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Wang Wen& Liu Ying: Ten areas where China and US need to focus

2019-10-25

By Wang Wen and Liu Ying    Source: Global Times    Published: 2019-10-25


Substantial progress has been made in the latest round of China-US trade consultations on October 11. The volatile trade dispute which has taken global economic circles by storm over the past year and a half hasn't led to the collapse of the two countries' trading relationship in at least 10 fields. Cooperation in ties hasn't evaporated but rather seems to be strengthening. Enhancing cooperation in these 10 areas will not only be a key to stabilize ties but also an effective way to reverse global pessimism.



First, US investment is still pouring into the Chinese market.


Although China-US trade frictions have been escalating since US President Donald Trump took office, from manufacturing to finance and from services to retail, US investment in China has increased rather than decreasing. US investment in China reached nearly $3.45 billion in 2018, a rise of around 8 percent year on year. The US invested $1.63 billion in China from January to June 2019.


No company in the US can ignore the consumption demand of 400 million middle-income Chinese people, a number larger than the entire population of the US. Take Tesla and Costco. Tesla CEO Elon Musk set up the company's first overseas super factory, Gigafactory 3, in East China's Shanghai and plans to invest 50 billion yuan ($7 billion). It is the first foreign investment project of new energy vehicles in China and the largest foreign investment manufacturing venture in Shanghai.


US retail giant Costco opened its first brick-and-mortar store in Shanghai on August 27 with customers queuing for hours. The company's stock price jumped 5 percent on the same day.


US companies' attention to the Chinese market, their interest in investment and desire to cooperate are an important factor in mitigating China-US economic and trade frictions.


Second, China and the US have accelerated coordination of their financial infrastructure.


Financial cooperation has been a major marker of China-US cooperation in the past two years. Many big US firms have rushed to China, including three major US credit card companies, rating agencies such as Standard & Poor's and Moody's, investment management corporation BlackRock and hedge fund company Bridgewater. Financial cooperation between the two economic giants has also promoted the development of global infrastructure.


On November 9, 2017, the Silk Road Fund and GE Energy Financial Services, a division of General Electric, signed an agreement to jointly establish an energy infrastructure investment platform. The two sides will jointly invest in electric power grids, new energy and oil and gas, in countries included under the framework of the China-proposed Belt and Road Initiative.


China-US financial cooperation has helped the growth of infrastructure and real economy in the two countries. It also reflects the pragmatic spirit and strategic trust of the two countries' financiers.


Third, China-US energy cooperation is deepening.


In 2018, the US hit a record to be one of China's top 10 providers of imported crude oil. China and the US account for more than 33 percent of the world's total economic aggregate and are world's two largest consumers of energy. Energy cooperation is important to the foundation of the relationship between the major powers and is also a means of erasing the US current trade deficit with China.


Fourth, China and the US have full mutual recognition of each other's aviation products.


Cooperation in the aviation sector has found wings as it is seen to have vast prospects. The Chinese and American governments signed the civil aviation transport agreement as early as 1980 and later expanded aviation traffic rights twice.


Aviation traffic rights deal between China and the US is one of the most inclusive of the 126 bilateral air transport agreements China has signed. China-US aviation cooperation mirrors their overall cooperation in manufacturing, high-end equipment, high-tech fields and people-to-people contacts, which is in urgent need of constant care.


Fifth, China-US agricultural cooperation is expanding.


There is great potential for cooperation in agriculture. Cost of agriculture in the US is low and its cultivated land and forest area per person is about five times China's. Besides, it is the world's largest producer of corn and soy and the largest exporter of agricultural products. US agricultural exports in 2018 surpassed $144 billion. Although hurt by the trade war against China, frequency of bilateral trade in agricultural has been high. Therefore, agricultural cooperation can add new impetus to China-US economic and trade cooperation.


Sixth, China and the US join hands in healthcare.


Medical treatment knows no borders, and cooperation in the field of healthcare between China and the US has not been halted by the economic and trade dispute. Strengthening cooperation in the medical field is mutually beneficial and can lead to win-win between the two countries. China-US medical cooperation can help increase people's well-being and reduce the trade deficit. It not only enriches medical supply, but also meets people's needs and promotes the quality development of the medical industry in China and the US.


Cooperation not only benefits the people of both countries, but also contributes to humanity. China and the US have joined hands to help African countries fight the Ebola epidemic, demonstrating the responsibility and contribution of these two major powers to the world. Sustained cooperation in the field of healthcare will help reduce global tensions.


Seventh, China and the US still agree on global governance.


As leading countries in global governance, China and the US are of vital importance in terms of their stances and attitudes toward major international organizations. Despite Trump continuously pulling the US out of major international organizations, China and the US agree on the basic framework of the global governance system spanning organizations like the G20, APEC, IMF, the World Bank and WTO. Many of these mechanisms have become annual meeting platforms for the leaders of China and the US, which are cherished by both countries. In other words, neither China nor the US has so far been willing or able to upend the global governance mechanism.


Eighth, China-US military cooperation has become a new anchor for bilateral relations.


In recent years, exchanges between the armies of the two countries have covered military education, medicine, maritime search and rescue, disaster relief and anti-piracy peacekeeping operations, and efforts have been made to explore new forms of cooperation in the field of unconventional security. Dozens of exchanges are annually planned.


Military cooperation has become a new anchor for bilateral relations. Without China's participation and support, it will be difficult for the US to handle the Middle East, the Korean Peninsula nuclear crisis, or the Iranian nuclear issue.


Ninth, complementary cooperation in high-end manufacturing between the two countries is ongoing.


China has the world's largest, best and relatively low-cost labor resources. China's labor force population of nearly 1 billion exceeds the total of some 700 million in the West.


China's manufacturing industry accounts for 20 percent of the global manufacturing output, according to a Brookings report in July 2018, and China is the only country in the world with all industrial categories according to the United Nations industrial classification. The strong interdependence of China-US manufacturing is the key to prevent the two countries from severing ties.


Tenth, people-to-people contacts between the two countries have not been shaken.


The more intense the relationship between the two countries, the more important the cultural and educational exchanges. China and the US have maintained close cultural and educational contacts over the past two years. China-US think tank cooperation promotes the correct path to resolve China-US economic and trade frictions. China-US cultural exchanges are in the common interest of people of the two countries. As one American manager says in the Netflix documentary American Factory: "We are one big planet, a world, somewhat divided. But we are one."


To sum up, emphasizing China-US cooperation does not mean weakening China's resolute struggle against the US. On the contrary, let struggle be struggle and cooperation be cooperation. Promoting cooperation through struggle and mitigating competition by cooperation is a prudent way to objectively view China-US relations.


This is not only a manifestation of Chinese people's confidence and resilience, but also the new mind-set that public opinion in the two countries should have in dealing with the relationship between China and the US in the new era.


Wang Wen is professor and executive dean of Chongyang Institute for Financial Studies, at Renmin University of China and executive director of China-US People-to-People Exchange Research Center. Liu Ying  is a research fellow with the Chongyang Institute for Financial Studies, Renmin University of China.

Key Words: US   China   RDCY   Wang Wen & Liu Ying  

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