Mutual gains stressed from mended trade ties

Two leading economies stand to benefit if they exit economic conflict, forum hears

Repairing trade ties between the United States and China is an important goal, as the resulting interconnectivity benefits both countries, a forum has heard.

Hosted by the National Committee on US-China Relations, the China Town Hall online discussion on Tuesday included Amy Celico, a principal at the Albright Stonebridge Group; Andy Rothman, an investment strategist at Matthews Asia; and Huang Yiping, chair professor of economics at Peking University.

Celico, a former US diplomat stationed in Beijing and Shanghai, was senior director for China affairs at the Office of the US Trade Representative and worked at the US Commerce and State departments. She pointed out that despite the trade dispute, China is still the United States' third-largest export market. The US remains China's largest export market.

In the past two years, tariff increases, together with an uncertain business environment and policies meant to decouple strands of the economic interdependence, have led to a steep decline in trade ties between the two nations, Celico said. This was particularly evident in US exports to China, she said.

Celico said that the trade conflict has hurt the US economy more than China's, although both sides have felt the pain.

"The China market remains incredibly attractive for American companies and exporters, so reengaging on trade issues needs to be a top priority of the (possible incoming Joe) Biden administration as it seeks to help the US economy revive after the COVID-19-induced recession we are now facing," she said.

Huang, who is also vice-chairman of the council at the Public Policy Research Center and research fellow at the Financial Research Center, both in the Counselors' Office of the State Council, said China's contribution to global growth in the past few years has been above 30 percent. This year, the figure will likely be higher, said Huang.

"When the global economy is shrinking, we are seeing Chinese exports expand quite dramatically. The October number for export growth was about 11 percent year-on-year," said Huang.

Decoupling a 'fantasy'

Rotham, another former US diplomat, pointed out that China's contribution to global economic growth is larger than the combined contributions from the US, Europe and Japan.

"So, to me the whole concept of decoupling is just fantasy and misguided," he said of the policy toward China advanced by the administration of US President Donald Trump.

The Regional Comprehensive Economic Partnership, or RCEP, signed on Sunday by 15 Asia-Pacific countries also was discussed at the forum.

The newly minted RCEP is "essentially free trade for the group of Asian economies", said Huang."It could be quite significant for China to further integrate into the rest of the region, especially with some of the important neighboring economies like Japan, (South)Korea and Southeast Asia."

Rotham said that the signing of the RCEP "hopefully will be a wakeup call to politicians in Washington who say on the one hand that they want America to be the preeminent world power and America to lead the way, and on the other hand saying they are not interested in international and regional trade deals. You can't have it both ways".

Celico offers a similar view:"The US government not being part of now two Asian free-trade agreements is very bad for the United States, which is a self-proclaimed leader and participant in the Pacific economy.

"I think there is more pressure on the US government to rethink when and how it might restart the process to join the CPTPP (the Comprehensive and Progressive Agreement for Trans-Pacific Partnership)."

The CPTPP is an updated version of the TPP (Trans-Pacific Partnership), which resulted from Trump's move to pull the US out of the TPP. The latter was championed by the administration of Barack Obama.

Rotham and Celico echo Huang's view that China's participation in the RCEP is good for both China and the world.

"If we look back, every time China has joined a global or regional institution, it's been to both the benefit of China and everybody else," said Rotham.

"Prior to the tariff war, US exports to China had grown by 500 percent since China joined the WTO versus a 100 percent increase to the rest of the world. Now GM (General Motors) sells more cars in China than in the US. I think bringing China into global institutions is good for everybody, and we need to continue to move that process forward."

mayzhou@chinadailyusa.com