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Sino-US Trade Imbalance: Approaches and Solutions
2017-09-13
2017-08-07
Since reform and opening-up, China has made remarkable progress, catching the eyes of the whole world, which not only enables China to maintain a medium-high rate of growth, but also injects new impetus to the world economy with many countries sharing in the profits from the trade partnership with China. The enterprises and people from both China and the U.S. have enjoyed great benefit from bilateral trade and investment between the two countries. But it should be noted that trade imbalance is a problem not to be neglected between China and the U.S.
The bilateral trade between China and the U.S. is based on respective resource endowment and the strong complementarity of their industrial structures, which is favorable for both sides in the bilateral trade relationship. With regard to micro-level, the U.S. has solved part of its income and distribution contradictions and significantly reduced the consumption costs of its domestic consumers by importing the low-cost and labor-intensified products, especially consumer goods, from China in large quantities; in light of macro-level, it will be helpful for the U.S. to curb inflation and provide adequate room for implementing its macro-economic policies by importing large quantity of low-cost products.
The reasons why there exists bilateral trade imbalance are very complicated, which requires in-depth studies on on how to look at the issue and what measures to be adopted. First, the statistics of Sino-US trade imbalance of the two sides vary greatly due to their technical differences of statistical methods. In addition, another important factor is related to the calculation of Hongkong’s intermediary trade volume. Second, Sino-US trade imbalance should be viewed from the perspective of global value chain. Third, the trade imbalance should be looked on in the context of America’s macro-economy and its status in global economy. Fourth, the trade imbalance should be treated under the overall economic and trade framework between China and the U.S.
To solve Sino-US trade imbalance, efforts need to be made in the following aspects. First, the consensus reached at the Mar-a-lago resort in Palm Beach, Florida by the heads of two countries should be implemented and problems in bilateral trade development should be jointly solved in an open, balanced, mutually-beneficial and win-win manner. Second, relevant issues should be placed against the big picture of global economic and trade patterns and both sides should be fully aware of the important roles that China and the U.S. have played in global trade and economy. Both sides need to solve the related issues through negotiations and cooperations and from the perspective of keeping a stable global trade performance. Third, adequate concern should be paid to the complexity and difficulty in resolving the long-standing issues, which calls for certain strategic patience and resolve. Fourth, joint efforts need to be made by both sides. China will adopt more measures to expand import from the U.S. and the U.S. needs to give play to its comparative advantages through policy adjustment. Fifth, we should consider the solutions to the problems in the general framework of Sino-US trade and economic cooperation, including accelerating the negotiation of bilateral investment agreement between China and the U.S., taking into account commodity trade, service trade and bilateral investment in the lump and further enhancing the bilateral trade and investment relations to truly realize mutual benefit and common wins.
