China Ambassador Tiankai Cui: Trade war against China is unjustified

Trade war against China is unjustified

When the world is wondering where the trade war waged by the U.S. against China is heading to, let us pause and take a look at the underlying arguments of the U.S. to see whether they are justified.

The main criticism that the U.S. makes against China centers around the trade deficit America runs with China. Deficits are not products of ill-intention, nor are they necessarily bad for an economy. Generally, they result from how resources are allocated in a globalized economy and are natural reflections of the global value chain. Besides, some structural reasons, such as the low savings and high consumption rates America maintains, the role of the U.S. dollar as the international reserve currency inevitably leads to trade deficits. The fact that the U.S. government curbs high-tech exports to China makes the deficit even bigger.

China has never deliberately sought a trade surplus as the flow of trade is determined by the market. Having a deficit does not mean the U.S. is “losing.” On the contrary, thanks to the trade with China, American families have access to more, higher quality, lower cost products. In just 2015, trade with China lowered prices in the U.S. by up to 1.5 percent, saving each family $850 on average.

China’s structural problems of its economy are also a source of American criticism. However, this is neither fair nor objective.

The U.S. motives for trade war are wrong

Take the so-called theft of intellectual property, as an example: intellectual property rights (IPR) protection takes consistent efforts and China is, in fact, strategically committed to and has recently made demonstrably significant strides in this regard. We have codified a robust IPR protection legal system, including setting up IPR courts and dedicated tribunals that enhance the dominant role of the judiciary in IPR protection.

Since entering the World Trade Organization in 2001, intellectual property royalties paid by China to foreign right holders has registered an annual growth of 17 percent, reaching $28.6 billion in 2017. More than $7 billion (25 percent) went to the U.S. Indeed, improving IPR protect is crucial to China’s own development, particularly technological innovation.

Chinese economic success has never been achieved by stealing from anyone, and never will be.

Another accusation levied against China is the supposed “forced technology transfer.” Let’s be clear: the Chinese government has never made any such request to foreign companies. When it comes to technology or any other cooperation between Chinese and foreign companies, it is purely a matter of voluntary contracts. Indeed, many foreign companies have reaped huge benefits from setting up joint ventures in China over the years.

To be sure, there is room for China to improve its trade policy and address structural economic issues. We certainly are open to addressing reasonable American concerns. But the two sides should conduct dialogue and cooperation on the basis of mutual respect and trust. China’s policy is, and always has been, to resolve differences through dialogue and consultation. From February to June of this year, China, with maximum sincerity and patience, engaged in four rounds of high-level economic talks with the U.S. As a result, the China-U.S. joint Statement has been announced with consensus reached on strengthening trade and economic cooperation, and avoiding a trade war. Unfortunately, the U.S. has betrayed its own words. It brazenly abandoned bilateral consensus and insisted on fighting a trade war with China, forcing us to take countermeasures.

Ironically, some U.S. officials accuse China of taking counteractions with no international legal basis, which is tantamount to a thief crying “stop, thief.” Domestically, the 301 investigation runs counter to the U.S. President’s Statement of Administrative Action approved by Congress; internationally, it has violated its commitment made in the resolution of the General Agreement on Tariffs and Trade dispute with the European community in 1998. Any reasoned, objective observer can tell at a glance who is violating international law.

America’s trade war will hurt itself and others

For four decades, economic and trade relations have served as the bedrock of positive China-U.S. relations. When Henry Kissinger paid a secret visit to China 47 years ago, there was barely any bilateral trade. When the two countries established diplomatic ties in 1979, the volume of trade was merely $2.4 billion. This number then rocketed to $580 billion by 2017, thanks to the reality of free-market economics. If such rationality continues to prevail both sides will benefit.

Today’s China, with a middle class of almost 400 million people, is the world’s largest automobile market, largest source of international students and tourists, largest importer of agricultural products and energy, and the second largest medical care and pharmaceutical market. As President Xi Jinping announced at the Boao Forum for Asia this April, China will continue its reform and opening-up. Some of the major steps have already been delivered; the rest are in the pipeline. Tariffs on 1,500 types of consumer goods have been lowered considerably. The import tariff on automobiles has been cut from 25 percent to 15 percent. The revised negative list for foreign investment released late last month substantially eased market access restrictions for foreign investors. In November, China will host our first International Import Expo in Shanghai.

With all of this as a backdrop, it is absolutely beyond our understanding that the U.S. government initiated the trade war with such determination. Does the U.S. government genuinely believe China would possibly yield to such unreasonable policy? Anyone familiar with Chinese history knows that “maximum pressure” doesn’t work for our nation. Trade bullying will only backfire. There is no winner in a trade war. The U.S. will only end up hurting itself and the world.

For great powers like China and the U.S., competition – even conflict – is natural. It is, however, vital for us to manage such competition in an effective and constructive way.

Cui Tiankai is the Chinese ambassador to the United States.