In A Trade War, Would China Or The United States Prevail?

2017 hasn't even officially began, and it is shaping up to be a year of worsening relationship between the United States and China and could very well result in a trade war. If that proves to be the case, then China could outlast the United States, at least according to a Hong Kong-based professor.

James Wang, a City University of Hong Kong professor who writes a monthly commentary letter for the billion-dollar Pine River China Fund, wrote in his recent letter that a trade war between the two superpowers is a "distinct possibility" next year.

Wang argued that companies in a democratic society, such as America, will face difficulties in drawing up a relief effort from a trade war with China and the country as a whole may face a political backlash from the companies who are most impacted. On the other hand, state-controlled Chinese companies will have the full backing and support of the central government.

"On this basis, the Chinese may have more runway to play the long game in a trade war," Wang's letter added.

Wang further argued that China's government also has punitive options at its disposal, including withholding aircraft orders from Boeing Co (NYSE: BA) or limiting automobile and agriculture imports from American companies.

On the other hand, Bloomberg cited Kinger Lau, a China equity strategist with Goldman Sachs, who suggested that the any tariffs on China's exports to the United States would erase 3 percent from its GDP.

Image Credit: By U.S. Department of State [Public domain], via Wikimedia Commons