China-US trade tensions need composed, pragmatic controls
China and the US made a tricky start to 2018 as skepticism about Chinese investment and trade cast dark clouds over Washington.
The US government rejected a merger by China’s Ant Financial with US money transfer company MoneyGram International Inc. over national security concerns on Tuesday.
It is not surprising that a number of Chinese companies have hit buffers in Washington as trade tensions between the two countries are flaring.
The bonhomie that grew between China and the US in Beijing in November, when the two signed hundreds of billions of dollars of deals, seems to be fading away as the US side is stuck in a zero-sum game mentality.
In the last 30 days of 2017, the US government launched a Section 301 investigation into Chinese intellectual property and technology transfer, selfinitiated probes into Chinese-made aluminum products and rejected China’s market economy status at the World Trade Organization.
The hawkish turn became ear-piercing when President Donald Trump described China as a strategic “competitor” in his first national security strategy in December, accusing China of pursuing economic aggression designed to weaken America.
Are there reasons for optimism in 2018? An injection of hope is urgently needed for the world’s top two economies to sail the charted course.
The first batch of prototype subway cars to be eventually manufactured in Massachusetts arrived in Boston days before Christmas.
The new prototype was built by a China-based plant of CRRC, China’s largest rail car maker. Mass production will begin at the company’s factory in Springfield, Massachusetts to serve the Orange Line of the Boston metro, the world’s oldest transit system.
This story highlights a shift in the economic relationship between the world’s top two economies: “Made in China” is increasingly being replaced by “Made by China in America.”
According to a report by the National Committee on US-China Relations and Rhodium Group, employment by Chinese-owned firms across America jumped nine-fold from 2009 to 2016.
Stephen Orlins, president of the National Committee on US-China Relations, said that for years US companies invested in China, made profits and built communities, becoming strong supporters of constructive US-China relations.
In the face of a rising China, the US, however, feels uneasy.
China has not hesitated to make it clear that it is not seeking global dominance, rejecting a zero-sum game mentality between countries, especially between the US and China. Cooperation is the only correct choice for both.
China’s case is not well received by the US. With deep-rooted strategic mistrust toward China, US politicians have failed to catch up with China’s understanding of cooperation and adopted an increasingly protective and isolationist approach.
When China proposes building the world into a community of shared future, it does not distinguish between competitors and partners. At this moment, the real test facing policymakers is whether or not they can maximize cooperation and manage competition so that it does not escalate into conflict.
Cooperation is essential for China and the US to handle growing common challenges and interests. Narrow-mindedness and rigidity will lead to a zerosum game. But both will be better off if they come together, since their common interests are greater than their differences.
China and the US are about to ride a bumpy journey in trade in 2018 if the US government goes it own way, and retaliatory measures by China could be on the table.
But the price is too high for the two peoples to pay if skepticism grows and tension escalates. Composure and pragmatism are needed to steer trade ties safe and sound.