Commentary: Beijing determined not to buckle under Washington's tariff threats

Source: Xinhua| 2018-04-06 22:40:41|Editor: Mu Xuequan
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by Xinhua writer Liu Chang

BEIJING, April 6 (Xinhua) -- It seems Washington is betting that Beijing might eventually back down in a trade tit-for-tat if it continues to serve up tariff threats against Beijing. Not so.

The Trump administration threatened on Thursday to slap tariffs on 100 billion U.S. dollars' worth of imports from China. The move came only days after the U.S. Trade Representative (USTR) proposed to levy an additional 25 percent tariff on 50 billion dollars' worth of China imports.

The United States is not short of intelligent economists, yet it appears that Washington is losing common sense on global trade, and trade relations with China, its largest trading partner for merchandise.

The biggest modern myth about China-U.S. trade transactions is that China has a strategy to maintain a surplus with the United States, and that the United States has, as President Donald Trump called it, been taken advantage of because of these trade gaps.

First, China is not the only country that runs a trade surplus with the United States. Germany and Japan do so as well. Second, the root cause for the trade imbalance between the world's top two economies has a lot to do with the spending-saving ratio inside the United States. What's more, none of the other reasons for the deficits, including China's position as a "grand assembler" in the global chain of production, could suggest China is an intentional surplus seeker.

What should be stressed is that these trade deficits have not headed off America's economic recovery in recent years. It fact, in a country such as the United States where people consume more than the country can manufacture, Chinese exports to the U.S. market have offered American consumers quality goods at lower prices.

The USTR's Section 301 investigation, based on an obsolete Cold War weapon for trade disputes, lacks nothing but evidence to prove that China has been forcing technology transfers in international economic cooperation. The probe is severely biased against the "Made In China 2025" plan. But the plan is neither exclusive nor unilateral, and could produce opportunities for China's partners.

Some politicians in Washington may think they can crash the Chinese economy just like what they did in the 1980s to Japan. If so, they are greatly mistaken.

Beijing does not want a trade war with anyone. Yet if there were a conflict, China's economy is resilient enough to manage it.

After years of painful adjustment, the Chinese economy today is less dependent on foreign trade, and as the economy continues to expand while the country's debt growth slows, Beijing has a broader macro-economic policy space.

In the meantime, by deepening domestic reforms, promoting industry restructuring and diversifying its export markets, China is capable of turning a crisis into an opportunity for further economic progress.

By ratcheting up its rhetoric and threatening trade levies, Washington seems to gamble China would budge first.

However, Ministry of Commerce spokesman Gao Feng said Friday that there have been no talks or contacts over economic and trade matters between Chinese and U.S. officials since Trump signed the memorandum on its plan to slap tariffs on Chinese imports in late March. The fact shows China's strong determination that it will not give in to any threats when its key national interests are at stake.

To face down these threats, Beijing is going to reciprocate, and more importantly, show its determination to defend its legitimate economic interests.