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The so-called “China-US trade imbalance” is a self-serving, confusing account

By People's Daily columnist (People's Daily)    15:07, July 16, 2018

The so-called “China-US trade imbalance” is one of the many excuses that the US has used for its unilateral trade protectionism. International trade is based on voluntary principle and both sides have reaped huge benefit from the cooperation over the years.

What is unreasonable is why the US, the most powerful country, has become the “biggest victim” of “imbalance”? Are the former owners of the White House really happy to sell their own interests, or are they too weak to argue with their trading partners?

The US claimed that when doing business with other countries, the US has such a large trade deficit that it has to adopt strong solutions, and that trading partners are unfair to the US, thus harming its economy, industries and employment.

However, according to the results found by a statistical working group made up of experts from government agencies in China and the US, the US official trade deficit with China is overestimated by about 20% every year. Besides, trade data cited by the US government only includes trade in goods and does not reflect trade in services. The US service sector accounts for more than 70% of its GDP. How can the US lose such a large sum when calculating trade accounts? The reason is very simple. The surplus of US trade in services is not small. If this surplus is included, the so-called “China-US trade imbalance” will be even more untenable.

Trade deficit is not the same thing as interest deficit. In the global value chain, the trade surplus is reflected in China, whereas the interest surplus is in the US, according to a research report on Sino-US economic and trade relations released by the MOC. Last year, 57% of China's trade surplus was from foreign-invested companies, and 59% came from processing trade. China only earns a small amount of processing fees from processing trade, while the US makes huge profits from design, parts supply, and marketing. In the Sino-US economic and trade cooperation, the US imports a large number of low-cost labor-intensive products from China and American consumers have enjoyed real benefits, which is also conducive to the US in curbing domestic inflation.

China does not deliberately pursue trade surplus in its trade with other countries. China has actively expanded its imports in line with the people's growing needs for a better life and high-quality economic development. On July 1, China actively reduced tariffs for daily consumer goods involving 1,449 tax items, with an average fall of 55.9%.

According to the so-called “fair” trade advocated by the US, countries must be completely consistent with the US in terms of the tariff for each specific product and the access of each specific industry to achieve absolute reciprocity.

Tariff levels and openness have always been closely related to a country’s development stage, resource endowment and industrial competitiveness. The so-called “fair” trade essentially denies the national conditions and development stages of various countries, which will inevitably have huge impact on the economies and industries of developing countries, and will inevitably lead to a wider range of unfairness.

Pursuing protectionism is like locking oneself in a dark room. While wind and rain may be kept outside, that dark room will also block light and air. International trade seeks to achieve mutual benefit and win-win outcomes. No one will emerge as a winner in a trade war. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Bianji)

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