Introduction
China and the United States have been engaged in a trade conflict over a very long period with the focus being towards ensuring that the countries build themselves as the leading economies in the world. Using the linguistic game theory, it would be much easier to examine the trade conflict occurring between these two countries with the intention of examining how they are using the theory to build their competitive position. The focus of this report is to engage in an in-depth analysis of the game theory adopted by the two countries as part of building a front from which they would define their respective positions. The report will seek to embark on a theoretical analysis of both countries to determine how they are using the linguistic game theory as part of building their trade advantages.
Trade Game
One of the notable conflicts arising within the global economic environment has been the significant rise of China on the economic front towards becoming one of the largest economies in the world. That has resulted in the occurrence of a conflict with the United States, which is considered the world's leading economy. The trade conflict between these two countries has been driven by the fact that China has been accused of promoting unfair competitiveness in trying to build its position in the global economy. On the other hand, the country has been charged with using different strategic approaches, which includes bumping policies, as well as, adoption of fix exchange rate policies. Thus, this has prompted an international trade conflict with the United States, as it seeks to maintain its position as a leading economy.
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To help in understanding the trade conflict between these two countries, it is essential to adopt usage of a linguistic game theory, which would seek to examine how both countries are using language as a critical entity towards building their advantage in the game. Additionally, linguistic game theory analysis will also try to understand how the states are adopting various game avenues as part of their strategic approaches towards paving the way for enhanced performance outcomes. Ghoneim & Reda (2008) take note of the fact usage of game theory in examining the trade conflicts between China, and the United States is essential towards determining the decisions that each of the countries makes on a global perspective. In other words, this will help in the development of a decision tree from where it would be easier to understand how the decisions between these two countries are influencing their position in the global economic environment.
Background of the Trade Conflict between China and the United States
For a period not less than two decades, the United States has positioned itself as a leading economy by signing unilateral agreements that serve as critical policies that define its exports. The United States government has also been on the forefront in using its influence towards ensuring that it gets the best outcome from given agreements. That can be seen from an example where the American government imposed pressure on South Korea to limit its health requirements on meat imports from the United States in 1998. The fact that the United States can use its influence in seeking the global standpoint on an international perspective rose towards becoming a vital issue of concern.
However, the rise of China as a leading economic hub in the world has not only created concern for the United States concerning its financial position but has also resulted in increased trade conflicts. The conflicts can be attributed to the fact that China has focused much of its attention towards the adoption of policies that seek to ensure that the country can build itself as a leading hub for investment. For the United States, this has meant that the country finds itself in a position where it has experienced a significant decrease in demand for its products and investments. Thus, this has created a front from which both countries are engaged in trade conflicts with the United States wanting to subdue the authority that China has amerced from an international perspective in building itself as a leading economy.
Strategic Use of Language for China and the United States in International Trade
Using the linguistic game theory, it is essential to take note of the strategic approaches that both China and the United States have taken in a bid to using language as a critical tool allowing them to build their competitive advantage. The first use of language can be seen from the fact that the United States tends to consider China as lacking the strategic understanding of what it means to create a fair competitive environment. The exchange of words between the United States and China has sparked a conflict on the limits to which the China government can use its authority towards creating a competitive advantage for the country from an international perspective as a way of attracting investors.
One critical aspect to note about the exchange of words during this conflict is that both China and the United States seek to portray themselves as having a clear understanding on what is essential for the world based on the language used in the conflict. The second strategic use of language can be seen from the fact that the United States and China have focused much of their attention towards marketing themselves as essential investment hubs. The idea of engaging in marketing and advertisements is critical for both countries, as it seeks to ensure that both countries maintain some form of control in their bid for building their positions in international trade. The governments in both countries have been involved in increased conferences with the focus being towards highlighting their global posts regarding their abilities to meet set out standards on the international market. The outcome of this is that it has only worked towards creating a war of language between the two countries in their bid to engaging in the international trade war.
Considering the linguistic game theory, China and the United States engaged in defining key strategies that help in enhancing the international trade between the two countries. The United States capitalized on two main approaches that play a significant role in influencing the international business. The first strategy defined by the United States concerning altering the international trade is Strategy A that focuses on threatening China and calling for Yuan appreciation. The second strategy involved not issuing threats to China to maintain the status quo.
The implementation of each strategy may have different outcomes within the two countries when engaging in international trade. Both strategies A and B have various features that may contribute to varying issues thus influencing the processes associated with international trade. The development of the strategies by each country helps in defining the position of a nation in the game in the process of undertaking the international trade between the countries. The strategy taken by China is influenced by the decision of the United States regarding whether to choose strategy A or B. In cases where the United States chooses strategy A, China engages in making critical decisions on various ways of overcoming essential issues that may be associated with the choice of the United States to choose strategy A as part of its approach to usage of language.
However, the game stops in the situation where the United States chooses strategy B as a guiding factor towards engaging in international trade. There are critical decisions considered by China to ensure that the strategy chosen by the United States do not have adverse outcomes on the international relations between the countries. The first decision recognized by China concerns responding to the threat by engaging in measures for appreciating the currency to various percentages defined by the state. On the other hand, the second decision entails not responding to the threats of the United States with appreciating currency but with a trade war, which means that China may avoid engaging in the exchange of words.
