US trade moves aim to protect tech hegemony

By Wang Jun Source:Global Times Published: 2018/4/23 22:53:39

Illustration: Luo Xuan/GT


The real intention of the US in provoking trade friction with China has come to the surface. The targets are the emerging high-tech industries mentioned in the "Made in China 2025" strategy. The extent to which China and the US can open their markets to each other and the pace of opening the markets are the focus points.

"China in my view has brazenly released this China 2025 plan and basically told the rest of the world, 'We're going to dominate every single emerging industry of the future and therefore your economies aren't going to have any future," White House trade advisor Peter Navarro said to Bloomberg Television in late March.

Also, the Section 301 investigation and the items the US is targeting for tariffs all point to high-tech products instead of the ones that are actually generating the trade imbalance between the US and China. The US has apparently used the trade deficit as a pretext to start the conflict.

The US is aiming at interrupting the upgrading of China's high-tech industries, and hence to prevent China from substituting the products it currently imports with ones that can be made in China. In this way, the US hopes to maintain its advantage against China in the technology field. Now the US is pressuring China to follow its pace and accept its unreasonable demands. Otherwise, restrictions will be imposed on the technological exchange between companies and barriers on Chinese companies investing in the US will be launched to hinder the "Made in China 2025" plan.

The US has accused China of forcing US firms to transfer technologies. But the US has also turned a blind eye to the basic rule of the market, which is fair trade. The US wants everything - not only an unconditionally open market from China but also an unchallenged technology advantage.

The US-China trade friction is more of a political issue than an economic one. The friction and its momentum serve US domestic politics. Later this year, the US midterm elections will take place, with multiple seats set to be contested by the two main parties. US President Donald Trump wants voters to see China cave in due to coercion from the US, thus attracting more support for the Republican party. The trade friction is also being used as a tool to protect US hegemony, deterring any potential challengers.

The "Made in China 2025" plan, which was issued in 2015, is an industrial upgrading plan that is nonexclusive. In the plan, China mentioned several industries it would like to stress in the future. If the US has a more open and inclusive mind, there will be many cooperation opportunities. Germany launched the concept of Industry 4.0 in 2012. China and Germany have carried out cooperation under the framework and further linked the two plans together. If the US lifts its restrictions on technology transfer, investment and acquisitions in the US and exports of high-tech products to China, more cooperation between the two can be expected.

Sadly, the US never realizes the need to adjust its way of thinking. Its culture encourages finding fault with others rather than being self-conscious. The less competitive domestic industries and the trade deficit are inseparable from the US production model and its unbalanced saving and investment. The US needs a wakeup call and should not guard its interests by pointing fingers at others.

China will continue opening and refining the investment environment according to its own timeline. It has been almost 20 years since China entered the World Trade Organization and the domestic market has kept expanding.

The circumstances allow China to pursue a new round of opening-up. First, China can better utilize foreign capital. Second, the opening-up process can provide better resources, such as technology and human capital. Third, China does not need to rely on exports to generate foreign reserves.

The technology advancement and the new normal of the Chinese economy demand a faster pace of opening-up. And China is making bigger strides with measures that apply to the whole world, rather than going down the road of protectionism.

The author is chief economist with Zhongyuan Bank and a member of the academic committee at the China Center for International Economic Exchanges.


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