As U.S. trade and investment protectionism is on the rise, last week U.S. President Trump approved the imposition of protective tariffs on imported solar panels and washing machines at rates of 30% and 50%, respectively. The latter also imposed import quotas Asian countries such as South Korea and China have been hardest hit, while Secretary of Commerce Rose of the United States on January 24 at the World Economic Forum in Davos dished out the argument that "the trade war is playing every day" even more nervous the parties in the market.
South Korea has appealed the tariffs imposed by the United States under the WTO agreement on safeguards, which will give the United States 30 days to resolve the matter. If the U.S. move violates WTO rules, it will have 60 days after the end of the period Time to implement trade sanctions.
On January 25, at a routine news briefing by China's Ministry of Commerce, in response to the issue of 'Sino-US trade war,' the spokesman of the Ministry of Commerce spokesman reiterated that cooperation is the only correct choice for both China and the United States. We hope that the Sino-U.S. Trade friction will not Both sides will properly resolve conflicts and promote pragmatic cooperation in a constructive manner. At the same time, China will take all appropriate measures to resolutely defend its legitimate rights and interests in cases of unilateralism and protectionism that do not conform to the WTO rules. .
Concerns over the continuous escalation of trade frictions and even the detonation of an all-round trade war between China and the United States are on the rise. Experts from all walks of life believe that from the current status quo, it is hard to avoid a partial warming of the trade friction between China and the United States in 2018 and the potential risks of a trade war are on the rise .
Otaviano Canuto, World Bank executive director, told the "IFC" in an interview: "If China and the United States start a trade war, it will result in a 'lose-lose' situation and the United States will lose more than it has ever obtained." Central Plains Bank Wang Jun, chief economist and academic committee member of China International Economic Exchange Center, believes that both China and the United States should resolve trade conflicts as far as possible under the existing WTO-based framework.
Potential risks increase
U.S. President Trump has approved the imposition of high tariffs on imported solar panels and washing machine products. If the trade friction between China and the United States continues to escalate into a trade war, the move may be the first to be made a trade war.
However, Trump did not consider it a trade war when he signed the 'Section 201' Executive Order on January 23. He called the order just a warning that other countries would not take advantage of the United States, and earlier on January 16, Speaking on the phone with Chinese President Xi Jinping, General Boucher also mentioned that the United States attaches great importance to its relations with China and U.S.-China cooperation and would like to work with China to strengthen high-level and all levels of exchanges, expand pragmatic cooperation, handle the problems in the economy and trade between the two countries and promote Bilateral relations have made even greater progress.
However, the government officials in the United States have different positions on the trade issues, such as Ross's aggressiveness in trade and the U.S. Treasury Secretary Mnuchin on the same occasion explaining his position on the trade issue from the perspective of the U.S. dollar. "Clearly, Weaker favors us as it relates to trade and opportunities. "Mr Mnuchin favors the U.S. bid farewell to a strong dollar policy, and since the start of the year 2018, the devaluation of the dollar has accelerated with the steepest de-escalation since 1987 .
Wang Jun told the "International Financial Newspaper" reporter: 'In 2018, the Trump administration will usher in the mid-term elections, the tax reform has been successfully introduced in China, and foreign trade is most likely to hit' trade cards' and 'populace cards.' However, the policy of trade protection will adversely affect the global economy and trade and thus weaken the momentum of the global economic recovery. There are indications that the Trump administration's position on China will be much tougher than previous U.S. governments Trump at the APEC summit in Vietnam said he would no longer tolerate the "abuse of long term trade" in Asian countries, and his remark hinted at him to regain a stronger stance. Sino-U.S. Relations will enter a period of more turmoil in 2018, and a certain amount of trade frictions or trade wars will inevitably occur. The conflict will probably expand from simple trade to more fields such as investment and finance.
