New channel: Shipping containers are seen piled up at a port in Qingdao, Shandong province. China has been gradually redirecting its growth engines away from exports and toward internal demand. — Reuters
ALMOST all economists agree that a full-blown trade war would leave both China and the US worse off.
A simple game theory framework shows that international trade is inherently a “co-operative game”, especially when consumption and production chains are tightly interconnected across borders. If the game is played unco-operatively, the hoped-for gains for specific activities and segments of the population would pale in comparison to the losses for big majorities in each country. That would be true even if the (few) winners from widespread protectionism tried to compensate the (many) losers.
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