The Research Of Mechanism And Effect Of Trade Friction On China's Macro-economy

For years,the Chinese and American economies have depended on each other.Consumers of US need low-cost Chinese goods and borrow from China's huge surplus savings.China relies on favorable balance of trade for economic growth and stable employment.With China's rapid development,the United States increasingly sees China as the biggest threat to its hegemony in the world,and setting the stage for a potential trade war.Since trump came to power,the trend of us trade protectionism and America first has become more and more serious.China and the United States have close relations and are interdependent.Only by deeply understanding the causes and impacts of trade frictions can China better cope with this trade friction.DSGE model can change with the economic situation,and it has the characteristics of open,dynamic,random and general equilibrium.This paper introduces a third country besides China and the United States,considers the endogenous entry and exit of heterogeneous manufacturers in production and export markets,and incorporates tariffs into the model.The dynamic stochastic general equilibrium model of open economy in the three countries is established to study the impact of trade friction on China's macro economy.At the same time,this paper makes a quantitative study on the influence of Sino-US trade friction by means of historical retrospection and scenario simulation.The simulation results of the model show that the tariff imposed by the United States on China can directly reduce the trade deficit of the United States,thus driving the increase of the output of the United States,but it will also have a negative impact on the overall consumption and production of enterprises,resulting in the loss of the welfare of American residents.If we do not fight back,most indicators in the United States "get better" and most indicators in our country get worse;If our country countermoves,it will change the trend of "improvement" of most indicators in the United States.For our country,countermeasures will reduce our country's imports,while raising the cost of our manufacturers,thus damaging the entire import and export,there is no advantage for our country;Moreover,with the increase of China's countermeasures against the United States,the import and export of China and the United States will show the opposite trend.The greater the countermeasures,the smaller the trade volume and the greater the loss to the two countries.Considering only economic factors,it is "irrational" for the United States to launch trade frictions or for China to launch countermeasures.In this paper,we should start from the long-term game between the two countries.For its part,the United States cannot afford to watch China's rise without taking action,so the underlying reason for its trade friction is to curb our economic development.For our country,although countermeasures will cause greater losses,our country is more concerned with political factors such as the voice of the society and the demand of international status;In addition,from the perspective of game,this paper believes that China and the United States are infinite game,as long as both sides pay enough attention to long-term interests,cooperation can emerge.Referring to the strategy of "tit-for-tat",when the United States has launched a trade war,China can only choose countermeasures to force the United States to give up the idea of taking unilateral measures to "sanction" China,and finally increase the bargaining power to achieve the optimal choice of no additional tariffs between the two countries.