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China-US Trade War

Student: Junjie Li

Supervisor: Maxim Bratersky

Faculty: Faculty of World Economy and International Affairs

Educational Programme: International Relations in Eurasia (Master)

Final Grade: 7

Year of Graduation: 2019

The aim of this research is to evaluate the process of the Sino-US trade war from April 2017 to May 2019, based on the game-theoretic model. It basically aims to explain three questions: how to evaluate the process of this trade war? Did these two countries have any other available options during this dispute? Whether the outcome is the best payoffs for individual players or the whole unity? The research gap for this topic and this aim is quite clear: because of the rapid occurrence of this trade war and ordinary limitation of game-theoretic models, many studies focus on other domains and merely anticipate the possibility and decision-making of this trade war; no other materials focus on the real process. From our findings, without compromise in the trade war, the final payoff of the outcomes is neither the best for individuals nor the whole unity, except few extreme situations; and these two countries could have other available options, which could obtain both individual-best payoff and unity best-payoff. In this research, it firstly focuses on the strategies, which includes controlling, deterrence and reassurance; and then it basically divided the trade war into 6 phases, according to their distinctive features. Afterwards, it will apply game-theoretic model in extensive form with perfect information to re-describe the process of trade war from April 2017 to May 2019, according to the actual options from reports and announcements. In this sense, it will be a stepping-stone to analyze the complexity of this trade war and then find out the economic, political and diplomatic effects.

Full text (added May 23, 2019)

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