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By Xu Qinduo|
U.S. Treasury Secretary Steven Mnuchin has said, "a trip is under consideration" to Beijing over the ongoing trade spat between China and the United States. Such a move is a positive development, if it actually happens.
Though Mnuchin didn't comment on the timing of the possible trip (or anything else about it, for that matter), it's still a welcome step in the right direction. China would welcome a visit by Mnuchin, as Beijing has always embraced dialogue and negotiation as the preferred way to resolve trade disputes with Washington.
U.S. Treasury Secretary Steven Mnuchin [File Photo: IC]
China has mapped out a series of measures to reduce tariffs on imported goods, including automobiles. It said it would also gradually eliminate limitations on foreign ownership of car, aircraft, and ship manufacturers. China sees deepening reform and further opening up as being in its own interest, as it will encourage sustainable economic growth and is conducive to free trade and globalization.
Trade wars damage the interests of both sides. For example, ships carrying American sorghum destined for China had to make a U-turn a couple of days ago to return home after China imposed new import levies. And many suspect that Chinese telecommunications company ZTE is paying a dear price due to the escalating trade row between the two countries. And there have already been fluctuations in the stock markets that correspond to news about the dispute. Many economists have pointed out that no winners will come out of a trade conflict.
It is important to keep in mind that the impacts of the trade dispute can extend beyond damage to the domestic interests of both China and the United States. The two countries are critical players in the global economy. In recent years, China has contributed to more than 30 percent of the global economic growth. As IMF Managing Director Christine Lagarde said last week, a trade war between the world's two largest economies threatens to damage global confidence, investment, and growth.
Lesetja Kganyago, IMFC Chairman and Governor of the South African Reserve Bank noted that "it is important that as a global community we keep trade open, we ensure that we work within the multilateral system, that we have to make sure if there are disputes, these disputes are resolve." These remarks are clearly targeted at the American practice of going it alone in a dispute: When there's a trade issue, instead of using the WTO dispute settlement mechanism, the United States searches for something in its own toolbox, and punishes trading partners unless they agree to its demands. For example, it has imposed tariffs on a number of countries over steel and aluminum imports by making claims about national security. These arguments are on very shaky ground. China, Japan, Mexico, and European countries are all victims of American unilateralism, although some of America's partners were given temporary exemptions.
Before the trade dispute, the Trump administration threw the Trans-Pacific Partnership into the dustbin, walked away from the Paris deal on climate change, and threatened (and is still threatening) to abandon the international agreement on Iran's nuclear industry.
Then it turned its attention to its trade relationship with China, and launched an investigation under Section 301 of the Trade Act of 1974 that led to threats of billions of dollars of tariffs on imports from China.
But China is not a country the United States can push around. It is the largest trading nation for goods, has the largest reserves of foreign currencies, and is the world's largest buyer of U.S. treasury notes. China has a population of 1.4 billion, which includes a growing middle class of more than 400 million people. And it is poised to become the world's largest retail market by the end of this year.
If Washington is sincere in its desire to negotiate with Beijing, that's a good thing, as a carefully negotiated outcome that serves the interests of both countries also serves the interests of the rest of the world. And Beijing would be willing to extend its hand towards a reasonable deal.
But if that's not what the United States is offering, then China will be resolute in its retaliation against additional tariffs imposed on its products by the United State.
Xu Qinduo is a political analyst for CRI and CGTN, and a Senior Fellow of the Pangoal Institution. He has worked as CRI's chief correspondent to Washington DC.