Xi Jinping, President of China, at the Davos Economic Forum said that by imposing restrictions on trade, the entire world will be at a greater loss. No country would benefit from trade wars. On the other hand, the American President Donald Trump has repeatedly said that in order to protect American industries new duties and heavy taxes would be imposed on the imports from Mexico and China. If China and other countries retaliate, who would suffer the most? Obviously the US. Restriction does not work well.
The interesting side of this clash is that America and China are doing what is against their own ideologies. America is an ardent supporter of Capitalism and beacon of Capitalist Economy. According to this philosophy all decisions are taken through free market operations. Maximization of profit is the essence of capitalism. The Republicans believe in limited and lesser government controls. They are against taxing the rich and soaking the poor. Cutting Social Security & Medicare & Medicaid Programs, they want to leave everything to open and free market system. The principles of Capitalism were laid down by great economist Adam Smith in his classic book “The Wealth of Nations” which is considered the Bible of Economic System. American businesses stand for lesser controls over trade and business. Republicans advocate policy of deregulation. They strongly believe in Free Market.
On other side, China is ruled by Communist Party and there is no place for free market. All economic decisions are taken by Communist Party organization controlled by Central Executive Committee. In this background ideologically free market has no place. But in recent times China has opened door for internal and external investments through drastic economic reforms. Special kind of Capitalism has been promoted and taking roots in its economy. Political control remains with Communist Establishment which rejects Capitalistic System.