The latest data released by China's General Administration of Customs on Friday showed that the U.S.-China trade deficit, which hit a new high in 2017, apparently will not help alleviate the increasingly tense relations between the United States and China. In particular, President Trump is bent on correcting the trade deficit between the two countries In January, the United States will also announce the results of a series of investigations into Chinese products.
U.S. Ammunition for Trade Wars
According to the latest statistics released by China's General Administration of Customs on Friday, the trade surplus between China and the United States, the largest economy in the world, expanded by 25 billion U.S. dollars to 275.8 billion U.S. dollars last year.
Although some experts pointed out that the trade imbalance is not a real issue in the economic ties between the United States and China, the new data may give Trump more reasons to correct what he calls the trade imbalance between the United States and China. Trump may raise some of China's imports Tariffs or restrictions on the importation of certain products to the US Trump once said during the election campaign that China would impose up to 45% tariff on imported products.
The U.S. Commerce Department announced Thursday evening (January 11) that it completed a survey on whether the import of steel products would harm U.S. national security and submitted the findings to the president. Trump has 90 days to decide on the basis of the findings. preventive solution.
In April last year, President Trump signed a memorandum asking the U.S. Department of Commerce to launch a '232 investigation on whether U.S. imports of steel and aluminum products threaten U.S. national security. Trump will have the right to restrict the importation of these commodities if the verification is true.
In August last year, Trump once again signed an administrative memorandum instructing the U.S. trade representative to review the so-called 'China's trade behavior', with a focus on whether China is suspected of infringing on U.S. intellectual property in the area of technology transfer and using it to decide whether to conduct a trade investigation into China.
Under Section 301, U.S. trade representatives first seek to negotiate with foreign governments to seek trade remedies or eliminate trade barriers, and if the negotiations do not solve the problem, the United States can adopt trade remedies such as imposing additional duties, fees and charges on imports limit.
In addition, the United States can also limit China's investment in certain sensitive areas, and this has already taken shape in early 2018. In less than a month in 2018, two cases of Sino-U.S. Investment and cooperation have been declared bankrupt. China's Alibaba Ant Financial acquisition of the American money exchange gold company's acquisition was rejected by the US authorities, after China's Huawei and AT & T American telecom company to sell mobile phone cooperation in the United States also announced at the last minute stranded.
China's retaliation measures
As soon as the results of the 301 U.S. investigation are about to be announced, the spokesman of the Chinese Ministry of Commerce recently said hard-line, saying that China will resolutely defend its legitimate interests. Then what measures China will take?
In an interview with VOA, Aaron L. Friedberg, a professor of political science and international relations at Princeton, said that China might adopt similar measures on U.S. products, such as raising tariffs or restricting imports Fred Berger has published a book on the relations between the United States and China, called "the highest status of competition."
He said China can also make the situation of US enterprises in China more difficult and limit their investment, etc. At a time when the Trump administration launched a 301 investigation on Chinese products in August last year, the Chinese media had already indicated that China could target the United States Boeing, as well as the United States soybean products retaliation.
The United States exports 26% of Boeing aircraft, 56% of soybeans, 16% of cars and 15% of ICs to China. There are also reports that injured U.S. companies even include Hollywood Pictures.
Fred Berger said China may also sue the United States to the World Trade Organization in an attempt to resolve it through the WTO dispute settlement mechanism, but China's reaction should depend on President Trump's actions. If Trump needed only symbolic Victories, such as raising tariffs on certain limited products, may not be as responsive as they are because they do not want to get involved in a trade war.
On January 10, Bloomberg reported that Beijing is considering whether to slow down or stop buying U.S. Treasuries in retaliation for the United States, but it has already been denied by China.
Paul Krugman, a columnist for The New York Times, once gave an explanation of this issue.
He said those who believe that China can blackmail the United States and harm the United States by stopping buying or selling U.S. bonds are wrong because they do not understand that buying China's U.S. treasury bonds is not about compassionate with the United States nor about providing economic aid to the United States, Because China's large foreign exchange reserves do not have a better place to go and can only buy U.S. Treasury bonds to preserve their value.
If China were to damage the United States by selling US Treasuries, it would only be rocking its own feet, as the sell-off would cause market turmoil and the value of the U.S. treasury bonds would fall, which is equivalent to the destruction or destruction of China, the world's number one U.S. Treasury, Own financial interest.
A recent article in The New York Times said there are many options for Chinese officials to avenge potential U.S. tariffs, but there is hardly any good choice.
After analyzing the possible losses to China caused by the restrictions on imports of soybeans or the reduction of U.S. bonds, the article pointed out that the most serious measure may be to conduct informal harassment against U.S. companies operating in China.
The article said that the Chinese domestic media have put forward the view against companies such as Apple and Boeing that bureaucrats can arrange for consumer boycotts encouraged by the government, surprise inspections, refusals of licenses, etc. For executives And squeeze is painful for investors, but it's also an example of how Beijing's rigorous controls have just revealed its weakness.
Who will win this war?
There is no absolute winner in the trade war, the more accurate statement is who should lose more, who will succumb earlier, no one will win, both will be wounded and the damage will be greater as the trade war escalates.
Fred Prince, a professor at Princeton University in the United States, said: "As for who will lose more, who is more likely to yield first? I find it hard to say." On the whole, the Chinese economy relies more on the United States than on the U.S. economy's dependence on China In this perspective, China has suffered even greater losses, and the Chinese government is particularly worried about slowing economic growth as it may affect social stability and political instability, and they should be less willing to take this risk and slow down economic growth, On the other hand, President Trump also hoped that the economy will grow rapidly and the stock market will rise. He has always regarded these two points as his own achievements and therefore he is also reluctant to see the protracted struggle between the two sides and the consequent damage to both parties '.
Of course, some economists also pointed out that China will be the winner of this trade war, and Nicolas Lardy of the Peterson Institute at the United States, during the '2018' co-organized by the National Committee of U.S.-China Relations and the China Center for Economic Research, Peking University, China Economic Forecasts' forum said: The U.S.-China trade war can hardly be avoided, but China will be the winner of this war.
He said that although exports have a great impact on China's GDP, China is more capable of surviving the trade war than the United States. The Trump administration will eventually have to change its policy, and while the Sino-U.S. Trade war has been affected, There are countries in East Asia and Southeast Asia that rely more on their exports to China.
The trade deficit is not a real issue for the U.S.-China economic relations
Although Trump hopes to correct the trade deficit between the United States and China by adopting measures that may even trigger a trade war risk, many observers, including Fred Berger and Radie, believe that the Trump administration The important issue of the U.S.-China economic relations has been mistaken. The causes of the trade deficit are manifold. The biggest problem between the United States and China is not the trade deficit but the unfair trade policies and instruments in China.
Fred Berger of Princeton University said: "The real issue in U.S.-China economic relations is a series of policies implemented by the Chinese government aimed at giving Chinese companies advantages, promoting the development of China's economy, and unfairly targeting foreign companies. For example, Export companies provide subsidies that allow them to compete with foreign companies on the international market at low prices, while setting restrictions on Chinese businesses, limiting their exports and investments, etc. I think many economists would say that this The trade deficit is not a real problem, and the cause of the deficit is not only China's policy, but also the U.S. policy. For example, the huge budget deficit in the United States is also one of the reasons for the deficit.
He said just restricting exports from China will reduce the trade deficit with China, while the U.S. trade deficit will not change. It merely increases the trade deficit with other countries.