Tweets don’t tell truth of trade war’s cost

By Hu Weijia Source:Global Times Published: 2019/5/26 21:59:48

File photo: IC

Comments on the trade war have been made by pro-Trump radio host Bill Mitchell, who tweets things like: While US consumers purchase 80 percent of what the US makes here, the poor Chinese purchase a very small portion of what they make. 

"We are self-sustaining, China is not. If they lose exports to the US, they could collapse." Mitchell said.

But let facts and figures tell you what will happen if China "loses exports to the US." The total value of China's merchandise exports to the US stood at $478 billion in 2018, accounting for only 3.6 percent of China's total GDP of $13 trillion in the same period. China posted GDP growth of 6.6 percent for 2018. Even if the country loses all of its US orders, which are worth 3.6 percent of its GDP, the Chinese economy won't collapse.

What's more, increasing exports to other countries will help offset losses from the US market, especially considering the enormous size of markets in some emerging countries. Chinese exports rose 9.9 percent in 2018 in US dollar terms, resulting in a trade surplus of $352 billion. Facts proved that China's exports didn't collapse amid the trade war.

The upgrading of domestic consumption can also offset losses in the US market. China's transition to an economy driven by consumption, rather than exports and investment, has reduced its dependence on the US market. What's more, take the example of Huawei. Chinese consumers have begun bought smartphones from the technology giant in growing numbers since the company received unfair treatment from the US government. For some Chinese companies, their markets are shrinking in the US, but expanding in China.

Mitchell has chosen to purposely ignore facts in order to mislead the public to believe that the Chinese economy will collapse if it loses exports to the US.

What we worry about is what will happen to the US economy if it loses imports from China. Is the US economy really self-sustaining? The answer is no. Revisiting the stories describing US families who are trying to live an entire year without buying anything produced in China but failing in the end can help Mitchell reach a just conclusion over the question.

As an important link in the global value chain, China can easily deal a blow to the US economy if it cuts exports to the latter. At the very least, a complete loss of rare-earths exports to the US will hurt the US economy far more than the Chinese one. The US is one of the countries that relies the most on made-in-China products. Mitchell's tweet over the trade war is totally wrong.

The author is a reporter with the Global Times.


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