The stance taken by US administration on trade with China – with Donald Trump threatening to impose an additional 25 per cent tariff on all imported Chinese goods – will damage the US economy, while cooperation between the world’s two biggest economies would be a win-win for both, writes Chinese consul to Scotland, Zeng Wei.
Since it took office in 2017, the new US administration has been trumpeting “America First” and has adopted a series of unilateral and protectionist measures by regularly wielding tariffs as a “big stick” and coercing other countries into accepting its demands.
By threatening additional tariffs and other measures, the US has provoked frequent economic and trade friction with its major trading partners, which disrupts global economic and trade order, dampens world economic recovery, and undermines the development of companies and the well-being of people in all countries, plunging the world economy into the “recession trap”.
The Global Economic Prospects report released by the World Bank revised its forecast for global economic growth down further to 2.9 per cent, while the International Monetary Fund also marked down its projection of world economic growth for 2019 to 3.3 per cent, from the 2018 estimate of 3.6 per cent, in its World Economic Outlook report published in April 2019.
Specifically targeting China, the US imposed additional tariffs and investment restrictions, provoking economic and trade friction between the two countries based on the following two accusations.
First, the US accuses China of stealing intellectual property and of forcing technology transfer. China is an innovative and diligent nation. It has created a highly sophisticated civilisation and contributed significantly to human progress.
In terms of some key innovation indices, China is already among the world’s leading players.
As China continues to witness a series of major scientific and technological achievements, its industries are gravitating towards the middle and high end, and the country’s international influence is markedly increasing. In 2017, total research-and-development investment in China ranked second in the world. The number of patent applications reached 1.382 million, ranking number one in the world for the seventh consecutive year. China is third in the world in terms of valid invention patents held. China encourages and respects voluntary technical cooperation between Chinese and foreign firms based on market principles. It strongly opposes forced technology transfer and takes resolute action against intellectual property infringement.
Historical records confirm that China’s achievements in scientific and technological innovation are not something we stole or forcibly took from others; they were earned through self-reliance and hard work.
Accusing China of stealing intellectual property to support its own development is an unfounded fabrication. Accusations against China of forced technology transfer are baseless and untenable.
Second, the US insists that the trade deficit in bilateral commercial exchanges with China constitutes “being taken advantage of”.
The Chinese and American economies are interlinked, and bilateral trade and investment are mutually beneficial. China and the US are each other’s largest trading partner and important source of investment.
In 2018, bilateral trade in goods and services exceeded US$750 billion, and two-way direct investment approached US$160 billion.
China-US commercial cooperation has brought substantial benefits to both countries and both peoples. In 2017, the total annual sales revenues of US-invested companies in China were US$700 billion, with profits exceeding US$50 billion.
Therefore, if trade in goods and services as well as two-way investment are taken into account, China-US trade and economic relations are mutually beneficial, rather than the US “being taken advantage of”.
The tariff measures by the US result in serious adverse consequences, making two-way trade-and-investment volume plummet, having significantly increased production costs for US companies, leading to domestic price hikes in the US and having an impact on US economic growth and people’s livelihood.
If the US imposes 25 per cent additional tariffs on all imported Chinese goods, US GDP will decrease by 1.01 per cent, with 2.16 million job losses. Therefore, the US trade bullying harms others, bring no benefit to itself and will not “make America great again”.
The Chinese government rejects the idea that threats of a trade war and continuous tariff hikes can ever help resolve trade and economic issues.
Guided by the spirit of mutual respect, equality and mutual benefit, the two countries should push forward consultations based on good faith and credibility in a bid to address issues and jointly safeguard global economic stability and development.
Since they were launched in February 2018, the economic and trade consultations between China and the US have come a long way with the two sides agreeing on most parts of the deal.
But the consultations have not been free of setbacks as a result of a US breach of consensus and commitments, and backtracking. Cooperation is the only correct choice for China and the US, and win-win is the only path to a better future. Striking a mutually beneficial and win-win agreement serves the interests of China and the US, and meets the expectations of the world.
Zeng Wei is a spokeperson for the Chinese Consulate in Edinburgh