By Bian Yongzu Source: Global Times Published: 2017-11-8
Since the beginning of last year`s US election campaign, Donald Trump repeatedly emphasized the trade deficit between China and the US. His stance has not wavered, and his administration also launched a Section 301 investigation into China not long ago.
Trump will pay a state visit to China from Wednesday to Friday, and Cui Tiankai, China`s ambassador to the US, said that trade cooperation will be an important issue for this visit.
Overseas media reports have said that dozens of company executives are expected to accompany Trump and sign multibillion-dollar investment agreements.
The trade deficit between China and the US is mainly due to differences in their economic structures, industrial competitiveness and labor markets. Sino-US trade, although undergoing some friction, is rich in potential cooperation opportunities - for example, cross-border retail. If the US wants to reduce its trade deficit with China, efforts should be made to export more to China instead of suppressing imports. Through bilateral cooperation in developing cross-border retail activity, there can be new growth points in Sino-US economic and trade exchanges while effectively reducing the deficit.
With the rapid development of its domestic economy, China has achieved the conditions necessary for cross-border retail trade. The nation`s efficient logistics system and convenient online payment options are already boosting e-commerce in China and bringing the country into the new retail era. Today, e-commerce is part of everyday life in China, and the sector is growing much faster than in the West.
In the next five years, China`s e-commerce market is expected to grow by 20 percent annually. By 2020, the market is expected to reach 32.7 trillion yuan ($4.93 trillion), twice the size of the US market. China`s growing middle class, with increasing demand and purchasing power, is interested in high-quality goods from the US.
China has become the backbone of the cross-border shopping sector. An estimate by the China e-commerce research center finds that by 2018, the number of Chinese consumers buying overseas products, known as haitao in Chinese, will reach 35.6 million, pushing the overall market above 1 trillion yuan.
To expand and standardize cross-border retail transactions, the Chinese government has imposed relatively loose regulations and launched several favorable policies. It can be said that the current environment in China is very conducive to becoming a cross-border retail hub.
If the US can value and seize the opportunities of cross-border retail, the trade deficit between China and the US may be narrowed. At the same time, cross-border retail between China and the US will bring more benefits to the US, by increasing employment and promoting the internationalization of the logistics industry and agriculture. Many small companies in the US actually value the Chinese market very much and have a strong desire to do business with China.
Alibaba`s Gateway `17 conference, which was held earlier this year in Detroit, attracted more than 3,000 small companies and entrepreneurs wishing to export to China. Numbers like these show the enthusiasm of companies in the US to trade with China.
China has always been willing to expand its imports from the US based on actual market demand and has never deliberately sought a trade surplus. The US could undertake further cross-border retail cooperation with China. For instance, accepting direct yuan-denominated payments could attract more Chinese consumers. Another move could be to expand the categories of export products and ease some restraints on items such as personal electronic products, household medical devices and some medicines.
With joint efforts by both sides, cross-border retail will likely grow into a new spotlight in trade and narrow the trade deficit between China and the US.
The author is a researcher of the Chongyang Institute for Financial Studies, Renmin University of China.