozen global economic activities by restricting and hindering the Global Supply Chain Networks (GSCN). This paper provides an in-depth analysis of the causes of these disruptions and their widespread global economic consequences.

Ad hoc government payments impact on non-real estate farm debt

Purpose>The authors examined the impact of the Market Facilitation Program (MFP) and Coronavirus Food Assistance Program (CFAP) payments to United States agricultural producers on non-real estate agricultural loans.Design/methodology/approach>The authors used quarterly, state-level commercial bank data from 2016–2020 to estimate dynamic panel models.Findings>The authors found MFP and CFAP payments not associated with the percentage of non-real estate agricultural loans with payments over 90 days late. However, these payments associated with the percentage of non-real estate agricultural loans with payments between 30 and 89 days late. The available data utilized cannot consider when producers received the actual payment and what they specifically did with those funds.Originality/value>The contribution of this study is for US policymakers and agricultural lenders. The findings could be helpful in designing and implementing future ad hoc payment programs and provide an understanding of potential shortcomings of the current safety net for agricultural producers in the Farm Bill. Additionally, findings can assist agricultural lenders in predicting the impact of ad hoc payments on their distressed loan portfolios.

Slowbalisation in the Context of US-China Decoupling

While it is too early to confirm the depth and the sustainability of this new trend towards slower globalisation, it may be happening in more domains than we are fully aware of, at least for the near term given the renewed backdrop of the Russia-Ukraine war and the wider use of sanctions globally.

The Business Relationship Between Taiwan and China from the Development and Economic Perspective

Taiwan has achieved impressive economic growth from an agricultural state to produce the globes most advanced semiconductors. No less dynamic and exciting are the political developments on the island. Once a colony under the Dutch, Chinese and Japanese flags, the island has become quasi-autonomous. The abolition of martial law and the transformation into one of the world's most democratic nations are impressive. High education levels, an exceptionally well handling of the COVID-19 pandemic, and a non-corrupt government pushing future technology and supporting Taiwan's democratic path make Taiwan an attractive investment target. One look at the facts is enough to see that the Taiwanese are happy with their current system and enjoy great space. One country and two systems are not a good solution for Taiwan politically and economically. In principle, Taiwan has only one option: keep the status quo, minimize provocations against China, and hope for a diplomatic and acceptable outcome to the situation. At the same time, the government must promote itself in the free world and conclude free trade and other mutual exchange agreements.

SUPPLY CHAIN RESILIENCE AT THE APT COST AND EFFORTS THROUGH VISIBILITY

The trade war between China and U.S. and supply and demand prostrations brought on by the covid-19 have been impelling the manufacturers everywhere to reappraise their supply chains. The vulnerabilities exposed from the wide spread of covid-19 has taught a lot of valuable lessons to Indian supply chain industry, particularly in formulating the supply chain strategies concentrating more on delivering quality despite the cost, including supply chain resilience. After covid-19, skilled labour shortage, manufacturing shifts from host countries to home countries, scarcity of resources with environmental threats, advanced persistent threats, technical disruptions, cyber-attacks and collapse of trust and visibility have emerged as the biggest challenges for SCM organisations. Overcoming the above-mentioned shortcomings, the resilience of supply chain has become the strong urge now-a-days for the SCM units with the need of re-imagining, re-thinking and re-managing the supply chains to ensure disruption free business continuity and progress with growth.

The Impact of Uncertainty on Trade: The Case for a Small Port

In the present paper, we show how uncertainty emanating from fluctuations in economic uncertainty, news-based uncertainty, and geopolitical risks affect the number of containers exported from Thailand via Penang Port, Malaysia. Our sample extends from January 2009 to May 2020 from three main entry points in the Northern Peninsular Malaysia–Thailand Border: Padang Besar, Surat Thani, and Bukit Kayu Hitam. Two modes of transportation of containers are mainly used for export purposes, namely, road and rai. This study examines the nonlinear effect of uncertainty on trade by employing a two-regime Markov regime-switching approach. The empirical results show that, overall, uncertainty significantly affects the movement of containers in the high-uncertainty regime. Therefore, small ports must continue to diversify their client base to cushion the impact of fluctuations in global trade due to uncertainty.

Current Situation and Optimization Countermeasures of Cotton Subsidy in China Based on WTO Rules

Cotton plays an important role in China’s agricultural production structure and international trade;therefore, China has implemented a variety of cotton subsidy policies. Since China joined the WTO in 2001, WTO rules have become substantive constraints on its agricultural subsidy policy. Therefore, in order to prevent appeal cases of China’s cotton subsidy, in this article, we investigate the current situation and optimization countermeasures with respect to China’s cotton subsidies based on WTO rules. According to calculation of the level of China’s cotton subsidy support under WTO rules, it currently exceeds 8.5% of the cotton production value. Secondly, we estimate the change in cotton subsidy effect when the support level of China’s cotton subsidy policy is directly reduced to 8.5%;the results show that such a reduction would have a considerable impact on the production scale. However, due to the constraints of the political and economic goals of cotton subsidies, the Chinese government can only “box shift” subsidies by changing the subsidy method and object in order to comply with WTO rules. Finally, from the perspective of how to use cotton subsidies to improve the efficiency of production factors, the Chinese government should focus on optimizing the cotton subsidy policy according to three aspects: improving the Amber Box subsidies, expanding the Green Box subsidies and increasing the Blue Box subsidies so as to maintain the existing level of cotton subsidy support.

