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Editorial: U.S., China must strive to avoid trade friction turning into quagmire

  • August 25, 2018
  • , The Japan News , 07:39 p.m.
  • English Press

Trade friction is a futile war that has no winner. Conflicts turning into quagmires should be avoided by cutting the negative chain reactions of sanctions and retaliation.

 

The United States has imposed the second set of punitive tariffs on Chinese products, citing China’s violation of intellectual property rights as a reason for the move.

 

The United States imposed 25 percent tariffs on $16 billion (about ¥1.8 trillion) worth of Chinese goods. China also implemented retaliatory tariffs on an equivalent scale on U.S. products.

As a third set of punitive tariffs, the United States is considering tariffs on $200 billion worth of Chinese products. In that case, China also intends to impose retaliatory tariffs on U.S. goods.

The conflicts between the two biggest economic powers could inflame concern among companies and markets, stagnating global consumption and investment. The two nations should aim for the solution of trade problems not by exchanging sanctions and retaliatory measures, but through negotiations to the very end.

 

The United States and China have resumed their trade talks for the first time in about three months. A plan for a summit meeting between the two countries in November has surfaced.

It is important to make use of such a framework and heighten the momentum for breaking the deadlock. Efforts must be made for compromise from a broader perspective.

 

The problem is that in their past negotiations the United States has not presented China with any point of compromise, such as that the United States will bury the hatchet if China copes with an issue to a certain extent.

 

Japan has role to play

 

It is certain that competition with China for dominance in digital technologies is behind the U.S. hard-line stance against China.

 

China is trying to nurture its industries with its enormous subsidies and by other means. There is a deep-rooted dissatisfaction in the United States that such measures are distorting the environment for fair competition.

 

Industrial promotion measures with digital technologies as a core constitutes the basis of China’s national strategy. Therefore, China cannot accept U.S. demands easily.

 

Unless China can sound out U.S. intentions to a certain extent, such as to what extent China should make concessions to the United States, it will be difficult for them to develop the discussion.

 

To repeat effective dialogues for avoiding friction, the United States, which started the fight, should present concrete points of contention first.

 

For Japan, intensifying U.S.-China conflicts are not someone else’s problem.

 

It has been pointed out that a negative effect of trade friction with an exchange of high tariffs is that supply chains established by global companies will be disrupted.

 

There are many Japanese companies with production bases in China. An increase in product prices due to additional tariffs could lead to sluggish Japanese exports to the United States. It is necessary to pay attention to whether serious damage would be inflicted on the performance of companies.

 

The U.S. method to forcibly threaten a negotiating partner country to make concessions while wielding punitive tariffs is never acceptable.

 

Japan should also contribute to calming down U.S.-China friction. Japan needs to continue to tenaciously emphasize problems of protectionist policies to the international community.

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