A trade war should not be a choice between China and the United States
Aug 08, 2017

A trade war should not be a choice between China and the United States

Recently, a news from the American media began to spread all over the world: the United States government plans to use the "301 clause" to protect China's intellectual property rights and unfair trade measures. Affected by this, the international community concerns about the possibility of a US trade war continue to heat up. Then, will China and the United States open trade wars? Once the outbreak of the trade war affects geometry? Experts point out that, in any case, a trade war should not be a choice between China and the United states. In fact, once the United States unilaterally launched a trade war, China will inevitably respond to specific circumstances, and this is likely to form a global Domino effect. At that time, not only the Sino American trade suffered, the global economy will suffer.

The crux of the trade imbalance is not in China

The Sino US trade deficit has always been the focus of attention of the United states. Trump's focus on one of almost all trading partners, including China, is to reduce the US deficit and pursue trade balance. However, it should be noted that the US trade deficit with China is not actually a positive one for China to increase US imports. Objectively speaking, the crux of the problem lies not in China, but in the United states. It is a global value chain and a supply chain, and Trump is a balanced nineteenth Century idea between nations." He Weiwen, senior researcher at China's global think tank, said.

Chen Fengying, a researcher at the China Institute of modern international relations, pointed out to the newspaper reporters that, considering the imbalance between China and the United States, the division of labor and industry development under globalization should be taken into full consideration. Compared with America, Chinese is still in the global value chain in the downstream, its products exported to the United States, there is a lot of Japan, South Korea and even the United States inputs to Chinese processing later sold back to the United States, excluding these, Sino US trade deficit probably will be reduced by half. In addition, due to differences in statistics between China and the United States, the US statistics on China's trade deficit widened a lot. Moreover, the current Sino US trade deficit does not take into account the large US trade surplus in China's service trade.

As a matter of fact, the United States not only has a huge deficit against China, but it has a deficit against many economies in the world. The root cause of the deficit is the low savings rate and high consumption rate in the United states." The State Council Development Research Center, deputy director Long Guoqiang said, in addition, the United States from low cost China of labor-intensive products through a large number of imports, especially consumer goods, it should be said that greatly reduces the cost of the American consumer, and help to curb inflation in the macro in the United states. Therefore, both from the micro level and the macro level, the United States has benefited greatly.

A trade war could bring disaster to the whole world

"To resolve the Sino US trade deficit, it is certainly not feasible to hope for a trade war.". In fact, a trade war could not have been the results you want us freely, because once the United States launched a trade war, China will inevitably respond to specific circumstances, is bound to be a lose lose, it will not only harm the development of Sino US economic and trade relations, will bring unpredictable negative consequences for the global economy." Chen Fengying says.

Azevedo, director general of the world trade organization, also pointed out that the existence of trade protection policy resulted in the risk of a trade war. Once countries take unilateral measures, other countries will respond, it will form a "Domino effect".

It is worth noting that the international community has begun to express unease about the possibility of a trade war. "The Australian" website in August 3 journal article said that the Trump government trade war threatened China, is a "bad news for Australia". Reported that the news "surprising", if the United States really decided to launch a trade war against China, whether for the Australian economy or the Australian dollar is not good.

The day before Chinese network reports also expressed concern, in the global economy, if GDP ranked first in the United States ranked second with the China trade frictions, trade partners may also seriously affect the surrounding. The Trump administration is also discussing new restrictions on imports of steel, not only China, Japan and many other countries in Europe, but also likely to become targets for higher tariffs. Protectionist measures are being discussed in various countries, and the tide of protectionism may suddenly increase on a global scale.

Dialogue and consultation remain the best way

It should be pointed out that China's attitude has always been clear on the issue of the development of Sino US economic and trade relations. The Ministry of Commerce spokesman summit recently pointed out, we always believe that the Sino US economic and trade relations is the bilateral relationship of the ballast and propeller is acommunity, mutual benefit and win-win, is beneficial, fighting will hurt all. As the two largest economies and trading countries in the world, we are willing to work hand in hand with the United States to jointly promote the sound development of Sino US economic and trade relations, so as to inject a strong impetus to the global economic recovery.

"Of course, there are still many structural problems in the development of Sino US economic and trade relations, but the solution to these problems requires a rational approach rather than a quick success and extreme approach. In view of the complexity and difficulty of the Sino US trade imbalance, it is not realistic to solve this problem at once. But through dialogue, consultation and enhanced cooperation, these problems can be solved in the medium to long term." Chen Fengying says.

The Ministry of Commerce pointed out that in the past 3 months, China and the United States actively promoted the "hundred day plan", made important progress, successfully held the first round of the comprehensive economic dialogue, and established the correct direction of economic cooperation between the two countries. We adhere to the principle of win-win cooperation as the basic principle for developing bilateral economic and trade relations, and take dialogue and consultation as the basic method of resolving differences, and maintain the communication of major economic policies as the basic mode of dialogue and cooperation. We have made clear the direction of the year's plan for economic cooperation to achieve early harvest. At present, the two teams are actively working for this purpose, and we hope that this good momentum of cooperation will continue.

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