Chen Wenling: Analyzing the China-US High-Level Economic and Trade Consultation

  • Date:2019-02-15
  • Source:CCIEE

On the evening of January 30th, 2019, Chinese Vice Premier Liu He led a delegation to the United States attending the economic and trade consultations with their US counterparts. A positive result has been achieved and the two sides are making continuous efforts to settle their differences.

From 12 o’clock Beijing time, July 6, 2018, the 25% tariff imposed by the Trump Administration on $34 billion Chinese products started to take effect and thus, can a ship with 70,000 tons of US soybeans be able to reach the shore before 12 o’clock drew attention from the international community. Finally, China and the United States decided to solve the trade war through negotiations. Despite the optimistic and complex expectations of the prospects of the negotiations, it will some time for us to digest the deep structural problems exposed by the China-US trade friction.

Recently, many scholars and experts said that amid the complicated domestic and international situation, we should envisage the problems, stick to our bottom of the line, and use our wisdom to solve problems because this is the right way to ensure that the China-US relations will return to the right track.

The trade consultations resumed by China and the United States cover various aspects of economic development. The impact on the US soybean exports also exposed the structural problems in China’s agricultural development. Gao Juncai, former department director of the National Development and Reform Commission, said in an interview that the United States and China are the world’s largest economies and the contradiction between the two major powers will exist for a long time, however, they also share similarities. Taking soybean as an example, China’s soybean imports have increased year by year in recent years. In 2017, it imported more than 90 million tons of soybeans, accounting for more than 85% of China’s soybean consumption in that year. Brazil is China’s largest soybean exporter, followed by the United States, whose soybean export accounts for 40% of China’s total imports. Many Chinese companies have turned to other countries for soybean due to the increased tariff on US soybean. The trade frictions have forced China to diversify its import of soybean and promote domestic soybean production. In the future, we should improve China’s production of soybean, improve the varieties of soybean, increase the irrigated area and allocate appropriate subsidies to soybean production. At the same time, we should diversify soybean imports.

Experts pointed out that both China and the US have suffered from the trade war, and the trade consultation will help the two sides to adjust their policies and do a better job.

In terms of the trend of the China-US economic and trade negotiations, CCIEE chief economist Chen Wenling stressed in an exclusive interview that some of the demands put forward by the US are in line with China’s expansion and opening up. For example, China also needs to strengthen the protection of intellectual property rights to satisfy the requirement of China’s own development. China’s manufacturing is moving towards the mid-to-high end, its innovation capability and scientific research are also making great progress, therefore, IP protection is essential for China as well, not just for the US or other developed countries.

She said that some of China’s technologies may not be as good as the United States but they have developed rapidly. Therefore, intellectual property protection is also a necessity for China’s own development. With the advancement of the “Belt and Road Initiative”, China needs to strengthen intellectual property protection and consequently, it should not be hard for China and the US to reach an agreement in this regard.

China must stick to its bottom line. For example, we must not make any kind of compromise on China’s political system and major policies. We will not allow the United States to intervene in other countries with its own domestic rules.

Xu Hongcai emphasized that China has a lot of room for further opening up. In the past ten years, a lot of work has been done to promote the circulation of goods and elements and significant achievements have been made. For example, the trade volume between China and the United States has reached more than 600 billion yuan, but mutual direct investment is only over 200 billion yuan, which is still relatively small. This is an important part of the China-US negotiations.

As far as he knows, the direct investment of the United States in the ASEAN region has reached 1 trillion. On the other side of the Atlantic, investment in Europe reached 2 trillion, but its investment in China was only over 100 billion, indicating that the trade between China and the US is simply “buy and sell”.

 Xu Hongcai believes that we must create a high-level and high-quality open economic system, which is an inherent need for China’s economic development. Relying on its resource can hardly help China to realize sustainable economic development in the future, instead, it should make the best use of various markets and resources. Therefore, the economic cooperation between China and the United States is of great significance.

The experts believe that the opening up of the past four decades has promoted reform and innovation in China, which have benefited all of us. In the future, we will continue to develop along this path and do a better job. The consultations between China and the United States itself is also a progress.