Expanding China-US market interdependence remains important

By Song Guoyou Source: Global Times Published: 2020/9/10 18:48:40

 Illustration: Liu Rui/GT

China-US tensions are rising due to Washington's continuous escalation of its containment of the world's second largest economy. Since some US politicians have been recklessly banging the drum of the "decoupling" theory, voices in China have emerged arguing that it might be a better choice for China to decouple from the American economy as well to shun the US government' bigotry and coercion.

Some people even believe that the "internal circulation" under the framework of China's new economic development pattern of "dual circulation" is aimed at cutting dependence on the US market and technology, and shaping up an economic pattern without the US.

However, pondering the current economic trends and the overall external situation, it is more important for China to pay higher attention to maintaining and expanding its connections with the US market. 

For starters, the US market remains the top destination for Chinese exports, although China's total trade volume of goods with ASEAN and the EU has surpassed that with the US. China's exports to the US surged during the first eight months despite the pandemic and the higher tariffs, accounting for 16.9 percent of the country's total exports, followed by the EU's 15.6 percent and ASEAN's 14.8 percent. In terms of total trade volume, the US has remained China's third-largest trade partner. 

In addition, the US market remains quite important for China when technology and finance sectors are taken into account. And the normal operation of Chinese economy may take a hard hit if the US launches a financial war. It is crucial for China to take measures to reduce the risks, but also necessary to enhance connection with the American market and cultivate capacity to hedge risks within the US market.

The American market remains important for China and vice versa. 

The US' exports to China in the second quarter increased 3.8 percent year-on-year and 23 percent over the previous quarter. The increase seems particularly distinct at a time when US exports to other major economies have fallen sharply.

Against the backdrop of the intensified tensions between the US and China, the rising interdependence in trade could facilitate the cultivation of amity between the two nations, and help offset voices advocating the decoupling with China. 

Though disputes persist, the latest data shows that the trade ties still serve as a cornerstone of the overall China-US bilateral relations. 

No matter how badly the US hawks try to cut off the economic and trade ties between China and the US, it will be hard for them to erase the deep interdependence between the two large economies.

This interdependence now features bidirectional increase of exports between the two nations, and the bilateral trade will become more and more balanced.

China attaches importance to the American market, which is essentially based on the logic of market and openness. Making good use of market logic is still the best defense against US politicians' yelling of protecting its national security. 

The Trump administration has been upholding its security logic which goes against market principles to threaten economic entities from both home and abroad, as well as to obstruct the trade and economic ties between China and the US.

However, if China gives up the US market voluntarily, or compromises under the US' coercion and tries to retreat from the market, it'll fall into the trap of the US hawks and prove the so-called security logic to be correct. Not only will it undermine the confidence in the market and China's interests, it may also accelerate a "comprehensive decoupling" between China and the US.

The author is deputy director of the Center for American Studies at Fudan University. bizopinion@globaltimes.com.cn


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