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Populism and trade wars

Editor: Zhang Jianfeng 丨CGTN

07-17-2018 09:33 BJT

Editor's note: Professor Wang Xuewen is a political analyst and a former deputy president of International Business Daily. The article reflects the author's opinion, and not necessarily the views of CGTN.

Trade wars provoked by the United States have been the most eye-catching headlines in the world's media in recent months. Some people attribute the trade conflict to the capricious politician-businessman President Trump. In my opinion, the matter is not so simple. As a matter of fact, Trump proclaimed that he would put America first and make it great again early in the days of his presidential campaign. It is not wrong for a president to safeguard the interests of his own country. But that should be done under the correct guiding principle and using the right approach. Regrettably, if we look into the matter, it is easy to find populism playing a considerable role in the process. Let’s look at the following facts.

First, while the US trade deficit with China has been fairly large, it is not as large as the figure used by the US, because of considerable statistical differences between the two countries. Nevertheless, the United States sticks to its own stand and never cares to consider this factor.

Second, the deficit is due to several reasons, including US domestic factors such as its low savings rate and the inadequate competitiveness of some of its enterprises. But the United States has shifted all the blame to China lock, stock, and barrel. Here I am not neglecting China’s responsibility. But China has taken substantial steps to narrow the trade imbalance. President Xi Jinping declared early this year that China would open wider to other counties and greatly expand imports. Notably, China is going to host an import expo this year as an important move to increase its imports. Just look at these figures: From China’s accession to the WTO in 2001 to 2017, its commodity imports increased at an average annual rate of 13.5 per cent, twice as high as the world annual rate; service imports increased at 16.7 per cent, 2.7 times that of the world average; intellectual property royalty paid by China reached 28.6 billion US dollars in 2017, 15 times as much as in 2001. Those may fall short of US expectations but represent undeniably great progress on the part of China.

Third, the right way to remove the deficit should be by increasing US exports to China rather than curbing China’s exports to the US. For this purpose, China has already taken specific measures and made headway in lowering tariffs and providing better conditions for imports. On the other hand, the United States, instead of removing restrictions imposed on the export of high-tech products to China, started on July 6 leveling additional an 25 percent tariff for 34 billion US dollars worth of Chinese exports. Thus it lost the eligibility to enjoy favorable import conditions offered by China. What is more, the US went further in announcing on July 11 a list of 200 billion US dollars worth of Chinese exports for additional levies. Such moves can only remind people of populism and trade hegemonism.  

Both the United States and China benefit from economic globalization. Actually the former took the lead in the globalizing process, e.g. in establishing the WTO system and the Bretton Woods mechanism. For many years, the United States remained by far the most influential country economically, politically, technologically, and militarily. Over time, China gained rapid development thanks to its reform and opening up policy, and the gap between the two countries has been narrowing. Some Americans may not be used to it, and there emerged a sort of populism that influences people’s ideology and policymaking. The irrational imposition of additional tariff by the United States and its withdrawal from multilateral trade and economic arrangements all have a lot to do with populism. That is certainly a retrogression in multilateralism and globalization.

Actually, China is still way behind the United States in many respects and has a lot to learn from the latter. It has no intention of challenging the position of the United States. The trade deficit can well be settled through friendly negotiations. Earlier this year the two countries had four rounds of high-level consultations and reached consensus in May on strengthening trade and economic cooperation. It is a regret that the US side went back on the consensus and started a trade war. In the present globalized world, the trade war is not only against China but also against other countries, indeed against the United States itself, including its consumers and enterprises. Trade wars will have no winners and may land the whole world in economic crises. So all countries should make a point of removing populism, considering the interests not only of their own but also of their partners, and act in cooperation to realize a healthy trade environment for a prosperous human community. 

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