China, US both winners of deepened economic, trade ties

Source:Xinhua Published: 2012-12-20 9:36:49

China and the United States deeply rely on each other for economic growth and trade, and that interdependence has generated benefits for both countries despite frictions.

Politicians in both countries should heed to this fact, refrain from extracting political gains from economic and trade issues and foster, instead of disturbing, the growing business ties between the world's two largest economies.

Wednesday's the 23rd meeting of the China-US Joint Commission on Commerce and Trade in Washington offers a good platform for both countries to uphold cooperation and trust, and negotiate a timely solution to trade and economic disputes.

Both countries are each other's second largest trade partner. Bilateral trade surged 9.1 percent in the first ten months of 2012, compared with tepid growth in the rest of the world.

Despite a large surplus in trade with the United States, China, with its vast domestic market, is now the third largest destination for US exports, only behind Canada and Mexico.

Attributing the trade surplus to a weak Chinese currency is grossly simplistic. China's increasing productivity, a factor unrelated to exchange rates, has contributed in large part to Chinese exports growth.

In addition, the structural shift in global production networks, which saw more export-oriented US multinationals moving into China to set up assembly centers, inflated trade deficit numbers under the conventional calculation system.

China's yuan has appreciated more than 20 percent since its currency reform in 2005, making Chinese goods in the United States costlier and American merchandise more affordable in China.

Low-priced Chinese goods have kept US consumer prices relatively low and served to propel economic growth. Business cooperation with China has, in effect, added an extra 1,000 US dollars to the annual disposable income of each American household.

Busier trade also helped to add jobs in America, where more than 3 million new jobs were created between 2001 and 2010 thanks to exports to China. Chinese companies in the United States have also contributed to job creation.

China's shift from an export-oriented economy to one driven by domestic consumption is offering long-term opportunities for the US economy. The rising purchase ability of the Chinese people will become a main driver of the Chinese and world economy, which includes the US one.

China has also agreed to further open up its markets. The success of Walmart and General Motors, for example, in the Chinese market has even outshone their domestic market in America.

American policymakers should, too, open up its market to welcome more foreign investment that brings more job opportunities. Blocking Chinese investors under the pretext of national security smacks of discrimination and protectionism, and works in no way to solve America's own problems.

Some American politicians portrayed China as a threatening economic powerhouse that covertly bends trade rules, calling for a more confrontational stance toward the Asian country on trade in Barack Obama's second term as president. Yet, neither Chinese nor American businesses can afford a trade war.

Washington should take a long-term view toward China-US relations,formulate its China policies more in line with the prosperous reality in bilateral economic and trade ties, and prevent occasional political bickering from spinning out of control.

Posted in: Economy

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