【YU YONGDING】 The Drums of Tra

发布时间:2018-04-29 00:22

【YU YONGDING】 The Drums of Trade War

2018-04-28 21:52来源:中国社科院世经政所WTO

原标题:【YU YONGDING】 The Drums of Trade War

With Chinese President Xi Jinping willing to make some concessions to the US, the world may yet avoid a trade war. But thereason Sino-American relations have soured is the Trump administration'sworldview, not external balances.

Last month, US President Donald Trump's administration fired the opening salvo inwhat is quickly shaping up to become a full-blown trade war. While tradefriction has long been an issue in the Sino-American relationship, few expectedsuch an escalation, not least because economists widely view trade wars asdamaging to all parties. So how did we get to this point, and can we turn backbefore it's too late?

First and foremost, Trump does not seem to understand how trade works. He thinks thatAmerica's $500 billion trade deficit with China amounts to a loss, the resultof “incompetent” US administrations allowing their Chinese counterparts to takeadvantage of them. In fact, according to Trump, the US already lost a “tradewar” with China years ago.

But trade balances are far more complex than Trump makes them out to be. Forstarters, much of what China exports includes components manufacturedelsewhere, meaning that the country's trade surplus actually includes the tradesurpluses of many other countries.

Moreover, China runs large deficits against Japan and Southeast Asian economies, even asit runs a large surplus against the US. China's overall trade surplus as ashare of GDP has fallen steadily over the last decade – from nearly 10% in 2007to just above 1% in 2017 – meaning that the country's external account isbasically balanced.

And then there is America's current-account deficit, which is not necessarily a badthing, as it implies the acquisition of large amounts of foreign capital. Thishas benefited the US over the years, by strengthening its financial system andcurrency. While the US external deficit could stand to be reduced, as it partlyreflects America's own lack of savings, trade policy alone would beinsufficient to achieve that goal.

None of this is to say that the US does not have any legitimate grievances aboutChina's trade practices. But these must be viewed as issues of China’scompliance with World Trade Organization rules.

As former WTO Director-General Pascal Lamy once acknowledged, while China has done“really well” in implementing its long list of WTO commitments, “no country isabove criticism.” In particular, Lamy noted, certain services sectors may notbe sufficiently open and protection of intellectual property rights (IPR)should be strengthened.

These are fair criticisms. Indeed, China's government itself hoped to open up thefinancial-services sectors more quickly, but financial fragility demanded agradualist approach. And, though the country has made progress in IPRprotection, it should have taken the issue more seriously from the start.

As for the US, its Trade Representative (USTR) has closely monitored China’s WTOcompliance since the country joined in 2001. The USTR's 2016 report on thetopic acknowledged the complexity of the picture presented by China's WTOmembership at the time, but took an overall positive tone, highlighting theexpansion of mutually beneficial trade and investment.

Yet the USTR report for 2017 – Trump's first year in office – mentioned no positiveresults. Instead, asserting that the US had “erred in supporting China's entryinto the WTO on terms that have proven to be ineffective in securing China’sembrace of an open, market-oriented trade regime,” the USTR focused oncomplaints about Chinese industrial policy, which is largely beyond the WTO’sscope.

In particular, the Trump administration takes issue with the Made in China 2025strategy, introduced by China's State Council in 2015 with the aim of boostingten strategic industries, including advanced information technology, automatedmachine tools and robotics, aviation and spaceflight equipment, and electricvehicles. The USTR report warns that the strategy’s “final goal” is to “capturemuch larger worldwide market shares” in the targeted industries.

In reality, the Made in China 2025 strategy – which, incidentally, is inspiredpartly by the US government's own massive investment in research anddevelopment – seeks to raise China’s manufacturing ability only to the averagelevel of the world’s major manufacturing powers by 2035 (not 2025), a rathermodest goal. But even if China wanted to set more ambitious goals, by whatright could the US – which now possesses much larger market shares in thetargeted industries – block it from attempting to do so?

According to the USTR report, the problem is that the policy tools the Chinese governmentis using to achieve the goals of Made in China 2025 “are largely unprecedented,as other WTO members do not use them.” Moreover, they “include a wide array ofstate intervention and support designed to promote the development of Chineseindustry in large part by restricting, taking advantage of, discriminatingagainst, or otherwise creating disadvantages for foreign enterprises and theirtechnologies, products, and services.”

Yet the report fails to identify those interventions, which is not surprising,given that the State Council has not yet specified the policy tools it willuse. And while America's grievances regarding IPR issues are understandable,they could be addressed through the WTO. The fact that the Trump administrationhas taken the approach it has suggests that it does not merely want to ensurethat China complies with existing rules; it wants to prevent China fromcatching up to the US technologically. This is obviously not acceptable toChina.

This reading is reinforced by the National Security Strategy that the Trumpadministration released last December, which asserted that the US would “respondto the growing political, economic, and military competitions we face aroundthe world.” China was cited as the main challenger to “American power,influence, and interests,” an adversary that is “attempting to erode Americansecurity and prosperity.” This perspective fuels the risk of the so-calledThucydides Trap, in which an established power’s fear of a rising rival leadsto conflict.

We may yet avoid a trade war. Chinese President Xi Jinping seems eager to easetensions, exemplified by his recent pledge to lower tariffs on importedAmerican cars “significantly” and further open China's financial-servicessector. Trump then declared that trade negotiations with China were going “very well.”

One hopes that the war drums will be silencedthrough negotiation and mutual concessions. Then US and Chinese leaders canturn their attention to the broader problem of avoiding the Thucydides Trap,thereby preventing a clash with consequences that would dwarf those of a tradewar.

(This article originates from "Project Syndicate", https://www.project-syndicate.org/commentary/trump-china-trade-war-thucydides-trap-by-yu-yongding-2018-04 )返回搜狐,查看更多



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