US-China Higher Education Links in Crisis: Behind the Curtain of Suspicion

Has America's complex academic relationship with China been a largely positive experience, or has it eroded our national security by enabling Chinese Communist academic espionage and influence operations to take root at US colleges and universities? For almost forty years beginning in 1978, US-China education links were widely considered a clear benefit to both countries. Today, academic relationships have become a focal point of the current crisis in US-China relations. A web of suspicion has come down over Chinese students and scholars in the United States, as well as Chinese scientists and entrepreneurs. Some members of the Trump administration have even talked about cancelling all Chinese student visas. This article focuses on Chinese students and scholars in the United States. It examines the flashpoints of academic espionage and China's influence operations on American campuses, looks at how American institutions are responding, and closes with recommendations and reflections.

Introduction to the Special Issue

The US presidential election in November will therefore be a critical juncture, either deepening disputes and hardening attitudes if Donald Trump is reelected, or possibly opening a new chapter in relations if Joe Biden wins. On the three global issues—trade, climate change, and the pandemic —that dominate US-China debate, Gregory Chin shows that while the Trump administration has brought "major global institutions to the point of legal or political crisis," China has seized opportunities to stand as the guardian of globalization in multilateral institutions, notably the World Trade Organization and the World Health Organization. [...]Chin ends on a cautiously optimistic note, namely, that a Biden White House might be open to cooperation with China on climate change and global health, while also rejoining multilateral institutions such as WHO and the Paris climate accords. [...]he cautions that the future will be non-zero-sum and messy.

Trade policies, firm strategies, and adaptive reconfigurations of global value chains

The recent U.S.–China trade conflicts cast new light on the role of trade policies in global value chains (GVCs). Contrary to the expectation that trade restrictions lead to the shrinking or disruption of GVCs, our article posits that the unintended consequences of trade policies (both restrictions and trade agreements) are amplified by the prevalence and organizational complexity of GVCs. We anchor our argument in the historical evolution of three classic GVCs – apparel, automobiles, and electronics – from the 1970s to the present. Our framework highlights the dynamic interaction between GVC-oriented trade policies and firm strategies, which often has counterintuitive implications in terms of upgrading outcomes for the countries and companies involved in these GVCs. While trade policies often provide momentum for an adaptive reconfiguration of GVCs, firms’ strategic actions are crucial in modifying the geographic and organizational features of GVCs in ways that support their longevity. Firm strategies can mediate the effect of trade policies on GVC configurations in two ways: (1) firms can accommodate trade restrictions and trade agreements by altering supply and demand locations and by switching supply-chain partners;and (2) firms pursue diverse strategies to upgrade their value chain activities, leveraging the shifting geographies associated with new trade rules.

The Sino - U.S. Trade War And Way Forward For US President Joe Biden

China and the U.S. have the biggest markets in the world. They both established diplomatic links in 1979 and the bilateral trade was developed swiftly just after China joined the United Nations Organization (UNO) in 1971. America is the Chinese top one export market and the most significant source of foreign investment. However, the main worldwide economic event in 2018 was the Sino-U.S. trade war. In March 2018, the U.S. threatened to levy high duties on Chinese imports. The equivocal shift of import and export of the Sino-US trade relations were distinctively caught in China's trade surplus with the United States, which brought divergence to the trade relations. Consequently, the Sino-U.S. trade imbalance was the main reason behind why Trump incited the trade war. This paper actually analytically discusses the phenomenon of Sino-U.S. trade war as it is considered as a test case for the new American President Joe Biden.

The COVID-19 Pandemic and International Trade: Temporary Turbulence or Paradigm Shift?

