US-China eco­nomic ties can be bal­anced with win-win so­lu­tion

China Daily (Hong Kong) - - BUSINESS -

WASH­ING­TON — US-China eco­nomic re­la­tions will be more bal­anced and mu­tu­ally ben­e­fi­cial as long as both sides in­tend to cre­ate a win-win so­lu­tion, Do­minic Ng, chair­man and CEO of East West Bank, told Xin­hua in a re­cent in­ter­view.

The in­au­gu­ral China-US Com­pre­hen­sive Eco­nomic Di­a­logue, or CED, con­cluded last week in Wash­ing­ton DC, af­ter top eco­nomic of­fi­cials from both sides ex­changed candid and in-depth views on is­sues like trade, in­vest­ment and mar­ket ac­cess.

“The US and China have been trade part­ners for a long time, and this en­gage­ment sta­bi­lizes and strength­ens their re­la­tion­ship. Af­ter 30 years of rapid ex­pan­sion, US-China eco­nomic and trade re­la­tions have ex­panded from sim­ply goods to ev­ery as­pect of the econ­omy,” said Ng, the head of a US bank with to­tal as­sets of around $35 bil­lion.

The US trade deficit with China was a con­tentious is­sue in the first round of the CED. The bi­lat­eral trade gap, how­ever, is ex­ag­ger­ated by out­dated cal­cu­la­tion meth­ods. “With the glob­al­iza­tion of the pro­duc­tion chain to­day, this method­ol­ogy can’t ac­cu­rately re­flect a glob­al­ized econ­omy, and is very likely to cre­ate con­flict among coun­tries that heav­ily rely on each other,” Ng ex­plained.

A study by econ­o­mists with Fed­eral Re­serve Bank of Dal­las shows that us­ing a val­ueadded ap­proach to mea­sure bi­lat­eral trade re­duces the US-China trade im­bal­ance by 33 per­cent in 2013.

“As long as both sides have the in­ten­tion of cre­at­ing a win-win so­lu­tion, re­spect the is­sues each is facing, and proac­tively and con­struc­tively re­solve them, this will push the US-China trade re­la­tion to be more fair, bal­anced, and mu­tu­ally ben­e­fi­cial,” said Ng.

In the first round of CED, China agreed to fur­ther open up its ser­vice sec­tor and ex­pand bi­lat­eral trade in ser­vices with the United States, as the coun­try is shift­ing its econ­omy to­wards a growth model pow­ered by con­sump­tion, ser­vices and in­no­va­tion.

While the US has al­ready de­vel­oped a ro­bust and com­pet­i­tive ser­vice in­dus­try, China’s ser­vice in­dus­try, es­pe­cially high-end ser­vices, is still de­vel­op­ing. “China should look for an ap­pro­pri­ate time to open its ser­vice econ­omy and quicken the de­vel­op­ment, and proac­tively seek col­lab­o­ra­tion with the United States. At the same time, China should ag­gres­sively pro­mote the de­vel­op­ment of high added-value ser­vice trade,” Ng said.

Bi­lat­eral in­vest­ment be­tween the United States and China has been boom­ing in re­cent years, with China’s di­rect in­vest­ment in the United States last year tripling to $46 bil­lion from 2015.

Ac­cord­ing to a joint report by Rhodium Group, a con­sul­tancy, and the Na­tional Com­mit­tee on US-China Re­la­tions, the cu­mu­la­tive value of US for­eign di­rect in­vest­ment trans­ac­tions in China since 1990 ex­ceeds $240 bil­lion, while Chi­nese com­pa­nies had in­vested $110 bil­lion in the US by the end of 2016.

“The pre­dic­tion that the US will raise in­ter­est rates is pres­sur­ing the bal­ance of in­ter­na­tional pay­ments and will not cease any time soon,” said Ng.

“There­fore, China in­creas­ingly re­strict­ing out­bound in­vest­ment will cre­ate risks for Chi­nese in­vest­ing in the United States in the short run. This means that Chi­nese cor­po­ra­tions need to im­prove them­selves. Even though they are mak­ing less in­vest­ments, the ap­proved in­vest­ments will have bet­ter qual­ity, and the suc­cess rate will be higher,” said Ng.

FRED DUFOUR / AFP

Cooks cut US beef dur­ing a pro­mo­tional event in Bei­jing on June 30. Af­ter a 14-year ban, China re­opened its gate to im­port US beef in late June.

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