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By Huang Xingyuan
On June 2, the Chinese government released a white paper on China’s position on the China-US Economic and Trade Consultations.
The international community has paid close attention to China-US economic and trade consultations. There have been some rumours and speculation. In order to clarify the facts, the Chinese government has compiled this white paper.
It summarises and introduces the history of China-U.S. trade friction, and the general situation of the trade talks.
Through solid data it proves that the trade war provoked by the US is detrimental not only to China and the US but the whole world. The white paper presents China’s principles and bottom lines for the trade war and trade talks.
That is, China doesn’t want a trade war, but will not dread fighting one when necessary. Now comes the time of “necessary”, because the US side has backtracked on its commitments.
In the meantime, we remain open to negotiations. But the negotiations have to be conducted in good faith and be based on mutual respect, equality and mutual benefit. I hope the US side will not try to impose an unequal treaty on China.
Trade war between US and China escalating?
Recently, US President Donald Trump talked about a new round of tariffs to be imposed on Chinese products.
I think the international community is disappointed and regrets America’s actions. The trade talks were already in the final stage.
Whether President Trump’s actions are on impulse or deliberate, our first impression is they are extremely irresponsible.
China does not want a trade war but is not afraid of it. We hope the US could put right their wrong practices in a timely manner and not act on impulse.
This requires courage from the US side. China remains open to negotiation. Negotiations means both parties have to meet each other in the middle and China cannot be the only one making concessions.
This also requires the American side to show their good faith and resolve the differences through cooperation and consultation on the basis of equal footing and mutual respect. What makes a statesman different from a politician is the former has strategic vision, broad mind and sense of responsibility.
Indeed, there was an agreement between China and US. I still remember the two sides issued a joint statement on May 19 last year with the consensus that “we want no trade war and will stop tariff hikes on each other”.
Just when the international community was still celebrating this consensus, 10 days later the US side tore up the joint statement and announced tariff hikes on 50 billion Chinese exports to the US.
Also, in December last year, the two sides reached a consensus on the number of American goods China would purchase.
However, the US side has arbitrarily raised its demands in the subsequent consultations. I don't know why the current US administration would carelessly throw away the "contract spirit" that America used to cherish?
Western jobs and China’s industrial development
While President Trump is trying to re-industrialise the US, while Europe today relies on the services sector to provide employment to its workforce, China has an even more challenging task of employment.
China also faces the problem of losing job opportunities, maybe even worse than the US. The only difference is that China does not blame this on the US.
China’s development didn’t steal job opportunities from the US. On the contrary, China has provided new impetus to the US job market.
According to the US-China Business Council, in 2015 alone the US-China economic and trade relationship has provided 2.6 million jobs in the US.
As regards the concerns that a trade war between the US and China will have devastating effects on the world economy, I understand the European Union’s concern.
Apart from the US administration which started the trade war, the international community shares the same concern. Growth in trade has been a key force in the growth of the world economy.
The world economy was already struggling to recover from the last crisis. The fact that the biggest economy in the world has waged a trade war and technology embargo may plunge the world economy into another recession.
According to the latest report by OECD on May 21, because of the escalation of China-US trade tensions, the growth momentum for the global economy has weakened sharply.
This year the global economy is projected to grow only 3.2%, the lowest in three years and significantly lower than the 5% annual average before the financial crisis.
As the global economy remain subdued, many countries may be forced to relax their monetary policy. This would increase global debts and financial risks, undermining the long-term healthy development of the global economy.
US bonds
It makes sense for the international capital market to closely follow this issue. With the trade tensions escalating, no one could predict what will happen next.
A series of casual actions from the US side such as arresting Chinese nationals, intercepting Chinese companies’ shipments and disrupting the global supply chain have undoubtedly damaged the credibility of the US government and US dollar assets.
From my personal view, as a responsible investor in the international capital market, China will make diversified investments of our foreign reserves on the basis of market rules and principles.
Cyprus and the Belt and Road
The Cyprus President led a delegation to visit China and attended the 2nd Belt and Road Forum for International Cooperation in late April.
The fact that President Anastasiades gave up his Easter Holiday to visit China and was the first foreign leader to arrive in Beijing for the summit speaks a lot about Cyprus’ strategic visions and broad mind.
Our two leaders had a very good meeting. According to President Xi Jinping, Cyprus is an important player in building the Belt and Road.
The Chinese side would like to cooperate with the Cypriot side in sectors such as ports, shipping and infrastructure construction, and would like to explore the possibility of conducting third party cooperation in the Mediterranean region.
According to President Anastasiades, Cyprus will actively participate in the building of the Belt and Road, promoting EuroAsia connectivity and achieving mutual benefit and a win-win cooperation.
The two leaders witnessed the signing of an MOU on Belt and Road cooperation and the Executive Programme for Cultural Cooperation, which marks Cyprus formally becoming a member among the circle of friends for BRI cooperation and a new phase in China-Cyprus relations.
Huang Xingyuan is the Ambassador to Cyprus of the People’s Republic of China