Global financial transactions as well as information and communications technology services have also declined significantly.6 Moreover, according to the recent United Nations Conference on Trade and Development (UNCTAD) assessment, which is actually based on conservative assumptions, the COVID-19 outbreak will cause global foreign direct investments (service mode 3) to shrink by 5–15% in 2020.7 The demand side has also been affected as consumers around the globe are unwilling at the moment to spend their money. In particular, some countries have decided to establish export controls over certain medical products (eg medical ventilators, certain drugs, personal protective equipment) in the form of temporary export bans or the addition of licensing/authorisation requirements.8 Other countries, concerned with the security of their food supplies, have introduced export restrictions over specific agricultural products, and these decisions have generated genuine concerns about potential food shortages in the global market in the second part of the year.9 The problem appears sufficiently serious that it has led to a joint statement by the Directors-General of the Food and Agriculture Organization, the World Health Organization and the World Trade Organization (WTO), in which they noted that “uncertainty about food availability can spark a wave of [additional] export restrictions, creating a shortage on the global market”. [...]a number of states have recently removed or suspended some trade controls. [...]Argentina has suspended its anti-dumping duties on imports of certain medical products from China, while Canada has temporarily eliminated tariffs for specific categories of products if they are imported by public health agencies, hospitals and testing sites, or for use by first-response organisations.11 The aim of all of these measures is to ensure that there are sufficient supplies to domestic markets (either by decreasing exports or increasing imports).

Trump Ended WTO Dispute Settlement. Trade Remedies are Needed to Fix it

Unhappy with the rulings of the WTO dispute settlement system, which disproportionately targeted US use of trade remedies, the United States ended the entire system in 2019. There are multiple hurdles to agreeing to new terms of trade remedy use and thus potentially restoring some form of binding dispute settlement. First, a change would affect access to policy flexibility by the now large number of users of trade remedies. Second, although China's exports are the overwhelming target of trade remedies, exporters in other countries increasingly find themselves caught up in trade remedy actions linked to China. Third, critical differences posed by China's economic model may call for new rules for trade remedies, but no consensus on those rules has emerged. Even some of the most promising reforms have practical limitations, create additional challenges, or may be politically unviable.

Analysis of the Idiosyncratic Risk Characteristics from Commodity Markets

The main purpose of this study is to explore the commodity characteristics of crude oil market and gold market, and use CBP-GARCH model to capture whether there is instantaneous co-jump variation between the two markets when unexpected information occurs. The empirical results show that there is a phenomenon of volatility clustering between commodity markets. When the interest rate spread of stock market and long-term and short-term bonds expands, it has a significant impact on gold, but not in crude oil commodities, showing that there are different linkage between commodity market and financial market. In addition, when there is a transmission of market information, the jump intensity of crude oil will be higher than that of gold market, and there are instantaneous co-jump variation characteristics. This phenomenon can be attributed to the fact that the crude oil market is affected by market supply and demand, and the gold market plays a mixed characteristic of hedging and investment. Therefore, the empirical results of this study also suggest that investors should consider the asymmetric jump fluctuation variation between commodity markets when the market unexpected information is generated, so as to effectively control the risk degree in the portfolio.

A Shifting Northeast Asian Security Landscape and China-ROK-Japan Arctic Cooperation

The growing competition between Beijing and Washington and the coronavirus pandemic are not only changing the regional landscape but also China-ROK-Japan cooperation in arctic affairs. For the three countries, changes in the Northeast Asian landscape present both opportunities and challenges for trilateral exchange and cooperation. China, South Korea, and Japan all depend on international trade, shipping, and energy for their sustained economic growth. As extra-regional actors with major interests in arctic affairs, China-ROK-Japan share similar policy positions as observers on the Arctic Council. At the same time, the three economic powers also have inescapable competing views and conflicts of interest in the arctic region. Amid a shifting global landscape and the coronavirus pandemic, Northeast Asia is also undergoing profound changes, which requires higher levels of trilateral cooperation in arctic affairs to provide further momentum for maintaining regional stability and harmony. The best policy for China, South Korea, and Japan, three interdependent major economies in a world of growing uncertainty and competition is more coordination and cooperation. The Arctic could be a region where higher levels of Northeast Asian cooperation and integration can set a new paradigm of sub-regional coordination in the service of regional stability and prosperity.

RESPONSES FOR FUTURE SUPPLY CHAIN DISRUPTIONS

The crisis caused by COVID-19 pandemic lead to shocks in the global supply chains in 2020 and 2021. During the past two years - the trade wars, the effects on supply and demand and the ensuing logistical chaos that result from the rapid return to trade - have exposed vulnerabilities in firms' production strategies and supply chains. The paper is based on data from empirical research, expanding on the vulnerabilities of supply chain operations during global disruptions, focusing on both internal and external aspects of the companies. The research led to the discovery of future challenges which modern supply chains have to adapt to, through the possible digitalization of the supply chains with its analyzed benefits and drawbacks. Digitalization can synchronize various elements by eliminating manual processes and spreadsheets and replacing them with digital systems in companies that unite stakeholders around the world, improving communication, collaboration and ensuring the free flow of information in real time and by including each member in the supply chains. Based on data from the research, the paper presents detailed responses on various disruptions in supply chains. Organizations that are advanced in supply chain planning show key behaviors that drive their superior performance, enabling them to position themselves successfully and to adapt to most kinds of disruptions and momentary uncertainty.