Despite the trade deficit, the US side is benefiting from bilateral economic and trade cooperation with China, an expert told People’s Daily.
On March 22, US President Donald Trump signed a presidential memorandum based on the Section 301 investigation results to impose large-scale tariffs on goods imported from China as well as restrictions on Chinese investment in the United States.
This policy aims to narrow trade deficit with China, according to some voices.
The US trade statistics indicate the deficit has reached hundreds of billions of dollars, as some media reported. However, many economists agreed that the figures are highly overestimated.
Trade includes goods and service trade. However, service trade is not fully reflected in the US statistics, said Brian Peck, director of the Center for Transnational Law and Business at University of Southern California.
Peck noted that the service industry accounts for over 70 percent of GDP in the US, a country that enjoys a big surplus from service trade.
Chinese Commerce Minister Zhong Shan said the calculation difference widens the US trade deficit with China by around 21 percent, citing research by a joint work group comparing the two countries' trade figures.
Trade competitiveness is indeed industrial competitiveness at root, said Long Guoqiang, Vice President and research fellow of the Development Research Center of the State Council (DRC).
The research fellow also noted that the China-US trade imbalance is mainly attributed to less competitive US commodities in Chinese market. The most effective method to reduce the deficit is not to undermine China’s exports, but rather to increase its product competitiveness.
The labor-intensive products are the main source of China’s trade surplus, while the US has been enjoying a favorable balance in trade in the regards of agri-products, hi-tech industry and services.
However, the US imposes various restrictions on the export of high-end equipment and advanced technologies to other countries especially China. This factor also brings about the trade imbalance between the two countries, said Zhong Shan.
The Minister added that the trade deficit will reduce by 35 percent should Washington loose restrictions on high-tech trade with China, citing a US research institute report as saying.
The US has trade deficits with many countries around the globe, said Yale University Senior Fellow Stephen Roach. Its service-based economy is difficult to meet the high consumer demands, thus requiring large imports of consumer goods.
In fact, the so-called trade deficits in the US result from importing surplus savings from abroad to maintain consumption levels that far exceed production capacity.
Experts believe that imports of low-cost, labor-intensive commodity goods from China have effectively capped inflation and brought real benefits to Americans by substantially cutting the costs of consumption, and increasing consumer surplus.
Trade deficits do not equate to benefit deficits, noted Bai Ming, the deputy director of International Market Research Institute under the Ministry of Commerce (MOFCOM).
Bai said the US side benefits from bilateral economic and trade cooperation with China.
China enjoys a trade surplus while the benefit surplus is on the US side, according to the Research Report on China-US Economic and Trade Relations issued by MOFCOM, indicating that both sides are mutually gaining from trade exchange.
Experts added that the trade imbalance between the two countries has been many years in the making owing to differences in economic development and industrial structure. In addition, the problem remains less likely to be solved once and for all.
(People's Daily Online on March 28, 2018)