By Chinese Ambassador to Japan Kong Xuanyou
Trade friction between China and the U.S. is escalating, hurting both economies, and negatively affecting economic cooperation between China and Japan. I would like to closely analyze the issue as the newly-appointed Chinese Ambassador to Japan.
Who is causing the friction? The current U.S. administration advocates an “America first” policy and is implementing unilateralism and protectionism. It put its national interest above other countries’ interests, wielding a club called tariffs against China. Many of my Japanese friends told me that the U.S.’s method has been in its toolbox for waging past trade wars with Japan and that Japan can’t just ignore its high-handed manner.
The U.S.’s escalation of trade friction has been driven by a “tenacity” that is hard to understand and a strange logic. The country adopts way too many far-fetched theories. It also cheats and deceives.
Some in the U.S. say China changed its views during negotiations. But China has worked to protect the interests of both countries and the global trade order so that we can address the U.S.’s concerns. Since the Group of 20 summit held in Buenos Aires last year, China has negotiated with the U.S. many times and suggested practical plans. Our enormous efforts led to great progress in negotiations.
But the U.S. repeatedly changed its view and raised the ante. For example, negotiations made substantive progress during the period from the end of March to the end of April. We also broadly overcame our disagreements. But the U.S. was never satisfied with what it got. It continued to give tall orders that were unreasonable and did not try to abolish all tariffs it imposed after the friction had begun. The U.S. tried to include a request regarding China’s sovereignty in an agreement and denounced China for backtracking on terms already agreed upon. Further, the U.S. caused a major setback in negotiations by raising the additional tariffs on 200 billion dollars’ worth of Chinese goods from 10% to 25% and beginning procedures for imposing tariffs on another 300 billion dollars’ worth of Chinese goods.
Some in the U.S. say China is profiting from its trade surplus with the U.S. But China is not seeking a trade surplus. China’s current account surplus stood at 11.3% of the gross domestic product in 2007, but the figure fell to 1.3% in 2017. A trade imbalance reflects comparative advantages in and a complementary relationship between two countries’ industries. It is also a result of the international division of labor and multinationals’ changes of production bases. It is also related to the U.S.’s export restrictions on high-tech products to China and to the U.S. dollar’s being a major international currency.
The U.S. condemns China for the “theft” of advanced technology, but that is a slander. China has more than 2,600 universities and over 110,000 research and development organizations, where more than 6.2 million researchers and developers work. The R&D spending of the entire society has been growing at an annual rate of nearly 20% since 2000.
China’s technological advancement is the fruit of its long-term national development strategy. China’s attitude toward the protection of intellectual property rights is clear and firm. China has built a full-fledged system for protecting, managing, and controlling intellectual property rights in a relatively short period, compared with the decades that developed countries spent setting up similar legal systems.
Some say China’s domestic industry subsidy program is distorting market competition. The subsidy program is one of measures to resolve imbalance in economic development and has been adopted by the U.S. and many other countries. Since joining the World Trade Organization, China has been promoting compliance reform in the domestic policy area and steadily fulfilling the obligation stipulated in the WTO’s “Agreement on Subsidies and Countervailing Measures.”
The Chinese government wants better national development and the Chinese people want to live happier lives. China and the U.S. can establish a win-win relationship only if they have mutually beneficial relations. Trade friction will not make America great again. It only spoils long-term bilateral relations and harms the interests of U.S. companies and consumers.
Trade friction between Beijing and Washington is seriously affecting Japan, Asia, and the international community. Japanese companies export one trillion yen’s worth of products they manufactured in China to the U.S. every year. Trade friction has weakened the earning power of Japanese companies operating in China and reduced Japan’s exports to China.
The U.S.’s disruption of the free trade system, which was formed after World War II, by promoting protectionism and unilateralism will have a harmful effect on the economic situation in Asia and the world. As the Chinese saying goes, “The ceaseless flow of rivers makes the oceans deep.” The flow of goods, capital, technology, and people can provide a strong impetus and broad space for economic growth. If the economic and trade cooperation between China and the U.S. is torn apart, it will deal a severe blow to and have an immeasurable impact on the global connection of industries.
Some people underestimate the strength of the Chinese economy. But President Xi Jinping was right in pointing out at the Second Belt and Road Forum for International Cooperation: “The Chinese economy is as big as an ocean and can’t be overwhelmed by storms and torrents.” No matter how the issue of trade friction plays out, China will thoroughly deepen reforms in the new era and expand market entry by foreign firms in wider areas. China will also strengthen international cooperation for the protection of intellectual property rights and increase imports on a wider scale. China will further promote international coordination of macro economy policy and put a greater emphasis on accomplishing the policy of opening the country to foreign businesses.
The Chinese economy is like a huge tree. It will never fall but continue to grow branches and leaves and attract more Chinese phoenixes. I hope the Japanese business community will be able to assess the general situation without its view being blocked and will not miss the bus named “China’s development.”