context: Trade friction with the US is now at a critical stage, but China has yet to commit to a strategy for its response. Long Guoqiang, the government's top trade advisor, argues the two sides can resolve their differences rationally by recognising shared interests.
The package of US trade measures against China, including anti-dumping measures, countervailing measures and the Section 301 investigation, is not in accordance with international rules, says Long Guoqiang 隆国强 State Council Development Research Centre deputy director and director of MofCOM advisory committee for economic and trade policy. He says that they are intended to contain China, but that it is impossible for the US to achieve this goal by launching a trade war. Long argues that those who will be most hurt by trade war are
- Chinese enterprises: China is a link in the global value chain, and blocking Chinese enterprises from exporting to the US will also hurt upstream enterprises in the industrial value chain
- consumers in the United States: they will pay a higher price for the same quality goods
- the multilateral trading system: other actors are likely to imitate these actions, posing a broader challenge to the multinational trading system
Though these different measures of the package have different focuses, their goals are the same, he says, noting
- a short-term goal of opening the Chinese market, with a specific target of US trade deficit with China can be reduced by US$100 bn. This goal provides room for negotiation, Long says.
- a medium- to long-term goal of preserving US dominance in technology by preventing Chinese firms from catching up. This issue must be addressed by more innovative ideas for cooperation.
Eventually, China and the US must sit down to solve their differences through rational dialogue, Long says. It is normal to see trade frictions between great powers, he stresses, adding that China provides many opportunities for trade and investment.