US President Donald Trump has been accusing China of “ripping off” the United States in trade and started a trade war by levying tariffs on Chinese imports.
It’s true that China sustains a surplus worth hundreds of billion dollars with the US, but the number is too simple to explain the whole picture of bilateral trade and economic activities.
Sino-US trade is not a one-way channel through which the US transmits its wealth to China. The US trade deficit primarily comes from trade in goods. The US has imported huge volumes of inexpensive but good-quality Chinese goods, which have been enjoyed by all classes of Americans.
The Trump administration’s fascination with the trade in goods ignores a significant component of its trade with China: US exports of services.
The $500 billion trade surplus China keeps with the US was offset by a $40.5 billion deficit in services last year. If Washington is willing to cast aside the cold-war mentality and relax the severe export ban on high-technology products for civilian use, as much as 35 percent of the US deficit would shrink on the balance sheet.
Another wrong ascertain we frequently hear from the US is that it’s easy to win a trade war. The bleak reality is that there is no actual winner in a trade war and the price could be very high.
Calling it a self-inflicted wound, Rick Helfenbein, president and CEO of the American Apparel and Footwear Association, lamented that the tariff hike on Chinese imports will be catastrophic for the US economy.
The burden of Trump's tariffs on imports from China and other countries falls entirely on US consumers and businesses that buy imports. According to a study by economists from the Federal Reserve Bank of New York, Columbia University and Princeton University, the higher prices would depress US consumers’ spending, which would hurt growth.
Today, the value chain is highly globalized. The hike in tariffs will inevitably have an impact on the economies of both China and the US, and will spread to all aspects of the chain itself.
Unfortunately, protectionists view the trade issue through the perspective of a zero-sum game. They bet on huge pressure to force China to give in to unreasonable requests. Meanwhile, we have also seen the trade friction spills over to other areas.
In recent weeks, the US has beefed up its offensive on multiple occasions, challenging China’s national interests. This is unlikely to help the US address concerns over trade differences through negotiations and consultation.
In dealing with a capricious US and its maximum pressure, China has maintained calm and composure, and has been acting in a constructive spirit all along.
Cooperation is the best choice for the China-US economic and trade relationship. The door to China’s negotiations has always been open. China believes that the two countries have broad common interests and a broad space for cooperation in the economic and trade fields. The right thing is to seek common ground while shelving differences and to strike a win-win deal that benefits both sides.
With the continuous improvement of the business environment, more foreign investors are hoping to gain opportunities to be involved in the Chinese market, a large part of which comes from the US. These businessmen have earned profits by taking advantage of the rapid development of China's economy.
In the 2019 China Business Climate Survey Report compiled by the American Chamber of Commerce in China and Deloitte, the majority of surveyed US firms agreed that China remains a top priority in near-term global investment plans.
However, cooperation should take place according to rules and principles of mutual respect, equality and mutual benefits. China is resolved to defend the core interests of the country and fundamental interests of the people. Words must be matched with deeds since flip-flopping leads to nowhere but a dead end.