Threat of trade war only undermines US

The United States registered 20 anti-dumping and anti-subsidy investigation cases against China involving $3.7 billion in 2016, according to statistics from the Chinese Ministry of Commerce.

Given the rising pressure of trade disputes on China, the election of Donald Trump as US president has raised concerns that the new US administration may seek exorbitant and unreasonable economic concessions from and even stage a trade war with China. Some even cite the trade disputes to say China’s economic prospects look gloomier.

Such a view is simplistic. Economic and trade ties between China and the US are by no means a zero-sum game. Instead, they are mutually beneficial. Since the US’ huge and still rising “twin deficits” (fiscal and trade deficits) cannot continue forever, Washington needs to launch tangible reforms to correct the situation. It is thus understandable that many US citizens have higher expectations from the Trump administration. But only if the US has a stable and sustainable macro economy can it ensure a healthy and prosperous trade atmosphere for itself as well as China.

As it is different from China’s less-powerful trade partners, the US’ macroeconomic soundness is very important. So if the Trump administration adopts economic policies that can actually lower the US’ national savings deficit, it will also be a boon to China because it will open up a more sustainable external market and an improved international economic system for Chinese industries.

In such circumstances, the best solution for China will be to strike a series of economic and trade deals under reasonable terms. And an adjustment to the synchronized development model by China and the US could result in a simultaneous buildup of their sustainable development capabilities leading to a more stable world economy.

China should seek to strike economic and trade deals with the US that have strong potential to yield mutually profitable results. But such efforts should not be based on wishful thinking. Whether or not a deal can be mutually beneficial also depends, to a large extent, on the US’ actions.

Despite his sharp rhetoric, Trump has said he is willing to have mutually beneficial cooperation with China and Russia. The congratulatory message he sent to China ahead of the Lantern Festival and cordial telephone conversation he had with Chinese President Xi Jinping also seem to testify that China-US relations are emerging out of the “gloomy stage”.

But quite a few uncertainties still remain that could prevent China-US economic and trade ties from advancing smoothly and limiting bilateral trade disputes within a reasonable range.

Some observers still believe China-US trade frictions will deal a severe blow to China’s economy and the risk of a large-scale trade war will prompt Beijing to accept a series of unreasonable demands from Washington. Such an argument is based on the wrong notion that China is still a very vulnerable economy, when the fact is that even a large-scale trade war with the US may not undermine China’s economic status in the global market.

China is the world’s secondlargest economy, and the world’s leading manufacturer and exporter. China has also built a complete industrial system that covers almost all categories. And if it manages to keep its economic growth above that of the other major economies, China’s status and share in the international economic system will keep rising.

Besides, external economic chaos is unlikely to spell doom for a country such as China that has a strong risk-resisting capability so long as it can manage to avoid domestic turbulences. The continuous rise in its economic strength after the Asian financial crisis and the global financial crisis is enough proof of China’s economic resilience in the face of external crises. So, any possible trade war forced on China is unlikely to weaken its economic situation and its development course.

Whether or not a deal can be mutually beneficial also depends, to a large extent, on the US’ actions.