Discussion Papers

No.851 The US–China Relations and the Impact of the US–China Trade War: Global Value Chains Analyses

by Bo Meng, Yuning Gao, Tao Zhang, Jiabai Ye

April 2022


This study investigates the US–China relations and examines the impact of the US–China trade war on the global economy through the lens of global value chains (GVCs). We begin by reviewing the history of US–China relations in GVCs from three perspectives: cooperation, competition, and conflict. Using trade in value-added as a metric, we show that the world economy is transitioning from “hyperglobalization” to “slowbalization,” with the corresponding US–China interdependence varying across different value-added creation processes in GVCs. With a focus on the ICT sector, one of the most contentious battlegrounds in the US–China trade war, our GVC-based network analysis investigates the changing power and influential area of both the United States and China in GVCs, considering multinationals’ activities. Furthermore, GVC-based computable general equilibrium analysis reveals that the impact of a trade war on an economy is highly dependent on its position and degree of participation in GVCs. The essence of the US–China trade war, the contradictory stances behind the trade war, and the outlook of the US–China relations in GVCs are discussed.

Keywords: The US–China relation, the US–China trade war, global value chain, trade in value added, multinational enterprise

JEL classification: F13, F15, F62, D57

Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.