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Economy

A Limited Trade Agreement Helps Lift Confidence

Aug 02 , 2019
  • Wu Zurong

    Research Fellow, China Foundation for Int'l Studies

On June 29, 2019, President Xi Jinping met President Donald Trump in Osaka, Japan. They agreed to push forward China-US relations featuring coordination, cooperation and stability, and to restart economic and trade consultations on the basis of equality and mutual respect. The U.S. side agreed to refrain from imposing new tariffs on Chinese goods exported to the U.S. The Chinese and the US negotiating teams held “constructive” talks in Shanghai July 30-31, agreeing to meet again in early September.

During the past two months since the negotiations broke down in early May, Chinese media commentators and scholars published dozens of articles commenting on the new situation. Though some American hawks dismissed their commentaries as anti-America, they are actually helpful for American readers and trade negotiating team members to better understand China’s perspective. Their criticism of the U.S. provided a rare yet valuable opportunity to understand how far apart China and the U.S. stand on major world and bilateral issues, and what the real nature of China-U.S. trade conflict is. The following is a list of major issues involved in these discussions.

1, The tide of economic globalization is irresistible. China stands for globalization while the US has been embracing protectionism to resist it.

2, In the present world, all countries have become a community of common interests, with high level of economic interdependence and integration. China stands for common development of all countries while the U.S. believes in unilateralism under the slogan of “America First.”

3, The U.S. believes that tense military, economic and political competition has been unfolding worldwide, and it must wield all its power and means to maintain its dominance. China wishes to build a new international relationship based on equality, mutual respect and win-win cooperation and the common community of the shared future for mankind.

4, The U.S. regards China as a strategic competitor and believes that China has become the primary challenge to the United States in the coming decades. As a result, it has launched a tariffs war and various sanctions against China and carried out technological blockade. China believes that both countries gain from cooperation and lose from confrontation and that confrontation, whether in the form of a cold war, or a hot war or a trade war, will produce no winner. The relationship between cooperation and competition can be handled rationally, and the key lies in how to demarcate the boundary of competition and what nature of competition should be chosen. The US should respect China’s right to development.

5, China will grow regardless the external challenges. The U.S. can never succeed with extreme pressure.

6, American behavior is characterized by unilateralism, and has damaged its credibility and the established international norms. China stands for multilateralism and supports the world order based on the basic principles of the United Nations Charter.

7, The U.S. claims that the Chinese advanced technology such as represented by Huawei, is harmful to its national security. It has not only used its state power to suppress Huawei, but also urged other countries to refrain from cooperating with Hauwei. As China’s new technology keeps upgrading with confidence and opportunities, U.S. efforts to blockade China’s technology advancement are doomed to failure.

8, The U.S. holds that the trade surplus China has accumulated means the same amount of wealth the US has given China. It has gone further to boast that in the past 25 years, it is the US that has rebuilt China. As there is no savior in the world, such judgment cannot hold water.

9, It is known to the world that it is the US that has often gone back on its words in the economic and trade negotiations in the past year or so. It is untenable to accuse China of having gone back on its words. The negotiation is in the process. After all, nothing is actually agreed until everything is agreed upon

10, China’s economy, under the threat of the U.S. tariffs war, is not going to collapse.

The above highlights may also represent some of the Chinese official positions as well as public opinion on these issues. At least, some of the views are also accepted by many American scholars, businesses, academics, local officials, and farmers. People from various circles of both countries wish to see a healthy and stable China-U.S. relationship and to put an end to the trade war as soon as possible. A prolonged trade war has been harming the economies of China, the U.S. and other countries of the world.

As China and the U.S. have many profound differences on a number of bilateral and global issues and the negotiations involve so many difficult bargains rarely seen in history, it has become an extremely difficult mission for both sides to conclude a comprehensive trade agreement acceptable to both sides. Though the outsiders are often in the dark about the real progress made, they could hope for an early deal for both sides, even though on limited areas of the negotiated issues, which are relatively easy to reach agreement on. Even a limited agreement acceptable to both sides could ease the tension and lift the confidence in the world economy.

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