More Sino-US trust: researcher

By Zhou Mi | China Daily | Updated: 2015-09-24 07:43

The development stage, industrial structure, factor endowments, market demand and many other characteristics of China and the United States are highly complementary. These have created favorable conditions for sustainable development of bilateral trade based on the theory of comparative advantage. In addition, the acceleration of two-way investment, internal trade of transnational corporations and China-US bilateral trade and investment agreements have all provided practical support to the development of bilateral trade under the current global economic setting.

Bilateral trade between the two reached $549.19 billion in 2014, exceeding China's total foreign trade volume in 2001, according to data from the General Administration of Customs. China imported $153.13 billion worth of goods from the US and shipped $396.06 billion of products to the world's largest economy, achieving a surplus of $242.93 billion.

Since China joined the World Trade Organization in 2001, bilateral trade between the two sides has maintained steady growth, except during the tough period caused by the global financial crisis. Bilateral trade growth was higher than the overall growth rate of China's foreign trade. The economic crisis made both China's import and export growth rates fall. However, the growth rate of the nation's imports from the US grew even faster after its exports exceeded the US shipment volume to China in 2007, indicating the country bought more US products with growing purchasing power.

The US was China's largest export destination and second biggest market for imports between January and June. Electrical equipment accounted for the largest proportion of China's imports from the US. Cereals, fruit, machinery and aircraft followed from second to fourth. The average growth rates of these four categories were 10 percent higher than the proportion of China's total import volume during this period, increasing by 13.4, 11.5, 11.1 and 10.6 percent respectively.

Meanwhile, China's exports to the US were more highly concentrated. Electrical equipment and machinery exports accounted for 22.4 and 21.6 percent of total shipments.

The US was one of the earliest to recover from this economic crisis among developed economies. Its withdrawal from quantitative easing and surging international capital reflux not only boosted market confidence, but also built a solid foundation to expand its import channels in the global market.

The two-way investment between the two nations has remained fast and stable. The internal trade of transnationals cooperation also contributed positive factors to bilateral trade. However, it should also be noted that there are disparities between the two in areas such as health, sanitary and phytosanitary goods checking standards, as well as discriminatory export control against China to purchase "sensitive products" from the US. These elements have affected the purchasing confidence and operating ability of Chinese enterprises.

As the global economy is still in the rebalancing period, the US is also experiencing an economic slowdown and additional negative impact by other economies certainly cannot be ignored. Supporting the Abe government's constitutional amendment in Japan, creating tension in the South China Sea and accusing countries of cyber attacks will put more pressure on the US economy. The US people could be misled and the image of Chinese products in the US could be affected if these issues cannot be adequately controlled during the 2016 US presidential election. Some US politicians may make these topics into big deals but negative political ties will not be conducive to the sustainable development of bilateral trade.

In fact, the two countries have broad and close interdependencies in goods, technology, finance and culture. Having a favorable business environment certainly can benefit both sides. China and the US can play an important role to reduce greenhouse gas emissions and expand the sales of information technology products through collaboration, as well as promoting environmental projects and products.

To achieve sustainable development of bilateral trade, and meet consumer demand, China and the US should strengthen mutual trust in a bid to avoid welfare losses due to nationalism and trade protectionism. Under such circumstances, impartially in guiding public opinion and preventing inefficient mutual constraints between legislative and administrative departments can help the market play a decisive role in resource allocation for enterprises of both countries.

The author is a senior researcher fellow at the Chinese Academy of International Trade and Economic Cooperation.