By Zhao Minghao Source: Global Times Published: 2018-5-7
The latest round of trade talks between China and the US has come to an end. Although the two countries didn`t sign any agreements, they exchanged ideas on issues including expanding US exports to China, bilateral services trade, two-way investment and protecting intellectual property. The two countries agreed to stay in close communication on relevant issues and establish a corresponding work mechanism.
The result accords with people`s expectations. Considering the complexity of the US-China trade dispute, only one or two consultations definitely won`t solve the problem. In April, the US President Donald Trump administration announced tariffs on Chinese imports and China took corresponding countermeasures. The world soon worried the two countries will eventually start a trade war. However, an American trade delegation`s visit to China shows that Washington and Beijing still want to avoid escalation of the dispute.
There are more voices challenging the Trump administration`s move to impose tariffs on China. The Consumer Technology Association and the National Retail Federation recently entrusted The Trade Partnership, a consulting firm that studies international trade, to start research into the estimated impact on the US economy once the trade war starts. The results show that if the proposed US tariffs and China`s proposed retaliation are put into effect, US output will decline by nearly $3 billion and nearly 134,000 workers will lose jobs. Job losses in the agriculture sector will soar to over 67,000.
The Trump administration`s trade offensive would be a shock to the supply chain of the American manufacturing industry and harm the interests of American farmers and suppliers. Iowa Governor Kim Reynolds expressed her worries and complaints to Trump at a White House meeting. Other states of great importance to Trump`s 2016 presidential election are also worried about the consequences of a trade war.
The Trump administration eventually sent a high-level trade delegation to China, which shows that it is facing great pressure from different parties. People are criticizing Trump`s trade deficit-oriented strategy, including Joseph E. Stiglitz, a Nobel laureate in economics. Others said that although White House trade advisor Peter Navarro has great political influence on the president, he is neither an outstanding economist nor a specialist on China issues.
The trade dispute between China and the US seems promoted by ideology mingled with strategic security issues. Firstly, the trade war has become more of a technology war, and the Trump administration desperately wants to prevent improvements in Chinese technology. While President Trump slashed the federal budget on research and development, the US hopes to force China to give up Made in China 2025. China will firmly protect its own interests from such an unreasonable demand.
Secondly, as said by Rachel Brewster, a professor at Duke Law School, the Trump administration has dealt hard blows to the World Trade Organization (WTO), especially the existing multilateral trade mechanisms.
In fact the Trump administration`s unilateralism has also triggered the opposition of Europe, Japan and Canada. Lee Hsien Loong, prime minister of Singapore, also said that the trade tension between China and the US worries Southeast Asian nations, and Singapore is deeply concerned over the rising tide of protectionism and anti-globalization sentiments.
The Trump administration regards a trade offensive as an important part of strategic competition with China, and even uses Taiwan as a bargaining chip to force China to compromise. Once a trade war fails to deliver results for the US, the Trump administration is likely to make provocative actions on Taiwan and the South China Sea, which will drag China-US relations into bigger problems.
Beijing recognizes that resolving the trade dispute will be a long, hard fight. The National Association of Manufacturers, one of the most influential business lobbying groups in Washington, is urging the Trump administration to negotiate with China on a free trade agreement. Chinese leaders welcome negotiations of mutual respect and benefit, but will never submit to an arrogant and strong-willed US even though China will have to pay some price. In the past two or three months, the Trump administration underestimated China`s strong resolution to strike back in protection of its own interests. The White House needs to rethink its strategy.
The author is a visiting fellow at the Chongyang Institute for Financial Studies at Renmin University of China.