China­u. S. Trade Fric­tion Facts On Septem­ber 24, China pub­lished a white pa­per, The Facts and China’s Po­si­tion on China­u. S. Trade Fric­tion, to clar­ify bi­lat­eral eco­nomic and trade re­la­tions, demon­strate its stance on the two coun­tries’ trade fric­tion a

Beijing Review - - BUSINESS -

Cru­cial facts

Eco­nomic co­op­er­a­tion be­tween the two coun­tries is so huge, sub­stan­tive and broad-based, with so many play­ers, that it is in­evitable for some dif­fer­ences and fric­tion to emerge. The two coun­tries need to take a com­pre­hen­sive per­spec­tive, keep in mind their strate­gic in­ter­ests and the in­ter­na­tional order, prop­erly han­dle their dif­fer­ences by seek­ing com­mon ground while shelv­ing dif­fer­ences, and take prac­ti­cal steps to re­solve their ten­sions.

The gap in trade in goods alone is not a good in­di­ca­tor of China-u.s. trade and eco­nomic co­op­er­a­tion.

An ob­jec­tive as­sess­ment of the China-u.s. trade bal­ance calls for a com­pre­hen­sive and in-depth study, rather than a glance at the trade deficit in goods. It is not China’s in­ten­tion to have a trade sur­plus. Rather, the ra­tio of China’s cur­rent ac­count sur­plus to its GDP has de­clined from 11.3 per­cent in 2007 to 1.3 per­cent in 2017. The im­bal­ance of trade in goods be­tween China and the United States is more of a nat­u­ral out­come of vol­un­tary choices the United States has made in its eco­nomic struc­ture and mar­ket in light of its com­par­a­tive strengths. To re­solve this is­sue, both sides need to make con­certed ef­forts in re­struc­tur­ing. The United States turns a blind eye to var­i­ous fac­tors in its trade and eco­nomic co­op­er­a­tion with China, sin­gles out the im­bal­ance of trade in goods and blames China for the im­bal­ance, which is un­fair and un­rea­son­able.

In to­day’s world of greater glob­al­iza­tion and wide­spread in­ter­na­tional pro­duc­tion, bi­lat­eral trade and eco­nomic co­op­er­a­tion al­ready ex­tend be­yond trade in goods. Trade in ser­vices and sales of lo­cal sub­sidiaries in the host coun­try should also be in­cluded. If we give full con­sid­er­a­tion to these three fac­tors—trade in goods, trade in ser­vices and sales of lo­cal sub­sidiaries in the host coun­try—trade and eco­nomic co­op­er­a­tion de­liver bal­anced ben­e­fits in gen­eral for China and the United States, with the lat­ter reap­ing more net ben­e­fits.

The gap in China-u.s. trade in goods is a nat­u­ral out­come of the U.S. eco­nomic struc­ture and a re­sult of the two coun­tries’ com­par­a­tive strengths and the in­ter­na­tional divi­sion of la­bor. The per­sis­tent and grow­ing gap in trade in goods be­tween the two coun­tries is a re­sult of a num­ber of fac­tors, rather than China’s in­tent.

If we give full con­sid­er­a­tion to these three fac­tors—trade in goods, trade in ser­vices and sales of lo­cal sub­sidiaries in the host coun­try—trade and eco­nomic co­op­er­a­tion de­liver bal­anced ben­e­fits in gen­eral for China and the United States, with the lat­ter reap­ing more net ben­e­fits

The dis­cus­sion of fair trade should not be de­tached from the prin­ci­ple of the mu­tual ben­e­fit of the World Trade Or­ga­ni­za­tion (WTO).

The WTO prin­ci­ple of rec­i­proc­ity takes into con­sid­er­a­tion dif­fer­ent de­vel­op­ment stages by grant­ing spe­cial, dif­fer­en­tial and more fa­vor­able treat­ment to de­vel­op­ing mem­bers. This ar-

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