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Confidence and Resolve
China remains composed in the face of a trade war waged by the U.S.
By Wang Xiaohui | NO.26 JUNE 28, 2018
Visitors peruse exhibits of the China Pavilion during the Licensing Expo 2018, a trade show for the licensing industry, in Las Vegas, the United States, on May 22 (XINHUA)

Trade ties between China and the United States have remained unclear and strained since August of last year, when Washington unilaterally started a Section 301 investigation into alleged Chinese intellectual property and technology transfer practices.

Trade tensions between the world's two major powers escalated once more this year on June 15 with the White House's announcement of the imposition of an additional 25 percent tariff on Chinese goods worth approximately $50 billion. China hit back the following day by unveiling a list of U.S. products that would be subject to additional tariffs.

Then on June 18, the White House made another statement, threatening tariffs on another $200 billion of Chinese products. In response, the Chinese Ministry of Commerce said on June 19 that if the United States loses its rationality and unveils another list of Chinese products for additional tariffs, China will have no choice but to take comprehensive quantitative and qualitative measures to resolutely strike back. A trade war seems imminent.

What will be will be

Recent media reports have frequently expressed the sentiment that no one wins a trade war, and that "to kill 1,000 of one's enemy costs the lives of 800 of one's own men."

Is such a plain truth incomprehensible to U.S. President Donald Trump and his advisors? Surely not. Washington is fully aware of the damage it will suffer and is willing to pay the price, because it is more focused on the damage the war will inflict on China.

The Trump administration's apparently inconsistent attitude is only a tactic. Its strategy has never changed. It is determined to use the trade war and any other approach it can to impede China's progress. China must be clear about this.

If we look back on past decades, we will draw a clearer picture of the situation. U.S. hostility toward China has profound historical roots. It is the result of the differences between the social systems of the two countries.

Washington's attitude toward China has never changed. We can feel this hostility from the Truman Doctrine to President Richard Nixon's book, 1999: Victory Without War, to Secretary of State Madeleine Albright's hailing of the Internet as a way of opening up China to foreign ideas and to all the current actions by the Trump administration. The only difference between Trump and the others is that the businessman-turned-president doesn't use the conventional approaches of politicians, and that his overly flamboyant gestures leave the rest of the world flummoxed.

A protracted war

The trade conflict between China and the United States is a long-term problem caused by the respective economic structures of the two countries. It is impossible to solve it in the short run. On June 15, Trump explained his decision to impose the tariff. The gist was that bilateral trade between the United States and China has been unbalanced, and it is unfair that the United States has suffered a deficit, while China has seen a surplus. The allegation that bilateral trade remains unbalanced is true, but this can't be taken as an unfair outcome.

The cause of the current situation is complicated. Indeed, some sectors in China need to open wider, while state-owned enterprises need to improve their business modes. But the more important cause of the problem is the difference between the two countries' economic structures, the role of the U.S. dollar as a global currency, the U.S. lifestyle featuring low deposits and high consumption and the U.S. export restriction on hi-tech products to China, along with other systemic issues.

Take the U.S. dollar's role as an example. In the 1970s the United States managed to make the dollar a global currency, which led to an enormous profit gain. However, to maintain the dollar's position, the United States must extensively dispense its currency worldwide, which has led to trade deficits. The logic is simple. Washington is fully aware of this fact. It has just conveniently forgotten to mention it.

Since it is impossible to solve the trade imbalance between China and the United States in the short term, trade conflicts and even trade wars will occur frequently in the future. In view of this fact, we should be prepared for a protracted war.

Challenges ahead

When pursuing development, smooth sailing is not the norm. Although China grew rapidly in the first two decades of its reform and opening-up policy, it still fell far behind Western countries, particularly the United States. Since its entry into the WTO in 2001, China has seized opportunities to globalize, opening wider and integrating into the international community. It became the world's second largest economy in 2010.

Since the 18th National Congress of the Communist Party of China (CPC) in 2012, China has intensified its efforts to promote progress in the economy, military, culture, science and technology, as well as social governance. The share of China's GDP in the global economy has grown to roughly 15 percent, up from 11 percent in 2012. The Chinese Government has set the goal of transitioning the country's economy from a rapid growth phase to one of high-quality development.

All those achievements are the fruits of the hard work of more than 1.3 billion Chinese people under the leadership of the CPC. However, hegemonic powers wedded to a Cold War mentality use them as pretexts to fan the so-called "China threat" and to attempt to contain China's development.

After World War II, the United States gained world leadership, and after the dissolution of the Soviet Union, it became the sole remaining superpower. By wielding its political, military, economic and ideological influence, the United States managed to do almost anything it liked.

This has encouraged its egocentrism and intolerance of win-win outcomes. The trade war it has waged against China is just part of its scheme to contain China's development.

China has been committed to peaceful development, with no intention to be in conflict with any country. Over the past few months, we have been working to resolve the problem through negotiation. However, as an old Chinese saying goes, "The trees may prefer calm but the wind will not subside." When someone declares a trade war against China, we have no choice but to respond.

A broad vision

Mao Zedong once wrote in a poem, "Complaining too much damages health and one should have a far-sighted view of life." Deng Xiaoping remarked, "Development is of overriding importance." Xi Jinping observed, "A top priority for China is to manage our own affairs." These are good examples of the open-mindedness and great vision of Chinese leaders.

In pursuing its own interests, the United States has even fired shots at the European Union (EU) and Canada, which have been its allies for many years. How can we expect it to be fair with China? In the course of development, China will undoubtedly be confronted with various challenges, but we must not complain, knowing that with confidence and resolve we can achieve our goals.

First, we will further our reform and opening up, improve our economic structure, optimize our investment and trade environment, enhance our cooperation with the EU, Japan, South Korea, the Association of Southeast Asian Nations and African countries, and enlarge our partnerships to cushion the adverse impacts of the trade war.

Second, we will promote the implementation of the Belt and Road Initiative and increase economic and cultural cooperation with the countries along its routes to expand China's space for development.

Third, we will keep a clear head and become more aware of our weaknesses in technological innovation, core technologies and high-end manufacturing. We will increase spending on technological research and development as well as education, with a firm commitment to enhancing China's strength in science and technology.

Fourth, we will maintain strategic resolve. While safeguarding our national interests, we will uphold a broad vision for Sino-U.S. relations, and will try to keep the trade war at bay.

This year marks the 40th anniversary of China's reform and opening up. The country has reached a new starting point and will meet new challenges with unswerving confidence.

The author is editor in chief of China.org.cn

Copyedited by Rebeca Toledo

Comments to zhouxiaoyan@bjreview.com

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