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Trade deficit focus called misleading

By May Zhou in Desmoines | China Daily | Updated: 2017-06-14 07:31

As scores of US and Chinese experts gathered on Monday in Des Moines to discuss the countries' relationship, they agree that it will benefit the two countries and the whole world for them to continue to work together.

Several scholars exchanged their views on issues including trade imbalance at a one-day think tank symposium at The World Food Prize Foundation.

At the symposium, Tori Whiting of the Heritage Foundation said that the Trump administration's focus on the trade deficit is misleading.

China has made a large foreign direct investment in the US and holds more than $1 trillion worth of US Treasurys, which help finance US debt, said Whiting.

"The value of imports is often overlooked. Over 50 percent of our imports are intermediate products used to produce high-value goods," she said.

Zhang Yuyan, director at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that the trade deficit mainly reflects the different development stages of the two countries, and it has been declining over the years.

The US trade deficit with China through April 2017 stood at approximately $106.5 billion, according to the US Census Bureau. For all of 2016, the deficit was more than $347 billion.

"China is a rapidly developing country with a high savings rate, while the US is a developed country with a low savings rate," Zhang said.

"Looking from a long-term historical perspective, the US enjoyed a trade surplus when it was developing rapidly after World War II, until its population started to age, and savings started to decline. China now is approaching that stage," he said, predicting that the trade gap, which he said was $250 billion by the Chinese calculation in 2016, would narrow further.

Mike Naig, deputy secretary of the Iowa Department of Agriculture and Land Stewardship, said that US and China should not focus on the differences exclusively but the commonality.

"We both face issues such as aging farming populations, access to land and dependence on trade. If we focus too much on our differences, we would forget to work together to deal with those issues," Naig said.

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