Principles not Politics

Beijing released a white paper on China-U.S. economic and trade consultations and China’s position on June 2, 2019. It shined light on the issues that have been addressed and the differences that remain after 11 rounds of bilateral trade talks over the past year.

The Trump administration has lied to the world repeatedly, including the assertion that the United States has been a victim of its trade relations with China. The facts on the matter are most persuasive.

With China as the largest developing country and the United States as the largest developed country, a mutually beneficial relationship with strong complementarity and interlinked interests has been forged and strengthened. In 2018, bilateral trade in goods and services exceeded US$750 billion, and two-way direct investment approached US$160 billion. Bilateral trade in goods grew from less than US$2.5 billion in 1979 to US$633.5 billion in 2018. China is the key export market for American-made airplanes, soybeans, automobiles, integrated circuits and many other products. From 2009 to 2018, China was one of the fastest-growing export markets for American goods, with an annual average increase of 6.3 percent and an aggregate growth of 73.2 percent, higher than the average growth of 56.9 percent in other regions of the world.

The Trump administration has completely ignored trade in services. Two-way trade in services rose from US$27.4 billion in 2006 to US$125.3 billion in 2018. China’s services trade deficit with the United States reached US$48.5 billion in 2018.

Over the past 40 years, two-way investment between the two countries has grown from near zero to approximately US$160 billion. By the end of 2018, cumulative Chinese business direct investment in the United States exceeded US$73.17 billion. Chinese business investment in the United States has contributed greatly to local economic growth, job creation and tax revenues. In fact, if trade in goods and services and two-way investment are analyzed together, the picture is clear: China-U.S. trade and economic relations are mutually beneficial.

The Trump administration has placed all the blame on the Chinese side for the collapse of trade talks, alleging that China backtracked on significant commitments. However, facts show that the Trump administration has been the party backtracking at least three times on commitments, not the Chinese government.

Beijing has been consistent and clear on its stance on the economic and trade relations between the two countries. With such a closely interlinked and deeply interdepended economic relationship between the two largest economies, cooperation is the only choice for China and the United States. Cooperation can serve the fundamental interests of the two countries, and confrontation can only hurt both. China hopes that the two countries can work together to seek solutions to their disputes and differences.  However, cooperation must be based on principles. China will not compromise on major issues of principle and on state sovereignty. 

The author is a senior research fellow with China Institute of International Studies (CIIS).