Source: Global Times Published: 2019-4-2
Around this time last year, China and the US were on the brink of what has become a year-long trade war after the US announced its first set of tariffs on $50 billion worth of Chinese goods.
But as Chinese Vice Premier Liu He headed to Washington for a new round of trade negotiations with US officials, the two sides appear closer to a trade deal than at any other point.
Though uncertainties remain, the year-long battle and trade negotiations should offer profound lessons for the US and the world: No one wins a trade war, and more importantly, the US should realize that China, with its massive economic power and political will, is capable of and resolute in defending its legitimate interests, said Chinese experts.
"Facts have proven that the US' bully approach won't work on China. The US might receive submissions from its other trade partners, but with China, it will receive retaliations and pay for its bullying tactics," Bai Ming, deputy director of the Institute of International Market Research of the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Tuesday.
This is the main reason why the US is willing to sit down and talk and the two countries can possibly reach a deal, Bai noted.
China has shown its determination and capability to pressure the US, Bai noted. "For instance, China's action on the Boeing 737-8, which is based on security concerns, led the international community to express concerns and put pressure on a major US enterprise."
China was the first country to ground its entire 737-8, or 737 Max 8 fleet in March after the same model of plane has crashed twice in five months, with the loss of hundreds of lives.
It is unlikely that the final deal will contain anything that has not been discussed - from purchases of more US goods to better protection for US firms' technologies and intellectual property, to greater market access - all of which China has been addressing, analysts said.
Chinese and US officials have held eight rounds of high-level negotiations, and numerous talks between lower-level officials.
Diao Daming, a US studies expert at the Renmin University of China in Beijing, said "what the US could learn from the year-long friction with China is that using a unilateralist approach to deal with China can only cause a lose-lose situation. A result that can satisfy both sides can only be reached on the negotiation table based on equality and mutual respect."
Though the talks have been mostly positive since President Xi Jinping and US President Donald Trump struck a truce in December, they have been far more complicated and challenging. And the US side has adopted what some analysts described as "blackmail tactics" marked with constant threats and pressure.
For instance, in the first round of trade talks in Beijing in May 2018, US officials delivered a long list of demands to Chinese officials, including cutting its trade surplus by $100 billion each year and changing its industrial policies. Needless to say, that did not end up anywhere as Chinese officials pushed back.
Then there is the backtracking on the US side. At the end of May, after talks in Washington, the two countries released a joint statement that required China to reduce its trade surplus with the US and the two sides would avoid a trade war. But just days after the US backtracked and announced it would go ahead with tariffs.
Aside from equality and mutual respect, credibility is also extremely crucial, Bai said.
"Of course China wants to have a positive result to end the friction, but if the two sides still disagree or the US makes new moves after the talks, China is prepared. China won't make a deal if it has no backup plan."
The US could also see that the trade deficit it wants reduced hasn't dropped at all, Bai said. "China has found that it can find substitutes for US goods from Europe and Latin America, but the US could discover that substitutes for Chinese goods are hard to find. That's why so many US firms increased their imports from China as much as possible before the US tariffs took effect."
The US has also sought to increase pressure on China through other issues. Since the trade war, the US has targeted Chinese telecom companies such as ZTE and Huawei. But Huawei's 5G programs continue to make progress in many countries, including some US allies.
The US has also launched a worldwide smear campaign against Chinese companies and investments, with officials going as far as calling Chinese investments "new colonialism" or "debt book diplomacy" in Africa.
But China's cooperation with African countries and the Belt and Road Initiative (BRI) haven't seen any major challenge, and EU members like Italy even signed a BRI MoU with China, and France wants to cooperate with China in a third-party market such as Africa, and Germany maintains an open attitude to the BRI and is willing to attend the second Belt and Road Forum for International Cooperation in April.
US pressure, coupled with downward economic pressure, has concerned many, including some Chinese scholars and citizens, about the future of the Chinese economy. Some had even predicted that the Chinese economy would fall into recession.
After a year, what's clear is that the Chinese economy continues to show tremendous resilience in the face of what officials call "unprecedented" external and internal challenges. Though continuing to face downward pressure, the Chinese economy grew 6.7 percent in 2018, and is still among the fastest growing in the world.
The Chinese currency's exchange rate, which experienced turbulence last year, remains stable compared to currencies of other emerging economies.
Bai stressed that "China has proven to have a reliable pressure-bearing capability to keep its economy stable under pressure from the largest economy in the world."
What China and the Chinese people could learn from the year-long friction with the US is that "China's achievements since the reform and opening-up are remarkable, and the challenges in the future could only be more difficult than the past," Diao noted.
To overcome these challenges, China needs to stay confident, be prepared and continue to make efforts on opening-up and deepening reform, Diao said. "What China is doing is not to satisfy some countries, but to serve the interests of its people and development."
Diao Daming is a research fellow of Chongyang Institute for Financial Studies at Renmin University of China.