China-US Economic and Trade Frictions: Choose Right from Wrong
Signed Article by Ambassador Xiao Jianguo on Timorese Newspaper INDEPENDENTE
17 June 2019
Recently, China-US economic and trade frictions have attracted widespread attention of Timor-Leste and international media. The Chinese Government published a white paper titled “China’s Position on China-US Economic and Trade Consultations”, expounding China’s policy stance. Many Timorese friends of mine asked about this and I would like to share the following views:
First, US trade bullying harms the world. It is only natural for China and the US, the two largest trading nations in the world, to experience some differences over trade and economic cooperation. As members of the World Trade Organization (WTO), China and the US should preferably address their disputes under the WTO framework. However, the US has shown no regard for the WTO’s dispute settlement mechanism (DSM), turning to its domestic law to launch a series of unilateral investigations and constantly impose additional tariffs on China. The US raised the additional tariffs on US$200 billion of Chinese exports to the US to 25%, and announced that it had launched procedures to slap additional tariffs on remaining Chinese goods, which are worth around US$300 billion. These became a serious breach of the most fundamental WTO rules, including most-favored-nation treatment and tariff binding, and disrupted global industrial chains and supply chains, which have not only harmed the interests of China and other WTO members, but also undermined the authority of the WTO and its dispute settlement system, exposing the multilateral trading system and international trade order to peril. Affected by unilateralism and trade bullying of the US, Global Economic Prospects released by the World Bank revised down again its forecast for global economic growth, and the global economy is facing significant downward risks. Besides China, we can see that the US also “took off its gloves” to developing countries like Mexico and India. So who will be the next victim? Given the situation of the world economy’s hard recovery, the development of many small and medium-sized countries is relatively difficult. Who will be the biggest victim if the global economic order has been messed up? Seeming like a trade issue, the China-US economic and trade frictions are essentially a contest between multilateralism and unilateralism, between free trade and protectionism, between rules and power. It is closely bound up with every country that agrees and defends the multilateral trading system.
Second, China is committed to resolving disputes through dialogue and consultation. China stands firm in opposition to the US trade bullying. For the overall situation of the common interests of the two countries and global trade order, China remains committed to resolving issues through dialogue and consultation. Following numerous rounds of consultations, the two countries had agreed on most of the issues, but unfortunately, the US backtracked on its commitments by maintaining the additional tariffs imposed on China since the frictions began, forcing China to buy its products that exceed demand, insisting on including mandatory requirements concerning China’s sovereign affairs in the deal, which were absolutely unacceptable. On the contrary, the US threw out the nonsense of China’s “backtracking”, looked for excuses for abusing taxation and once again imposed additional tariffs on China, which severely hurt China’s interests. Cooperation has to be based on principles. There are bottom lines in negotiation. China will never compromise on major issues of principle concerning China’s core interests. Like people of many neighboring countries, the Chinese people have suffered the aggression and oppression of Western powers for a long period of time. History shows that, all the foreign interference in China’s sovereignty and economic independence must not be tolerated. Therefore, China has to take resolute measures to defend national sovereignty and the interests of its people. China wants dialogue, but it should be based on equality, mutual benefit and integrity. Any attempt to use “extreme pressure” to force China to accept any unreasonable demand is doomed to fail.
Third, openness and cooperation are a momentous trend of our times, and multilateralism is the right way to go. In contrast to the US’s threats of additional tariffs and pressure against other countries through its dominant position on trade, China has always been adhering to opening up and win-win cooperation on an equal footing, willing to share development opportunities with the rest of the world. On the 2nd Belt and Road Forum for International Cooperation, China has announced five more major opening-up measures, which has fully demonstrated that China’s future development would bring more opportunities to the world. H.E. Mr. Xanana Gusmao, former President, former Prime Minister and Chief Representative of Maritime and Land Boundary Negotiation of Timor-Leste, led Timorese delegation to the Forum. Just as pointed out by Mr. Xanana in his speech on the thematic forum of “Infrastructure Connectivity”, the “Belt and Road” Initiative has provided developing countries, including Timor-Leste, with ways and opportunities to develop economy and improve people’s livelihood. This view is shared by many developing countries. Together with Timor-Leste, China will resolutely defend multilateralism, achieve common development with all countries and jointly create a community of shared future for mankind. On global governance, we should defend multilateralism, uphold the rules-based international order and the international system with the UN as its core. On international trade, we should safeguard the rules-based multilateral trading system with the WTO as its core. On issue of climate change that affects the destiny of all mankind, we should defend the Paris Agreement on climate change, the acts of “exitism” and unilateralism are deeply unpopular.
In the context of the slow and hard recovery of the global economy, in the age of high level economic interdependence between countries, the “trade war” between big players has no winners. It will also harm the interests of many small and medium-sized countries and drag down the world economy. In fact, as Chinese President Xi Jinping has said, China and the US cannot be cut apart, this is neither China’s expectation nor Mr. Trump’s. It is the right option to resolve trade frictions through dialogue and consultation. On the basis of mutual respect, equality and integrity, striking a mutually beneficial and win-win agreement not only serves the interests of China, of the US, but also the interests of the international community, it will meet the common expectations of the world.