Trade friction with US helps China deepen reforms: Chinese experts

Source:Global Times Published: 2018/12/25 12:07:52

Chinese experts said the trade friction between China and the US helps China to deepen reforms objectively, although the US wants to limit China's development.

"The trade friction between China and the US is to limit China's development from the US side, but objectively, it poses a difficulty to China whilst allowing China to deepen reforms," said Yang Yiyong, director of the Institute for Social Development under the National Development and Reform Commission, guancha.cn reported.

He noted after what happened on ZTE, it is true that some industries in China "lack the heart and brain," hence, calling for sound economic changes.

"China should adopt a strategy of keeping a low profile but also do something in future. We should talk less, do more," Yang added.

The Chinese Academy of Social Sciences (CASS) released the Chinese Economy Blue Book 2019 on Monday. Experts and economists predicted that both China and US GDP growth rates may suffer for the next two years.

Some researchers from the Ministry of Commerce acknowledge there might be a possibility of failure of the trade talks between China and the US scheduled for the first quarter of 2019, but almost everyone agreed China should stick to the reforms and further expand the opening-up policies, guancha.cn reported.

The trade friction will significantly hit the US exports, said Lou Feng, director of the economic model team at the Institute of Quantitative and Technical Economics under CASS.

He raised three possible scenarios with the model of GTAP (Global Trade Analysis Project) during the report release:

1, The US may impose 25 percent additional tariffs on $60 billion worth of products from China; China may impose 25 percent additional tariffs on $60 billion worth of products from the US;

2, The US may impose 10 percent additional tariffs on $200 billion worth of products from China; China may impose 10 or 5 percent additional tariffs on $60 billion worth of products from the US. This is the current cause of the trade friction.

3, The US may impose 25 percent additional tariffs on all products from China and China may do the same to the US.

Lou summed up that both the GDP of China and the US will decrease due to the trade friction, but that will create a positive economic impact for the countries that can substitute Chinese products, such as Vietnam and Mexico.

In terms of employment, there will be a trend of decrease at first but later gradual increase for both countries. If his second assumption is the result, China would lose 8.6 million jobs and 1.25 million jobs for the US would be lost.

The CASS predicted the situation until 2025, saying China's economy may have negative effects for a longer period than the US.

But Lou echoed Yang, noting his suggestion to the trade friction is to strengthen dialogue and negotiation in order to avoid intensifying trade friction. "We should promote our innovation as well as the reform and opening-up for a new round," he called for deepening reforms to boost China's manufacturing transformation and upgrade.

Global Times



Posted in: ECONOMY

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