On October 4, US Vice President Mike Pence said in his speech that China’s success “was driven by American investment in China” and “we rebuilt China over the last 25 years.” These remarks are hilarious. What has China's development brought to the world? This question is not difficult to answer.
China’s development is an important boost to the world economy. China did not pursue “economic aggression” during its development, otherwise China would not have promoted the development of the world by expanding its market, creating employment and contributing wisdom to the world.
Pence accused China of engaging in “economic aggression” in the world and regarded US as a victim. He also claimed that China has “used an arsenal of policies inconsistent with free and fair trade…. These policies have built Beijing’s manufacturing base, at the expense of its competitors -– especially the United States of America.” and that “China’s actions have contributed to a trade deficit with the United States.” In the speech he said the US “will demand” China to “fulfill its obligations.” What about the losses to the world? It is worth close consideration.
The US thinks that its trade deficit with China is “a loss” and that the US suffers from “economic aggression,” claiming that its trade deficit is $200 billion. Trade numbers should not be counted like this. We must see trade as a mutual act, with each side taking what it needs from each other. China never sells by force nor seeks a surplus. The US has a huge demand for Chinese-made products. UN statistics indicate that in 2017 US exports to China amounted to $129.89 billion, a 577 percent increase from $19.18 billion in 2001, and far higher than the 112 percent average growth rate of overall US exports. The US strictly limits its exports to China, and anything that contains some technological content is forbidden from being sold. If the US was willing to sell high-tech products, would there be such a big deficit? Will the US Ford-class aircraft carrier, for example, be sold? One aircraft carrier is worth $15 billion and four carriers could fill the gap of the $60 billion deficit if it was sold to China.
If the US could ease restrictions on exports to China a little bit, the trade deficit would not be what it is today, not to mention selling aircraft carriers. According to a report by the Carnegie Endowment for International Peace in April 2017, if US export controls on China were relaxed to the level of those on Brazil, it’s deficit could be cut by 24 percent, and 35 percent if relaxed to the level of France. Evidently, the key point is not “China does not buy” but “the US does not sell.”
Beyond that, the service trade should also be considered. US data shows that US service exports to China rose 340 percent from $13.14 billion in 2007 to $57.63 billion in 2017, while its service exports to other countries and regions in the same period grew by 180 percent. The US surplus with China increased by 30 times to $40.2 billion.
In fact, because of globalization, it would be one-sided to calculate the profit and losses of China-US trade just based on the two countries. For decades manufacturing in the US has shifted to the world. The US has retained design and marketing services, while China has become the largest recipient of global industrial transfers. Multinational corporations from the US and other countries produce their goods in China Multinational corporations from the US and other countries produce their goods in China and sell them in their own countries. The sale of these goods is calculated as exports from China. In the value chain of products, multinational enterprises get the largest share of profit but Chinese enterprises get a smaller share. It’s unfair to conclude that China takes all the profit in this situation.
The development of China is not a sign of “economic aggression.” It’s an important boost to the world economy. China's contribution to world economic growth has stayed at around 30 percent since 2013 and China always ranks as the largest contributor. In 2017, China’s contribution reached 34.6 percent, about twice that of the US.
China's development has also created a bigger market for customers worldwide. From 2001 to 2017, China's imports grew at an average rate of 13.5 percent, or twice the world average. China's service imports grew at an average of 16.7 percent over the same period, 2.7 times the world average. From 2011 to 2017, China's total share of imports and services increased by 1.7 percentage points, from 8.4 percent to 10.1 percent, while the US share declined by 0.5 percentage points over the same period.
China is also playing an important role in job creation. China has established more than 80 overseas economic and trade cooperation zones with countries along the Belt and Road, adding 244,000 jobs. According to data from Ernst & Young, one of the big four international accounting firms, China created more than 130,000 jobs in Africa between 2005 and 2016, more than three times that of the US. In addition, China created 1.8 million jobs in Latin America and the Caribbean from 1990 to 2016, according to the report, entitled Effects of China on the quantity and quality of jobs in Latin America and the Caribbean, released by the International Labor Organization.
The US says that China has "taken" American jobs as some American factories have moved to China, which is a one-sided opinion and untenable. The US-China Business Council's 2017 report noted that the China-US business relationship supported about 2.6 million US jobs.
A study by Ball State University showed that compared with the peak in manufacturing jobs in the US in 1979, the US has lost about 7 million manufacturing jobs. However, 88 percent of the lost jobs were caused by improved industrial automation. This has nothing to do with China. In the final analysis, where the US companies assigns their factories is motivated by profit, and no one can control their decision.
China did not pursue “economic aggression” during its development, otherwise China would not have promoted the development of the world by expanding its market, creating employment and contributing wisdom to the world. China has strongly supported the UN Millennium Development Goals and the 2030 Agenda for Sustainable Development. China’s development has led the way for developing countries in the world, whose population accounts for more than 80 percent of the world’s total population, to modernize, and has provided new choices to countries and nations who want to accelerate their development and maintain their independence at the same time. The general secretary of Kenya’s ruling party, Raphael Tuju, said that China's achievements have no precedent in history. It brings African people hope and gives them light at the end of the tunnel.
China’s development is by no means “driven by US investment in China,” as some US politicians claim. It has been achieved by more than a billion Chinese people who have worked hard. Even when it comes to investing in China, the US does not have the most capital flow or capital deposited, not even mentioning talk about “rebuilding China.” Data shows that since the 1980s, US investments in China only account for 7 percent to 10 percent of foreign investment. On the contrary, the US has made a lot of money from investing in China.
(Compiled by Qu Qiuyan, Wang Zi, Wang Xiangyu and Zhang Jian)