The Decision Tree Analysis for China and the United States
The exact game theoretical analysis creates a situation where both countries have been involved in a notable use of language in their bid for engaging in competition as part of the international trade conflict. The outcome of the conflict has been the fact that the countries find themselves faced with a situation where they are expected to make specific decisions touching on their abilities to build their respective positions. Thus, this creates the need for having to undertake an analysis of the decision tree based on the strategic approach that both countries have taken, as has been presented in the previous section.
The United States, who would be considered as the first player in this game theory, reflects on the choice that it has to make based on its use of language to develop the strategies, as presented. One critical aspect to note is that if the United States makes the decision not to use language as a tool from which to threaten China, the outcome is that this would result in a status quo. In other words, it is important to note that the decision by the United States to use language to engage in threats against China acts as the critical determinant for the international trade war between the two countries.
If the United States decides to engage the increased use of language in threatening China, the outcome is that China may also find itself in a similar situation. In this situation, China may opt to use language as a critical tool from which to engage in an exchange of words as a way of responding to the threats by the United States. On the other hand, China may also be faced with the decision of having to avoid the exchange of words to help in creating a status quo.
From the analysis, it can be argued that the extensive use of language for both countries does not only serve to position themselves effectively within the global economy. Instead, this only serves as a critical tool from which to fuel the conflict further considering that it would only translate to a situation where both countries tend to engage in an exchange of words. The linguistic game theory reflects on the fact that usage of language for both countries in dealing with the trade conflicts only seeks to create some form of a game between the two countries. The outcome of the game can only be determined by the decision by the leadership within both nations to engage in a further exchange of words. From that perspective, it can be argued that indeed the linguistic game theory is an essential tool from which to understand the recurring conflict between these two countries on international trade.
Assigning Probabilities
From the theoretical analysis associated with the linguistic game theory between China and the United States, it can be noted that there are several vital probabilities to consider, as they are essential towards determining the outcome of the conflict. The crucial first probability to consider is the fact that China finds itself in a position where it has dominated international investment opportunities with the focus being towards pushing out the United States. The fact that China seeks to take over the location of the United States from a global perspective means that indeed the country finds itself in a situation where the possibilities of language conflicts between the two countries tend to increase significantly.
The second probability to consider is that China may focus much of its attention towards imposing tariffs on products from the United States with the focus being towards discouraging imports from the American market. The center for having to impose duties may focus on the need for China to position itself much more effectively within the international market while working towards ensuring that it builds its position as a leading country for investment. In other words, this means that China would find itself in a situation where the investments that it makes only serve as a critical tool from which to define its global position. In contrary to expectations, this probability will only seek to build the possibility of conflicts between the two countries considering that this would mean that the United States would be forced to threaten China. On its part, China may decide to respond to the threats by the United States, which, in turn, creates the possibility of an exact game.
The outcome of the Trade Conflict between the Two Countries
The game results in a significant trade conflict between the two countries based on the differences associated with the choice of strategies and decisions to be implemented while engaging in the international trade. According to Ghoneim & Reda (2008), the implementation strategy A that involves issuing a threat to China is useful considering that it helps in decreasing the trade deficits associated with a given country. The consideration of the given strategy capitalizes on creating a remarkable environment for effective and efficient operation. The implementation of the strategy does not create a significant issue in China considering that the highest payoff capitalizes on maintaining the status quo. On the other hand, the implementation of the different strategy by the United States creates a situation where China engages in measures to appreciate the currency with at least 10%.
Another critical outcome relating to the trade conflicts portrays the strength of the Chinese economy that allows the country not to respond to threats that leads to responding with appreciating the currency. The use of language in the game plays an integral role in solving international disputes that arise during international trades despite the integration that is experienced around the globe. According to Ghoneim & Reda (2008), the experienced outcome of the game presented a significant reality based on international relations and trades considering that the United States placed substantial threats against China on the use of protection tools. The issuing of threat follows lack of proper measures to adhere to game rules where China does not appreciate its currency. The issue of failing to acknowledge currency despite the implementation of significant threats created an international dispute that called for an evaluation of critical decisions.
Conclusion
In summary, China and the United States have been engaged in a trade conflict over a very long period. The trade conflict between these two countries has been driven by the fact that China has been accused of promoting unfair competitiveness in trying to build its position in the global economy. The first use of language can be seen from the fact that the United States tends to consider China as lacking the strategic understanding of what it means to create a fair competitive environment. The second strategic use of language can be seen from the fact that the United States and China have focused much of their attention towards marketing themselves as central investment hubs.
References
Ghoneim, H., & Reda, Y. (2008). The US-China trade conflict: A game theoretical analysis (No. 15). Retrieved from https://www.researchgate.net/profile/Hebatallah_Ghoneim/publication/23529970_The_US-China_Trade_Conflict_A_Game_Theoretical_Analysis/links/54745d390cf29afed60f7a5d/The-US-China-Trade-Conflict-A-Game-Theoretical-Analysis.pdf?origin=publication_detail