However, ROC, a senior researcher at Chung Yang Financial Research Institute of Renmin University, told the reporter that: "Trump's trade policy is not yet fully defined. On the one hand, the slogan of" the United States "calls for protectionism while the U.S. Administrations have introduced major protections against tariffs on solar panels and washing machines, while trade protection measures taken so far by the United States have affected only individual sectors and are uncertain about whether Trump will conduct more general trade protection measures. '
Michael Delaney, chairman of the U.S. Trade Policy Subcommittee and a post-conflict country special trade representative, told the "IFC" reporter in an interview: "The trade war should not show up because the United States has many interests that need to be maintained by maintaining trade relations. The rapid and Large-scale disruptions will damage the U.S. economy. '
Deficit
Since assuming office, Trump has gradually stepped down from the Trans-Pacific Partnership (TPP), tightening immigration policies, building a wall at the U.S.-Mexico border and restarting the North American Free Trade Agreement (NAFTA) And other campaign promises, but did not take any concrete action to counter the trade deficit in China, but Trump started his operation last week.
Michael Delaney told the International Monetary newspaper: "Trump's main concern is the trade deficit, and all trade measures are the solution to this major problem."
On January 12, according to data released by China Customs, the total trade volume between China and the United States in 2017 was 3.95 trillion yuan, up 15.2% over the same period of last year, accounting for 14.2% of China's total import and export value, with 2.91 trillion yuan of exports to the United States, an increase of 14.5% %, Imports from the United States 1.04 trillion yuan, an increase of 17.3%, the trade surplus with the United States 1.87 trillion yuan, an increase of 13% .After the release of this data, many foreign media and agencies predict the Sino-US trade war or imminent.
Rothstein emphasized that the deficit in U.S. trade with China is the inevitable result of the common use of the two major factors, but neither of these two factors is a unilateral responsibility of China.
First of all, the big deficit in the U.S. balance of payments stems from the fact that the level of savings is too low. Under such macroeconomic conditions, even if the United States does not have a trade deficit with China, it will have a trade deficit with one or more other countries. Second, The specific reason for the deficit is that China is the most effective producer of medium-tech products in the world and the United States can not compete in this area, while the United States is hindering the sale of certain high-tech products to China, which is the advantage of the United States. Selling the most competitive products with less investment and therefore inevitably creates a huge trade deficit with China. "Moreover, if the United States imposes tariffs on China in the field of medium-tech products, the United States needs Other countries import these products, it is bound to increase consumer costs.
Zhu Wenbin, vice president of China Development Bank Research Institute and signed article published jointly by Li Yijun, deputy director of the International Strategy Research Institute of China Development Bank Research Institute, pointed out that the trade deficit is not a poison that seriously endangers the interests of the United States.
The article points out: First, according to the opinion published by Forbes magazine, University of Sydney professor SalvatoreBabones, who has studied global economic integration for a long time, the trade deficit means different things in different economic periods and under different economic conditions. In a weak economy, the huge trade deficit is a signal that a country is losing its way to the crisis of balance-of-payments. In the case of a strong economy, the huge trade deficit is a manifestation of the surplus in the capital. Currently, the U.S. economy is growing at the fastest pace in three years Period, the Federal Reserve to raise interest rates continuously, the rapid growth of capital account surplus shows that international investors are looking for opportunities in the United States.
Second, the U.S. deficit will further increase after the tax reform, which is the result of the policy actively pursued by the United States. Nobel laureate Paul Krugman estimated the future of this tax reform in line with the forecast of the U.S. Tax Foundation Sixty-four trillion U.S. dollars of capital will flow into the United States during the year, which may lead to a higher exchange rate of the U.S. dollar. This will force U.S. companies to seek overseas service and commodity suppliers and increase the U.S. trade deficit.
Thirdly, the data on trade deficit between China and the United States can not represent which country the profits and interests belong to. The processing trade accounts for one third of the trade between China and the United States. In the current division of labor in the global value chain, China is still in the middle and lower reaches of the value chain. Trade has only marginalized the processing fees, cutting apart the international industry and the trading system, denying international division of labor in the global value chain and simply dividing the camp on the basis of a deficit deficit would hurt the U.S. economy rather than 'make the United States great again.'
Fourthly, there is no direct causal relationship between the employment problem in the United States and the trade deficit with China. The reduction in employment mainly stems from the fact that the growth rate of productivity exceeds the growth rate of demand.
According to a study by the Oxford Economics, the Chinese market supports 2.6 billion jobs in the United States and at least 400 billion U.S. dollars. At present, the U.S. natural jobless rate is about 4.5%, while the U.S. unemployment rate dropped in October 2017 To 4.1%, the lowest level in 16 years. The U.S. deficit hit its historical peak in 2017. It can be seen that China, which has contributed as much as 46% to the U.S. deficit, has no direct connection with full employment in the United States. China's trade is the balance of domestic trade Foreign policy 'scapegoat'.
