Recently, economic and trade dispute between China and the U.S. has become a global concern. Wielding tariffs as a “big stick”, the current U.S. administration has unilaterally provoked economic and trade frictions with China since March 2018, when it launched an investigation under Section 301 against China. China has had to take countermeasures to defend the interests of the nation and its people while at the same time, engaging in multiple rounds of economic and trade consultations with the U.S. in an effort to stabilize the bilateral commercial relationship and the world economy.
In order to justify its initiation of the trade friction, the U.S. has accused China of pursuing trade surplus and of stealing intellectual property. Such claims are totally groundless.
The Myth of Trade Imbalance
One, the U.S. deficits are overstated. The U.S. Department of Commerce announced that its trade deficit with China in 2018 was 621 billion U.S. dollars, but did not announce a trade surplus of 150 billion U.S. dollars in services. The U.S. also counted re-exported goods from Hong Kong and Taiwan originating from the mainland to the U.S. in the total profile of China’s exports, while the U.S. re-export to China through Hong Kong and Taiwan was not counted. This specially-oriented double standard will inevitably lead to data distortion. Recently, the Chinese Ministry of Commerce released the Research Report on US Gains from the China-US Trade and Economic Cooperation. With calculation based on the joint study of Chinese and U.S. commerce authorities, the Report proves that overall U.S. trade deficit to China should be around 153.6 billion dollars. That is only 37 percent of what the U.S. claims.
Two, the main responsibility for the trade imbalance between China and the U.S. is not in the Chinese side. First and foremost, trade is a spontaneous behavior of the market, and China has never imposed business deals on others. Trade deficit results from, among other things, differences between countries in industrial competitiveness, economic structure, stage of development, international division of labor and trade policies, as well as the international currency status of the U.S. dollar, the low domestic savings rate and the mass consumption within the U.S., and the export restrictions of the U.S. side on high-tech products. Therefore, the root of the U.S. trade deficit problem is in the U.S. itself.
Three, the U.S. has actually reaped substantial gains from the bilateral economic and trade cooperation. Since China and the U.S. established diplomatic relations in 1979, bilateral goods trade surged from 2.5 billion U.S. dollars to 633.5 billion dollars last year and two-way direct investment totaled nearly 160 billion dollars in the past four decades. China and the U.S. are each others’ important trading partners and beneficiaries of such a complementary relationship. In fact, 54 percent of China’s goods trade surplus from the U.S. was generated by foreign firms and 53 percent of the surplus came from processing trade. China only earned from limited processing charges while the U.S. took the lion’s share of profits from designing, parts supply and marketing. Moreover, the U.S. exports to China supported more than 1.1 million American jobs from 2009 to 2018. The sales revenue of U.S. firms in the Chinese market exceeded 940 billion dollars in 2017. Importing high-quality products at a low price from China helps the U.S. keep comparatively low inflation and reduce its production costs. All of these speak to the fact that the U.S. is not losing, but instead, gaining huge benefits from the Chinese market.
Intellectual Property Theft?
China’s technological innovation is based on self-reliance and hard work. Now, in terms of some key innovation indices, China is already among the world’s leading players. In 2017, total R&D investment in China reached RMB 1.76 trillion, ranking second in the world. The number of patent applications reached 1.382 million, ranking No. 1 in the world for the seventh consecutive year. China ranks third in the world in terms of valid invention patents held.
Meanwhile, China is fully committed to intellectual property protection. It has established a legal system for the protection of intellectual property that is consistent with prevailing international rules and adapted to China’s domestic conditions. Many of the concerns raised by foreign firms doing business in China have already been addressed through judicial reform and a strengthened enforcement mechanism. The effective impact of China’s intellectual property protection has won broad international recognition.
In fact, this friction between China and the U.S. extends far beyond trade issues. It is confrontation between free trade and protectionism, multilateralism and unilateralism, and international rules and hegemonism.
So far, the impact of the U.S. trade bullying has been felt across the world, damaging the multilateral trading system, disrupting global industrial chains and supply chains, undermining market confidence, and posing a serious challenge to global economic recovery and a major threat to the trend of economic globalization.
