On May 19, China and the United States released a joint statement regarding their economic and trade relations, promising that neither side would resort to higher tariffs as an act of revenge, which brought to an end two months of trade disputes.

The joint statement, though not the best outcome, has managed to defend China's bottom line. China will actively expand imports, instead of reducing exports, to alleviate the trade imbalance. No mandatory plan was created for the unreasonable demand initially proposed by the United States requiring China to cut trade surplus by $200 billion. In addition, the Made in China 2025 initiative will be safeguarded rather than undermined.

Although a consensus was reached to resolve the bilateral trade imbalance by expanding U.S. exports, frictions and disputes may arise during its implementation. Issues which are not mentioned in the joint statement are still awaiting solutions. Therefore, Sino-U.S. trade disputes are still far from a complete resolution.

In the foreseeable future, trade disputes may inevitably break out between China and other countries, including the United States, over the course of more intense trade interactions. China should get used to and ready for this.

According to the joint statement, China will further enlarge its agricultural and energy imports from the United States, which will bring about benefits for both countries in the long term.

As the largest energy importer in the world, China will benefit from more stable and cheaper petroleum and gas imports. Narrowing and removing the energy price gap between China and other major industrial countries will reduce production costs for Chinese companies and shore up their competitiveness in an open economic environment.

Since oil and gas reserves in China lag behind major producing countries in terms of quality, quantity and exploration costs, an overemphasis on self-sufficiency would only result in rising costs for downstream manufacturers and perhaps for the entire national economy. Moreover, domestic gas output can by no means grow in step with consumption.

To strengthen its voice in negotiations for energy trade, China needs to push for the diversification of import sources and forms. A country with China's energy import volume can manage to both increase import volume and make import sources and forms more extensive. Therefore, it is a reasonable decision to include the United States on the list of oil and gas suppliers to restrain unreasonable prices from traditional suppliers.

Will increased exports to China harm the interests of the United States? Of course not. In fact, U.S. business leaders have held high hopes for a dramatic increase in earnings from an import surge. Several years ago, the former U.S. Treasury Secretary Lawrence Summers asserted that the shale revolution would propel oil and gas exports into a new growth driver behind the U.S. economy. Without a foothold in the Chinese market, the country's prospects for remarkable growth in oil and gas exports would be slim.

In fact, opening up the huge Chinese market will help the United States' oil and gas industries lower production costs and intensify its international competitiveness and profitability, which is of great significance to these capital-intensive industries.

The author is an op-ed contributor to Beijing Review and a researcher with the Chinese Academy of International Trade and Economic Cooperation

Copyedited by Rebeca Toledo

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