Talks only way to resolve Sino-US trade row

Source:Global Times Published: 2018/5/22 21:13:41

Illustration: Liu Rui/GT



Editor's Note:


China and the US on Sunday issued a joint statement on economic and trade talks, vowing not to launch a "trade war" against each other. The two countries agreed to take measures to substantially decrease US trade deficit with China. How to interpret the agreements? What should the two countries do to further balance their trade structure? Global Times reporter Li Qingqing and Luan Xuan talked to two Chinese experts on the issue.

Lin Hongyu, dean of College of International Relations, Huaqiao University

Some regard the joint statement a sign of China's capitulation. I disagree with this argument, for trade negotiations involve concessions from both sides. Besides, it is not technically a "trade war," but a "trade dispute." "Trade war" reflects a Cold-War mind-set and such emotional expressions may drag China-US relations into a stalemate and make its resolution difficult.

Undeniably China did make some concessions. When it comes to trade imbalance, the degree of dependence on foreign trade is an important concept. The lower a country's dependence on foreign trade, the stronger its negotiating position. China is more dependent on trade than the US. However, China's concessions won't cause any loss, but will restore balance in trade.

China and the US are complementary trading partners. To balance the trade structure, the US should export higher added-value and high-tech products to China. The US has been vigilant about China over trade and has a long list of banned products to export to China. Washington often links trade with national security and attempts to intervene in free trade, which is one of the reasons for trade imbalance with China.

To change this requires efforts from both countries. The US needs to readjust its trade structure and policies and drop its Cold-War mind-set toward China. It can't intervene in trade with non-economic factors or regard China as a rival and a potential threat.

For China, more imports of US goods and services can meet the growing consumption needs of the Chinese people and boost economic development. During trade disputes, nations who own bigger markets hold more power. China needs to tap the huge potential of its domestic market by cultivating more middle-class consumers and measures like tax cut and pay rise. This will improve people's living standard.

China-US relations constitute the most important bilateral ties in the world. With the solution of their trade dispute, the world will expect more political stability and economic recovery. The agreement proves that disputes can be resolved by peaceful negotiations instead of confrontation. This will set a model for other countries to address problems.

Li Wei, a research fellow with the National Academy of Development and Strategy, Renmin University of China

Beijing vowed to increase its purchase of US goods and services, which benefits China's economy. Rather than promoting exports, expanding imports is more essential for China's economy. Currently, China is pushing to upgrade domestic consumption. Hence increasing imports helps reduce the cost of economic development and improve living standards.

China agreed on "meaningful" increases in US agricultural and energy exports. As the second largest economy and the most populous country, China's economic development is dependent on international resources. By increasing imports, China can take advantage of global resources to improve its economy and people's life. China's promise to strengthen intellectual property protection will also benefit its own development and innovation.

I believe that the US has acknowledged China's tough stance during the festering trade row. On the one hand, China is willing to cooperate and on the other, it hits back with determination. I think the US has realized China's potential in safeguarding its interests and will therefore think twice before it threatens a trade war next time. For China and the US, the most important part is to talk, not to threaten a trade war.

The resolution this time does not mean Sino-US relations will meet no bumps in the future. On the contrary, with China's economic development, some fundamental contradictions between the two nations will stand out, like high-tech competition. As China develops its industry, the US sees challenges in the high-tech field and bilateral competition will become fierce, bringing more frictions.

What's more, the US has criticized China's economic institutions and labeled it state capitalism, which is unacceptable to China. The two countries' different understanding of economic systems may cause competition and friction.

China and the US must realize that their economic and trade ties benefit both enormously. As the world's two largest economies, the two nations' economic relations play the role of ballast in bilateral relations, which cannot be shaken. The trade dispute this time also showed that threatening a trade war cannot help resolve difference in opinion, which can only be dealt with through negotiations. After two rounds of talks, China and the US have resolved disputes smoothly, which can be a good trendsetter.



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