China will never surrender to economic bullying

People's Republic of China flags
People's Republic of China flags Xinhua / Photoshot
Ambassador of the People’s Republic of China Shen Zhifei

Recently, China-US trade friction has been the focus of global media. There is also quite some coverage on the issue by the Lithuanian media, mostly concerned that the trade war not only has a bearing to China and the US but will ultimately have EU and Lithuania involved.

No doubt, a series of extreme trade protectionist measures taken by the US against China have harmed not only the interests of China and the US but is also bound to spread to other parts of the world including Europe. It has seriously undermined international economic order, disrupted global value chain and the international division of labor, and led to violent swings in the international financial and commodity markets, becoming the greatest source of uncertainty and risk for the recovery of the global economy. Since this year, World Bank and International Monetary Fund have lowed the expectation of global economic growth in 2019, stating that the China-US trade friction could further hurt the global economy and curb the already weak investment.

Trumpeting “America First” and trade protectionism, the US administration has also wielded tariffs and sanctions as a “big stick” against its allies. There have been trading frictions and tensions between the US and EU in the past year, ranging from steel and aluminum products, automobiles and auto-parts to subsidies to aircraft manufacturers. In recent days, the US and EU have threatened to impose tariffs on each other’s import respectively worth of $11 billion and $20 billion. The Trump administration also announced that the US ended special trade treatment for India, removing a status that exempts billions of dollars of the country’s products from US tariffs from June 5th. The Reuters commented that it is not only the most severe punishment on India since Donald Trump took office, but has also broken new ground on the battlefield of the international trade war. Other countries have to take countermeasures in response to the trade protectionist practices of the US, further disrupting global economic and trade order, dampening world economic recovery, and undermining the development of companies and the well-being of people in all countries, plunging the world economy into the “recession trap”.

Thanks to economic globalization today, economies, particularly the larger ones, are highly interdependent featuring mutually beneficial and win-win cooperation. The US claim it is “losing” in that its trade deficit with China exceeded $ 500 billion. As a matter of fact, the trade deficit with China results from both artificially-imposed restrictions, such as export control, and market forces, including industrial competitiveness, economic structure, trade policies, the position of the US dollar as the reserve currency, etc. Although China had a trade surplus, the bilateral trade benefits both sides. China has also stood as a major market for US export, creating large amounts of job opportunities in the US. According to a report released by the US-China Business Council in May 2019,  U.S. exports to China supported more than 1.1 million American jobs from 2009 to 2018, reflecting the significance of China to the U.S. economy. More importantly, the US has also reaped enormous benefits from its trade with China.  54 percent of China’s goods trade surplus from the United States was generated by foreign firms and 53 percent of the surplus came from processing trade. China only earned limited processing charges while the United States accumulated huge benefits from designing, parts supply and marketing. By trading with China, the United States imported a huge amount of high-quality products at low prices and therefore managed to keep comparatively low inflation and raise the real purchasing power of the American people, especially the low and middle-income cohort.

China is always committed to handling differences and disputes through dialogues and consultations, conducting multiple rounds of talks with the US administration with utmost sincerity and patience. Even threatened with tariff hike by the US, China has demonstrated complete sincerity and sat down for earnest consultations. However, everytime when the two sides are drawing close to a negotiated solution, the US resorted to intimidation and coercion, persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, in an effort to impose on China a solution that is totally unacceptable. The US has gone as far as to mount a groundless crackdown against the Chinese private-owned company Huawei. Using its state power, the US has placed Huawei on the so-called “entity list” and tried to sever its supply chain, which is typically economic bullying.

For China and the US, the two biggest economies of the world, cooperation is the only correct choice and win-win is the only path to a better future.  Striking a mutually beneficial and win-win agreement not only serves the interests of China and the US but also meets the expectations of the world. However, consultations have to be based on principles as well as built on mutual respect, equality and mutual benefit. Negotiations will get nowhere if the US puts “extreme pressure” and tries to coerce China into giving ground on issues of principle. China has been consistent and clear on its position, that China is open to negotiation, but will also fight to the end if needed. China does not want a trade war, neither is afraid of one and will have to fight one if necessary.

China remains committed to its own cause no matter how the external environment changes. The trade war provoked by the US might have an impact on the economy of China in the short term. However, as the biggest manufacturing base and consumer market with the largest population, China’s economy is hugely resilient and has enormous potential and ample room for growth. China has maintained a steady economic growth this year, with the first quarter registering a 6.4% growth that is higher than expected. At present, China is actively improving policies in support of innovation, increasing the R&D input, fostering talent and strengthening international cooperation in the field of science and technology innovation. China’s spending on science and technology R&D has exceeded 2% of GDP and has grown into a leading country in global innovation. According to Patent Cooperation Treaty Yearly Review 2018, ten Chinese enterprises stand among the top 10 international patent applicants,  with Huawei at the first place recording 5,405 published PCT applications. Those patents have been filed by Chinese enterprises, yet the outcomes of their innovations are to be shared around the world and benefit mankind.

As President Xi Jinping points out, “ China has been firmly putting forward the process of economic globalization, maintaining multilateral trade system, and committed to addressing the problem of inequality and imbalance in global economic development. “ China will continue to deepen reform and opening up, be a strong supporter of free trade system and economic globalization, and make unremitting efforts in building a new type of international relations and a community with a shared future for humanity”. China’s door will not be closed; it will only open even wider. We are expediting the implementation of the measures announced, including shortening the negative list on market access for foreign investors, further opening up the financial and other sectors, and strengthening the protection of intellectual property rights. China has grown into a major international investor. We will encourage credible and capable Chinese enterprises to invest overseas in an orderly fashion. China has actively expanded import from other countries. Since last year, we have voluntarily cut tariffs four times, bringing the overall tariff level down to 7.5 percent, a lower middle level in the world. We will also further improve the facilitation of customs clearance to significantly reduce cost and improve efficiency. A more open China will further integrate itself into the world and deliver greater progress and prosperity for both China and the world at large.

The views expressed in the article are those of the author and do not necessarily reflect the views or opinions of the Lithuania Tribune.

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