EARLIER at a Hari Raya event, I was asked by friend from the media: Is the G20 summit a game point of the China-US trade dispute, or the match point of it?
I replied with a smile, “Let’s wait and see.”
Last week, Chinese President Xi Jinping met with US President Donald Trump during the G20 Summit in Osaka, Japan. The two leaders agreed to promote China-US relations based on coordination, cooperation and stability, and to resume trade talks on the basis of equality and mutual respect.
Trump also promised that the US would not impose new tariffs on Chinese imports, and that the US is willing to cooperate with China to properly settle the trade balance problem between the two countries through consultations, and provide fair treatment for enterprises from both countries.
Long sighs of relief could be heard from those who have been paying close attention to the China-US trade disputes, as this piece of news may be a ray of hope.
On March 22 last year, Trump signed an executive memorandum to impose large-scale tariffs on imports from China and restricted China companies from investing in the US, based on the result of a Section 301 investigation by the office of the US Trade Represen-tative. This was the first shot in the trade disputes.
In September 2018, the US again abruptly announced plans to impose a 10% tariff on US$200bil (RM827.1bil) of Chinese goods. China fought back swiftly, announcing a 5% or 10% tariff on US$60bil (RM248.1bil) of US imports. With the Americans raising the stakes repeatedly, the fights and talks, highs and lows continued as the world watched the constant face-changing and backtracking by the US.
Malaysian Prime Minister Tun Dr Mahathir Mohamad has rightly compared the China-US trade war to the scenario where “two elephants fight, and the grass gets stomped”. China and the US, as the two largest economies in the global economy, will only thrive together in cooperation or wither together in confrontation, with the world economy following suit.
The uncertainty caused by the dispute caused the World Trade Organisation to lower its forecast for global trade growth in 2019 from 3.7% to 2.6%. Over the past two years, with the dark cloud of a “trade war” looming over the world, many countries have been worried that the global economy will be dragged into a “recession trap”.
China was pulled into this trade war, with its back to the wall. For China, this is a war to combat economic bullying, a war to safeguard our legitimate right of development, and a war to safeguard international rules and the multilateral trade system.
Last month, the State Council Information Office of the People’s Republic of China issued a white paper titled “China’s Position on
the China-US Economic and Trade Consultations”. The paper comprehensively elaborated on China’s position on the trade disputes, so I will not go into details here. Instead, I wish to point out four basic facts.
Firstly, the ultimate motive of the US in starting the trade war is to bully China in the name of “fair trade”. The US, wielding its “club of tariffs” and carrying the banner of unilateralism and protectionism, blatantly pursues the policy of “America First” and tries to coerce China into giving up its own interests and development rights.
Secondly, the US decisions are counterproductive, and it is getting a taste of its own medicine. Due to the trade war, domestic production costs and prices have risen significantly, and the economic growth of the US has been hindered while exports from the US to China have been scaled down.
According to the latest statistics on the website of financial magazine Forbes, oil exports from the US fell by US$2.49bil (RM10.3bil) compared with the first four months of 2018, and exports to China fell from 11% to 2.6%. LPG exports from the US to China fell by 87%, a decrease of US$640mil (RM2.6bil). Cotton exports from the US to China fell by 48.33%, a decrease of US$289mil (RM1.2bil). Soybean exports to China fell by 27.49%, a decrease of US$710mil (RM2.9bil).
Objections to the trade war inside the US have been making waves and are only getting louder.
Thirdly, the US has underestimated China’s determination and capacity to safeguard its core interests and to counter economic bullying. As the world’s second largest economy, China has a huge and irreplaceable domestic market that no country could bear to lose.
China has its complete industry chain, advanced infrastructure and a business-friendly environment. Consumption has become the main driver of China’s economic growth for five consecutive years, with a contribution rate of 76.2% to China’s economic growth in 2018, while the contribution rate of exports has been decreasing.
In fact, instead of a total collapse as predicted by the US, the Chinese economy has maintained a good momentum of sustained and steady development.
Lastly, it is only right to defend the multilateral trading system and to build an open world economy.
Malaysia is a pro-trade country with a highly globalised economy, with exports and imports of goods and services equivalent to about 130% of GDP in 2018. A fair, open and transparent international trade system is crucial to every country’s development and prosperity, including Malaysia.
In the short term, Asian countries like Malaysia may become the beneficiaries of production relocation or import substitutes caused by the trade war. However, in the long run, all Asian economies work as part of the global value chain. Any break in the chain will cause systematic damage to all of us. It is an unrealistic idea to look at the China-US trade war with opportunism or a fluke in mind, hoping that any of us could survive or even profit from it.
As President Xi Jinping emphasised many times, “China will do well only when the world does well, and vice versa.” This is precisely why China proposed the Belt and Road Initiative and commits itself to multilateralism.
The 5,000-year Chinese civilisation has always advocated the idea of “harmony among differences” and “seeking common ground while reserving differences”. We have never regarded the development of other countries as threats to ourselves, and never harmed others’ interests for our own benefit, let alone threatened others with maximum pressure, quitting from responsibilities or decoupling.
The Chinese side, with all our sincerity and goodwill, is willing to reach a mutually beneficial solution with the US side through dialogues and discussions based on mutual respect, equality and integrity, thus giving the global market confidence and vitality. We are willing to cooperate with, not to fight with, the US to make positive contributions to the world economy and global governance, making China and the US greater and the world better.
But however the chips fall, China will keep true to its own path. China will remain committed to reform and an opening up policy, and maintaining a sound momentum of economic growth. China will foster a more positive dynamic with the world and continue to function as an engine for global development.
Finally, I want to tell that friend from the media that the China-US trade dispute is not a fair game with rules and referees but a trade conflict that the US unilaterally provoked, forcing China to fight back. The consensus reached between the two presidents at the G20 Summit is encouraging. We look forward to the US living up to its word and working with China to find a solution acceptable to both sides through friendly dialogue.
For China, the US and the world, an eventual solution to trade disputes is definitely worth the wait.
Ambassador of the People’s Republic of China to Malaysia