Trade Wars : How China Can De-Escalate the Conflict and How Canada Can Help

China appears to have been surprised by the sharp escalation of its rivalry with the United States into a full-blown trade war – and also to have initially mis-read the situation as one it could dispose of by writing a cheque before getting on with business as usual. I argue that there are several practical options available for China to de-escalate the conflict; that Canada and others in a position to play honest broker should use their good offices to facilitate; and that, if China draws the right lessons, the current discord can be harmoniously resolved to the benefit of all. Specifically, I argue that China could do the following: Engage third parties without geopolitical interests to identify steps China can take that are constructive and de-escalating without making concessions to the U.S. itself; Accelerate the reduction of its external surplus; Make constructive down-payments to WTO reform by pre-emptively taking issues off the table that are bones of contention and complicate an already over-burdened agenda, and on which China will sooner or later have to make concessions anyway; Take unilateral and reciprocal liberalizing steps where available to offset the damaging effect on China's openness of the tariffs; and Recognize the value of genuine soft power that is being revealed by the U.S.'s abandonment of it and embrace it voluntarily. In light of the new consultation requirements for Canada to pursue a trade agreement with China, given the latter's status as a non-market economy under US trade remedy laws, Canada's recently tabled proposals for WTO reform, and the negative impact of the illegal US and Chinese tariffs on Canada's trade, I suggest how Canada can usefully intervene and help broker a de-escalation and hopefully a trade peace