A trade war won't benefit the US
Editor's note: The US and China have announced a new round of tit-for-tat tariffs, and if such actions and reactions continue and turn into a full-blown trade war, no one will emerge winner. Two experts share their views with China Daily's Pan Yixuan on the issue. Excerpts follow:
US should evaluate bilateral trade benefits
Di Dongsheng, associate dean of the School of International Studies, and International Monetary Institute, Renmin University of China
Although there is no winner in a trade war, China and the United States will not concede to each other's demands as long as they can bear the loss caused by reciprocal high tariffs.
Many believe US President Donald Trump will change his protectionist stance if the majority of US citizens start opposing his tariff policy on Chinese products, but that may not necessarily be the case. That's because developed countries such as the US have followed deflation policies for years that could, to some extent, weaken the impact of inflation caused by tariff hikes. No wonder Trump has even declared, wrongly though, that the US is winning the tariff war.
In 2017, exports to the US comprised 19 percent of China's total exports. And since the total exports accounted for 18.54 percent of China's GDP last year, a full-blown trade war would have limited impact on China's economy, although neither the Chinese government nor businesses want a trade war.
The industrial upgrading of China, too, can soften the impact of a trade war.
In the past, thanks to China's super-national treatment and abundant cheap labor, foreign enterprises used to compete with each other to invest in China. These foreign enterprises accounted for a large proportion of China's export industry while creating more jobs and establishing industrial chains.
But in recent years such enterprises have been moving out of China to Southeast and South Asia, because labor costs in China have increased and there is a dearth of workers in low-end manufacturing industries. Besides, China's export industry is undergoing a transformation and the country is now capable of making breakthroughs in some new fields in which developed countries have not taken the lead. Thus, it is expected that China will overcome the temporary difficulties and emerge stronger from the turbulence in global trade.
So, it's high time that the US realized it will get nothing out of a trade war and, instead, strived to end the tariff war. But the US seems set to continue with its protectionist policies for some time, during which both the US and China will suffer economic losses.
It is important that Washington rationally evaluates the pros and cons of bilateral trade, and starts sincere talks with China. Or else, by the time Trump's trade policy gradually becomes ineffective, the US economy would suffer irreparable losses, because if Washington continues to impose higher tariffs on Chinese goods, Beijing will fight back.