China Daily Global Edition (USA)
Trade ties seen too strong to break
Fu Ying says China and US should ‘persevere through ‘tough time’ and look for solutions
Despite the current trade conflict, the bedrock of commerce between China and the US is solid, according to the vice-president at one of China’s top universities.
“The foundation of bilateral trade is very solid, the pattern of bilateral trade has not been fundamentally damaged, and more importantly, the recovery of global trade is very obvious,” said Liu Yuanchun, vice-president of Renmin University in Beijing. “And China’s trade, which is diversified, has not been affected by the trade war,” he said, adding that it hasn’t resulted in systemic changes.
Liu spoke at the HighLevel Dialogue on US-China Economic Relations at the Asia Society in New York on Wednesday.
Representing China was a delegation composed of 10 experts and government representatives, including Fu Ying, former vice-foreign minister. The US side was represented by 15 professionals from various fields.
The aim of the half-day dialogue was to promote communication, cooperation and understanding between academics in China and the US, said Wang Wen, executive dean of the Chongyang Institute for Financial Studies at Renmin University.
Fu Ying said, “Americans have not only witnessed the progress of China, but have also been a contributor as well as a beneficiary,” she said, citing the expansion of US commodities exports and the growth of American business in China.
“We should persevere through this tough time in our relationship by engaging in dialogues and trying to find solutions,” she said.
“It is hard to tell at this moment how this will play out. But China has few choices but to stand firm to the US’ trade bullying for concessions. And China will not, and indeed cannot, yield.”
Liu, the Renmin vice-president, said the trade war’s impact on both sides has not yet fully emerged.
“Therefore, we should guide policymakers and the public from a very rational perspective as think tank researchers, to see the China-US trade war is not about win or lose. However, each side will be hurt,” he said.
Liu addressed concerns about the slowdown of China’s investment growth and said it’s an inevitable byproduct of policy normalization rather than that of a trade war with the US.
“From January to July, China’s investment growth rate has dropped to about 7 percent from about 9 percent last year. The first reason is that our infrastructure investment growth rate has dropped from 17-18 percent to only about 5 percent,” he explained.
“However, from the market side, we see a reverse result: The growth rate of private investment from January to July has rebounded to 8.8 percent from 2 percent in 2017, which was relatively low, and we believe is a pretty good figure because the current investment scale is very large,” he added.
Liu said manufacturing investment, which has been affected relatively heavily by the trade war, has seen its growth rate rebound from 3 percent to 6 percent this year.
One of the reasons is Chinese investment is undergoing structural change.
“It is actually the product of the gradual withdrawal of the previous investment policies,” Liu explained. “So it’s not about, ‘We’ve been hit by the trade war.’
“Therefore, I think it’s problematic to make a causal link between the two superficial phenomena of trade war and China’s slowing investment growth,” he said.
Wang, of the Chongyang Institute, said the fundamental issue between China and the US is China’s rapid economic growth — its economy has become almost two thirds of the US’, which is unprecedented in American history.
“So the US is threatened by the rise of China and being anxious about it,” he said.
“The very important thing for them is to prevent from that misunderstanding the misjudgment of China – do not perceive China as a threat and do not perceive it as the second Soviet Union, but look at China’s rise as a significant power of cooperation that will boost US sustainable development and make the US great again,” he added.
“I think the expectations have changed in the US — there has been a tremendous consensus in the past 40 years that China’s growth was good not only for China but good for a more stable and peaceful world,” said Josette Sheeran, president of the Asia Society.
She said that the change in how China has been perceived in recent years is natural, because “China’s economy has gone really from zero trade with the world — very little, and exponentially increased.”
Sheeran said the two sides are now in a phase that requires more action.
“China is here to stay, the US is here to stay, it’s a big world, and this is probably the most important relationship, so I think in the end, whether it’s weeks or months, we will sit back down together and get very practical about how we build the future,” she said.
“I don’t think it will happen overnight, I don’t think it’s one big announcement. I think it’s a commitment to work … that’s true in any relationship. This is becoming a very serious relationship, as China’s presence in the world and in the world economy is much bigger and more impactful.
“And so we have angry constituencies on both sides, and … we have to dig quite a bit deeper to get at the root of what are the fundamentals of a win-win relationship going forward,” she concluded.
Americans have not only witnessed the progress of China, but have also been a contributor as well as a beneficiary.”
Fu Ying, former viceforeign minister