CURRENTLY, economic and trade relations between China and the United States of America are tense. “Trade war” has become the buzz-word to describe this situation by major media organisations the world over.
What should we think of this? Is the US going to be “great again” or is it in trouble?
It is known to all that after Donald Trump became president using the slogans “America First” and “Make America Great Again”, the US frequently raises its “tariff baton”, unilaterally provokes trade frictions and even uses extreme pressure to force other countries, especially China, to accept its unreasonable demands in order to maximise US gains.
In April last year, the Trump administration announced a list of products with a 25% tariff on the US$50bil Chinese exports to the US. It has been more than a year since the US unilaterally provoked the trade war, but is it really helping to make the country “great again”. Or is the US shooting itself in the foot?
From the latest data, it is not difficult to see that the results of the trade war are not so beneficial to the US. According to the report of the US Department of Labour, the number of new jobs in the US economy dropped significantly from 224,000 in April to 75,000 in May this year. The unemployment rate remains at 3.6%, but the actual wage is not increasing.
Data from the London-based global information provider IHS Markit shows that the US purchasing managers’ index (PMI) was 50.6 in May, the lowest level since September 2009. Overall, business activity growth in the US has also faltered to a three-year low.
To address the complicated economic situation, the Federal Reserve System has begun to discuss interest reduction and monetary policy shifts.
In the era of globalisation, the China-US economy is highly integrated. Hence, the imposition of tariffs by the US has inevitably caused damage to the Chinese economy. Nevertheless, it will not change the trend of a sustained and stable development of the Chinese economy.
Our confidence comes from the vast Chinese domestic market. China has a huge prospect for development derived from its nearly 1.4 billion population, 900 million labour force, 800 million netizens and over 100 million market entities. China has great economic size, strong domestic demand and solid material foundation accumulated from sustained rapid development since the implementation of the government’s reform and opening-up policies. These are the things that enable the Chinese economy to successfully counter external risks and challenges.
China’s confidence also comes from mature regulatory capabilities. It has institutional advantages in coping with various difficulties and risks, and has wide experience in macro-control policy and sufficient space for policy manoeuvre.
Our confidence comes from extensive international support too. On the one hand, the US is wielding its tariff baton by engaging in trade blackmail using extreme pressure. On the other hand, it is withdrawing from various multinational organisations and treaties with a combination of threats and inducements. The US is now making enemies everywhere, disregarding international rules, destroying both the economic globalisation process and the existing world trade system.
Besides launching the trade war against China, the US is also using its power to suppress our high-tech private enterprises. As the Chinese saying goes, “a just cause enjoys abundant support while an unjust cause finds little support”.
The actions of the US have been opposed by other countries and even by its allies. For example, Malaysian Prime Minister Tun Dr Mahathir Mohamad publicly stated that Malaysia will use Huawei’s technology as much as possible, and the US and countries in the Western region should accept that Asian countries are now also capable of producing competitive products, and that they should not threaten business competitors.
Some restaurants in Malaysia even launched discount offers for users of Huawei products (pic). Malaysians are demonstrating their support for China’s Huawei with practical action.
I have also noticed that the media in Malaysia are actively following the issue of China and the US imposing tariffs on each other, and the US employing force to suppress Chinese private companies.
Some analysts believe that Malaysia will benefit from the China-US trade friction as Malaysia could be one of the alternatives for short-term imports and mid-term production transfer.
Indeed, in the short term, Malaysia and a few other countries will receive certain benefits by selling similar products or as a trade and transit point for companies to circumvent the tariff barriers.
However, these benefits are far less serious than the damage brought to the global economy by the escalating trade friction.
Malaysian Finance Minister Lim Guan Eng said recently that although the trade war is beneficial to Malaysia so far, he still hopes it would end soon because if it drags on, eventually there would be no winners, only losers.
An old Chinese saying goes, “harmony brings wealth”. Negotiation and bargaining are processes of trade where disputes and conflicts are inevitable.
But as long as we all come to the negotiating table with open hearts and attitudes, and take care of the concerns and interests of all parties, we can come to an amicable agreement. The relationship between China and the US goes far beyond buyer and seller.
At present, the international community is paying close attention to the meeting between Chinese President Xi Jinping and Donald Trump at the upcoming 2019 G20 Osaka Summit next week.
As the top two economies in the world, cooperation serves the interests of these two countries whereas conflict can only hurt both. Therefore, cooperation is the only choice for both sides.
As the No.1 super power in the world, the US should show style and be broad-minded, credible and responsible. The economic and trade friction between China and the US is putting global stability and prosperity at stake.
Whether China and the US will return to the negotiating table depends on the sincerity of the US. We hope it will meet China halfway on this aspect so that both countries can negotiate with the spirit of mutual respect and equality to find the best solution to the current economic and trade differences in order to safeguard and promote global stability and development for the well-being of the people of both nations and the whole world.
Chinese consul general in Penang