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Trade War Debate
Experts responses to renewed U.S. trade hostility
 NO.26 JUNE 28, 2018

Trade friction between China and the U.S. has been in the spotlight for around three months since U.S. President Donald Trump signed a presidential memorandum on March 22 authorizing the United States Trade Representative (USTR) to impose tariffs on $50 billion worth of imports from China.

The two sides decided to halt a potential trade war after Chinese Vice Premier Liu He's visit to the U.S. for trade talks from May 15 to 20, with the two countries agreeing to measures for a low-cost, optimal, win-win outcome from the consultations.

However, on June 15, the USTR announced a 25-percent penalty tariff on $50 billion worth of Chinese goods.

China was forced to respond in kind. The country's Ministry of Commerce unveiled a list of products from the United States—659 items worth about $50 billion—that will be subject to additional tariffs of 25 percent.

After exchanging blows, can China and the U.S. find a way to make peace over trade? The CIPG Digital Media Center asked a range of experts their thoughts on the issue. Edited excerpts of their responses follow:

Lu Xiang, an expert on Sino-U.S. relations with the Chinese Academy of Social Sciences

From June 15, 2018—the date of an announcement that will live long in history—a massive trade war targeting China has been launched. It involves the world's two biggest economies and the numbers involved also are unprecedented in recent times.

The existing world economic order was set up after World War II with the U.S. as the leading force. The WTO is an essential cornerstone of that order. The organization has kept growing and contributing to world economic development, especially since China's accession in 2001.

However, the threat of neo-isolationism arose during the U.S. presidential election in 2016 with Donald Trump as its champion. From the campaign trail to taking office, Trump has repeatedly attempted to compensate for his deficit in public popularity by sowing in the public mind an image of the U.S. as a victim.

Trump has variously claimed that the U.S. has been "raped", "robbed", "exploited" and "taken advantage of" by other countries under the existing international order. Hence, the U.S. needs to redefine its relationship in fields such as the economy, trade, and security with the rest of the world.

The U.S. trade war not only targets China, but also its traditional allies like the European Union (EU) and Japan, and neighboring countries like Canada and Mexico. But in terms of scale, China is the largest.

The essence of trade is the exchange of necessary goods. It is a reciprocal activity among economies. Both American companies and people have derived enormous benefit from trade between the two countries. Trump's increased tariffs on Chinese goods fall under the unwarranted charge of a Section 301 investigation, forcing the mutually beneficial economic relationship between the two sides into a state of hostility. This action is an open challenge to world trade rules and global interests.

However, the actions of Trump's administration do not represent the will, nor further the interests, of the U.S. people or its industrial giants. Key institutes including the U.S. Chamber of Commerce and the National Association of Manufacturers have united in condemning the counterproductive actions.

U.S. stock, bond and foreign exchange markets have all been fluctuating wildly since February this year, indicating that U.S. economic growth is still beset by enormous uncertainties. The U.S. economy has been generally stable in recent weeks, but with the renewed prospect of a trade war it will once again come under pressure.

The Chinese Government has shown all possible goodwill and sincerity in trade talks with the U.S., but a capricious U.S. government is making trouble not only for China and the world, but also for the country itself.

Zhu Feng, Dean of the Institute of International Relations of Nanjing University

A trade war between China and the United States has already begun.

The Trump administration went against its word and continued its unfair and unjust trade actions. Unfortunately, its reckless behavior will only burden the economies of both countries and hurt the global economy.

Trump has held high the banner of "America First" during his presidential campaign and after coming to power. However, the essence of this strategy is "America Alone:" economic nationalism when it comes to economic and trade issues.

Trump's strategy totally disregards the international system of multilateral free trade rules and procedures centered around the WTO. In order to achieve its ends, the United States has arbitrarily imposed tariffs on other countries based on U.S. domestic laws, interests and standards by creating and expanding conflicts by way of intimidation and retaliation.

Regarding the Sino-U.S. trade war, the Trump administration went even further by reneging on its pledge. The Chinese Government has been seeking dialogue with the United States since February and responding positively to the Trump administration's request for narrowing the two countries' trade deficit and other demands by increasingly opening up the Chinese market, lowering foreign investment restrictions, committing to importing more U.S. goods, and strengthening intellectual property protection. After negotiations, representatives of China and the United States published a joint statement that pledges to constructively discuss and handle the Trump administration's pressure on China's economic and trade relations.

However, the White House suddenly announced the imposition of a 25-percent retaliatory tariff on $50 billion worth of Chinese imports shortly after U.S. Commerce Secretary Wilbur Ross's visit to China in early June for a new round of trade talks. The Trump administration's attitude of seeking obedience instead of negotiation has deeply offended the Chinese Government's dignity and interests.

The Trump administration's decision to launch a trade war against China on June 15 is borne not only of contempt for China's willingness to talk and negotiate, but also a mockery of the hard work undertaken by officials of the two countries during recent dialogues. Both theory and history suggest that there is no winner in a trade war.

Confronted with Trump's punitive tariffs on $50 billion worth of Chinese products, China has no choice but to respond in kind. A trade war involving $100 billion worth of commodities is unprecedented in world history and will bring huge consequences on the economies of the two countries as well as the world economy.

IMF Managing Director Christine Lagarde warned that U.S. unilateral trade actions against China may prove counterproductive to the functioning of the declining global economy.

The Trump administration's brutality and toughness in launching the trade war have challenged the world order in a way hitherto unseen. The EU, Canada and Mexico were also on the United States' retaliation list. It is time for the world's major economies to strengthen cooperation and jointly stand up to Trump's "America Alone" strategy. Otherwise, more countries and economies will suffer.

Diao Daming, an associate professor at the School of International Relations, Renmin University of China

It is a pity that the Trump administration has gone against its commitments and is now threatening the world over trade. Its actions will incur the wrath of people all over the world. Every country harbors aspirations to develop its own economy, but such aspirations should never be built on the basis of destroying international mechanisms or the international order, or harming the interests of other countries.

The Trump administration's "America First" strategy is actually an extreme form of hegemony that flouts the international order and threatens the interests of other countries. It is a crude form of interference with the general laws of global economic development and the international division of labor. It goes against the law of the market. As a result, it will ultimately do serious damage to the interests of ordinary Americans.

China has always been an advocate of settling disputes through consultations and negotiations. Trade is always mutually beneficial—it is never the case that only one party gains from the arrangement. Hence the approach to resolving trade issues should be through expanding cooperation and making a bigger cake together.

China does not want a trade war; it wants to protect the practical interests of the country and its people, and defend the international trade order that supports sustained growth. China will be forced to take countermeasures of equivalent scale and strength. Waging a trade war does no good to any parties. The Trump administration should therefore reverse its position as soon as possible.

Li Yong, a senior fellow with the China Association of International Trade

The 25-percent penalty tariff issued on June 15 carried the obvious intention of initiating a trade war between the two countries.

China is imposing strong countermeasures on the continued unilateralism of the U.S., while restating its position of being fully against a trade war.

The background to these countermeasures is different from the situation of two months ago. China and the U.S. have undergone several rounds of negotiations over trade issues where both parties reached a consensus. It is against this backdrop that the U.S. imposed an additional tariff on Chinese goods.

The unilateral actions of the Trump administration are shortsighted and counterproductive. They go against both global interests and the long-term interests of the two countries involved. The consequences of these actions might not be what the White House expects, and in the end, they will only serve to hurt the U.S. itself.

Now that the war is on, taking countermeasures is the only reasonable choice that China is left with—although it is a choice China did not want to make.

Copyedited by Rebeca Toledo

Comments to zhouxiaoyan@bjreview.com

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