China’s Position
In response to the economic and trade friction started by the U.S., China has been forced to take countermeasures, as bilateral trade and investment relations took a hit. For the well-being of the Chinese and American people and the economic development of the two countries, both sides deemed it necessary to come to the negotiating table to seek a solution through consultation. Eleven rounds of economic and trade consultations have been held, with the two sides agreeing on most parts of the deal. But the consultations have not been free of setbacks, each of them being the result of the U.S. breaching consensus and commitments and coercing China into compromising on issues of principle, which no independent sovereign country would accept.
China always maintains that cooperation serves the interests of the two countries, that conflict can only hurt both, and that cooperation is the only correct choice for both sides. China does not want a trade war, but it is not afraid of one and it will fight one if necessary. China welcomes efforts to continue negotiations but will not back down on major issues of principle. As a responsible member of the international community and in the interests of both peoples, China is committed to credible consultations with the U.S. based on mutual respect, equality, mutual benefit and good faith. It is hoped that the U.S. can pull in the same direction with China and manage economic and trade differences, strengthen trade and economic cooperation, and jointly advance China-U.S. relations based on coordination, cooperation and stability for the well-being of both nations and the world.
Interlectual Property…
A businessman or a company fom China is free to invest in the U.S.But it’s not the same in China.The law is.It must be a joint venture.In order words the U.S. company must partner with another company in China,and of course this company is owned by the government or the businessman is a Chinese spy to steal the technology.There are almost 400,000 students from China studing here.And it’s said, a large number are sent by the government as spies.just to steal technologies.China is not playing by the rule.This article by the ambassador is nothing more, but a propaganda.
The government of China is giving the top universities in the U.
S.hundreds of thousands of dollars,so that they will accept its students.
Sir,I understand where you are coming from,because you are representing China.But to say “The U.S.is wielding tariffs as a big stick.” mr Lu Kun from the time President Bill Clinton lobbied on China’s behalf,in making it a member of the WTO China have been manipulating its currency,playing all kind of dirty tricks in trading with the U.S.making it almost impossible for U.S to sell/export goods to China, at the same time you freely dumping all yours there.When you enter a store,the place is littered with MADE in China.For example,I am working at a university in the dining service and I gave my uniform a look.My cap,shirt,apron and pants,all made in China.
The trade war started long ago by your country.The thing is Clinton,Bush and Obama never called China out,now a new sheriff is in town.Trump said the U.S. believes in free trade,but it must also be FAIR TRADE.
All Trump is saying,stop the abuse.
From a perspective that is objective, and from someone living in Jamaica, my take on the whole trade war issue is this:
The US is doing everything to prevent China’s rise. Containment is the order of the day. The US want to maintain a hegemony at everyone else expense. The whole world is practically a slave to the US, with a few notable exceptions. The slaves want to be free. China has created conditions for millions of Chinese to move out of poverty. The US won’t like that. It shows that their system, though, communist, is working for the people. Government’s job is to look after the welfare of its citizens. What better way than to lift them out of poverty?
Pretty ignorant victor. The question I would ask is how many of your fellow Jamaicans want to move to China to live under their wonderful democracy and the rule of law, their multi party system where everyone has a right to self determination, and their enshrined constitution that puts the individual freedoms above the state – oh wait, that doesn’t exist. What does exist since Nixon first advocated trade with China is a wholesale theft of IP by China (aided by American businessmen who signed up for joint ventures, the millions that have been put in Chinese labor camps, the threats to Taiwan and other enclaves of freedom, and the list goes on. I am very fond of the Chinese people but to equate what the US is now trying to do to “containment” is either naive, or extremely stupid. Very nice of you to bash the US where most of your countrymen have been trying to live in or go to for the last 50 years but in reality, we know what China is and what the US is, warts and all.
……………….. Of course tarriffs are additional taxes on goods brought into the US. The goal is to force American companies to re-think the trade imbalance and well as keeping US IP out of the hands of the PLA. The last time I checked it was not the US that was confiscating territory in the South China Sea and threatening invasion to any nacent democracy in the area. What is interesting is how much money is flowing OUT of China to Canada, US and other locations by the upper income folks in China. They know the jig is almost up. I am also assuming since you love Communism so much (China is not a communist country it is a single party country run by a cabal of men who control a controlled capitalistic enterprise) why aren’t you moving there and enjoin in the political process? Oh wait, you can’t. Their own people can’t.
The Gospel according to Xi.
