Recently, many Maldivian friends expressed their concerns over the ongoing China-US trade frictions and worried about the ripple effects of the escalation of the frictions to Maldives. In fact, the US arbitrarily wields the tariff stick to its trading partners in addition to China, which results in damages to others and the US itself.
As for the trade differences and frictions, China is willing to settle the issue through cooperation with the US and reach a mutually-beneficial and win-win agreement. However, cooperation has to be based on principles. There are bottom lines in consultations. China will not compromise on major issues of principle. China does not want a trade war, but it is not afraid of one and it will fight one if necessary. China’s message on this issue has been clear and consistent.
The so-called “US has suffered loss from its trade with China” is just misleading. The China-US economic and trade cooperation is the natural result of complementary advantages of the two countries. It is also an inevitable outcome of international division of industries. After nearly 40 years of development, the Chinese and American economies are deeply integrated and highly connected. The bilateral trade has reached USD 700 billion, the two-way investment stock has exceeded USD 230 billion, the annual sales of US enterprises in China amounts to USD 700 billion with the profits over USD 50 billion. No doubt that the US is an important beneficiary of China-US economic and trade cooperation.
Eventually, the US will suffer from the frictions instigated by itself. US exports to China declined for eight consecutive months. Comparing to the same period of the previous year, the investment of Chinese enterprises in the US fell by 10%, US agricultural exports to China declined by 33%, and the US net agricultural income declined by 12%. The production costs of US enterprises and domestic prices keep rising. A research study by a US institution shows that if all Chinese goods to the US were levied with extra 25% tariff, US GDP would decrease by 1.01% with a loss of 2.16 million job opportunities.
The escalation of China-US trade frictions would dampen the global economic growth. Global Economic Prospects released by the World Bank in January 2019 revised its forecast for global economic growth down further to 2.9%, citing continuous trade friction as a major downward risk. The International Monetary Fund also lowered its prospects of world economic growth for 2019 to 3.3% from 3.6% of 2018 estimate in its World Economic Outlook report published in April 2019, suggesting that economic and trade friction could further depress global economic growth and cripple the already weakened investment. The trade frictions instigated and intensified by the US would also break the global trade, production and value chains, and hurl a heavy blow to the rule-based international trade system and the global economic order. It’s a typical economic bullying which threatens the global security, stability and development.
Imposing extra tariff will not eliminate trade deficits. The US has trade deficits with more than 100 countries. Economists point out that the root causes of the US trade deficits are excessive consumption, insufficient savings and huge fiscal deficits.
More and more people have realized that the US has other hidden purposes to provoke economic and trade frictions. It’s shocking to all that the US applies its national power to suppress China’s high-tech enterprise Huawei without any concrete evidence. Malaysian Prime Minister Mahathir said recently that the US had a strong research and development capacity in the past, but it must accept the fact that the eastern countries also have this capacity. Malaysia will use Huawei technology as much as possible. Singaporean Prime Minister Lee Hsien Loong remarked that all countries must admit that China will continue to grow, and it’s neither possible nor wise to prevent this.
As an old Chinese saying goes, “Justice cause abundant support while injustice cause little”. China is for dialogue, mutual respect and mutual benefit, but will never accept any bullying in trade relations. This is not only to safeguard the legitimate rights and interests of China, but more important, to safeguard the multilateralism and international justice, which is the common interest of developing countries. Justice is in people’s hearts naturally and we believe that China’s neighboring countries, including Maldives, will stand together with China and jointly oppose trade protectionism and unilateralism.
Editors Note: The following article was written by His Excellency Zhang Lizhong, the Chinese Ambassador to the Maldives, and is being published on AVAS on His Excellency's request. The article is recorded here as originally written. No changes have been made in phraseology, structure or punctuation.