Form prediction
Whether the deficit data is a trigger for a trade war or not, many agencies have already made predictions about the possible form of trade war.
According to the U.S. presidential election and trade policy assessment report released by the Peterson Institute for International Economics in September 2016, there are about three types of trade wars that can be presided over and tasked after Trump assumed the "U.S. first" principle : The first is a brief attack and defense war against China and the United States on both sides, which is similar to the 'trade friction' for not more than a year, and frequently countermeasures against trade-related trade in China to counter specific industries or products in China Export activities; the second is asymmetric trade wars, that is, the two sides selectively adopt non-tariff measures, including refusing to provide key elements of resources, stop buying or selling each other's national debt, abolishing or delaying the implementation of favorable counter-terrorism Trade laws and regulations and other measures to reach the goal of trade retaliation by prompting the shrinking of businesses in the relevant fields and rising unemployment. The third one is the one that has the most profound impact: the all-out trade war broke out between China and the United States, If the United States imposes a 45% tariff on China, China will fight back in the same form.
Rothschild said that if the United States embarks on the road to trade protectionism, China may have no alternative but to take corresponding measures, and the most suitable areas for the United States to take appropriate measures include aviation and agricultural products.
Wang Jun believes that in the event of a trade dispute, the so-called trade war unfolds. In addition to the traditional manufacturing industries with relatively strong comparative advantages in China, trade frictions will also focus on areas such as intellectual property rights, state-owned enterprises, government subsidies and high-tech products. Both parties will announce a list of mutual sanctions of a certain scope and scale.
how to respond
However, experts also warned that adopting radical measures will result in a two-way losing streak between China and the United States.
Michael Delaney told the International Monetary newspaper: 'Trade agreements are not an effective policy tool to address trade imbalances, and to a large extent the solution depends on currency valuations, other than trade policy. "North American Free Trade Agreement is a good example when trade agreements are used to resolve trade imbalances and progress is very difficult. The trade agreement's marginal relevance to trade imbalances is not large even if China eliminates all trade and investment Barriers, I believe the United States trade deficit with China will still be great. '
Rothschild believes that one problem Trump faces is that the ultimate effect of protectionist measures will not be welcomed in the United States, which will first raise the prices of imported goods and thereby reduce the living standards of the American people.2 Second, trade protectionism will not create Employment - on the contrary may reduce some employment opportunities.
Otaviano Canuto, executive director of the World Bank, also believes that trade protectionism will affect the global economic recovery, resulting in the freezing of investment and rising costs.
'If the trade war between China and the United States will result in a' lose-lose 'situation, Otaviano Canuto said frankly that' Trump's trade policy is out of his commitment to performing his election campaign, but using trade measures such as tariffs will ultimately make consumers pay, America will lose more than it has got. '
'In the trade confrontation, China has the advantage of providing room for turbulence in the huge domestic market and scruples on the part of the other side. China also has multiple counter-measures to keep it with at any time. The flexibility to adjust the exchange rate is to maintain both the global market Share of the important weapons; the Belt and Road initiative in the future to expand the external market of our larger contribution and potential. The disadvantage is that China's manufacturing dependence on the United States market; China's investment in the United States will be negatively affected; external demand to improve the stability of the Chinese economy Development has a greater impact. 'Wang Jun analysis.
Of course, Sino-U.S. Trade has not yet dropped to the abyss of a trade war.
Experts believe that the current trade frictions have the proper treatment.
Wang Jun said: 'Strong trade confrontations should be avoided. The trade conflicts between China and the United States should be controlled as far as possible under the existing WTO-based framework. There should be more channels for consultation and communication between the two sides, more emphasis should be given to non-government channels and more should be done The work of the U.S. business community, trade unions and out-of-hospital groups. '
Michael Delaney said: "With the increase of China's income, the development of new technologies, etc., this trade imbalance may decrease over time. In fact, I think the peak of the imbalance has passed." The U.S. government Acceptable 'steady' trade balance over time - something that both countries may accept. '