What a spin from a pro China writer. Total garbage. For starters, it’s the US retaliating as should the rest of the western world because it’s been China imposing tarrifs on all her imports while boosting her exports and becoming the number one mercantilic country in the world.
Bone Spurs thinks tariffs are free money and he is a greedy fool. His actions hurt the US economy and harm prospects for world peace.
Now more than ever there is a need for an organization of non-aligned nations. The present geopolitical order is one where one nation with hegemonic ambitions, China, want to replace the ruling hegemony, the US of A.
Intellectual property theft in the chinese market is reported in the billions
https://money.cnn.com/2018/03/23/technology/china-us-trump-tariffs-ip-theft/index.html
They have full control of all companies within their jurisdiction and previous events have show that they can cause them to cease operations if they see fit. In that case if companies in China are engaging in blatant property theft under a totalitarian pseudo-capitalist economy then they have a share in the blame. But obviously they turn a blind eye because they benefit largely off it. Much of their technological ‘innovation’ has been the result of stolen trade secrets through reverse engineering etc.
But seeing this propaganda article come out is a good sign that they are starting to feel the effects of the tariffs and are trying to rally support for their position.
You got that right. Why the need to state position. Tell Mr. Lu as a black man i cannot own land in china, nor raise more than one kid in my family, nor send home money help my family. US may have an A hole president now but he is not thier for life and i aint want no system telling me what i can and cannot read or listen to. When the war break out we have many young men and women in the US military who will be fighting and i will join them. Dominica shall be slave to no one and mr. Lu can shove his propaganda and philosophy up his …….. When Chinese people free to be critical of thier gov without arrest then he can open his trap.
interesting article, and kudos to the Chinese diplomat for informing us of the China’s point of view. I feel that in 6 years the USA’s positions on tariffs will change, with a Democrat president as its obvious that Trump will will win a 2nd term.
Democrat presidents you all want. I hope you all enjoy the LGBT agenda being spread worldwide. Look at what Obama did in 8 years just wait let another democrat get in position pretty soon they will start talking about legalizing pedophilia and incest.
Also I hope you not a fan of freedom. The chine government does not like freedom and neither do the ‘democrats’. I can see why you would say that those two would benefit each other because they are not that different.
There is no free press in China as I know and the ambassador has to
present the official view of his government and can not criticise them. Is just like GIS. I’m not saying he is telling lies but we must examine all sources to get a more complete picture. I am sure the ambassador understands that but can not say so publicly.
“the U.S. has accused China of pursuing trade surplus and of stealing intellectual property. Such claims are totally groundless.”
lol look kix everyone know Chinese like to copy stuff and make a cheap knockoff it even happening in Dominica…..
Mr. Lu kun its amazing you are using media here to defend China position on trade war. I know what you doing. Meanwhile your government block information from it own people, stifles freedom of expression, by your own admission, stole intellectual property (It is hard work getting intellectual property and counterfeit), control its people and the list goes on. Chinese are some of the most racist to blacks and you economy is not a free market. It is one runned by a government that seeks world domination at all cost. Your relationship with the US is more about a competition to the top and China to engage inprotectionism, multilateralism and unilateralism, and international rules and hegemonism. How about you start taking migrants from all over the world fleeing persecution? It would be lime jumping from frying pan to fire. The US as an idot as president i will admit but your intentions are quite clear. Why not free up the society so business compete on same rules. Not elites capitalism.
Such willful ignorance, on your part. Your comment just shows how little you read and understand the world you leave in. You are entitled to your opinion but not your facts, empty barrels makes the most noise. Your type of thinking is of the dark ages. Do you think that US could manage a Population of 1.4 billion people in the direction it’s going through now, something for you to think about.
Gary, so you condone the wholesale elimination of millions of Chinese people during the famines caused by the communist government because it “enabled” the chinese communist party to “manage” 1.4BB people? You must love the socialists in the US that want to “manage” the people there as well. The dark ages as you call it were when the few ruled the masses as it is in China. But I guess tens of millions of forced abortions, mass incarcerations, mass pollution and so on and so on is your idea of management. I will miss-managed democracies that support capitalism warts and all than your “managed” societies. Cause the question is Who Gets to Manage – Pol Pot, Stalin, Castro, chavez, Maduro?