NADS Held a Roundtable Discussion of the China-U.S. Trade War

The Roundtable Forum on “the China-U.S. trade war: thoughts, responses and future” was jointly held by National Academy of Development and Strategy (NADS), RUC and Think.China in Beijing, inviting research fellows of NADS - Zhao Yong, Yu Ze, Fan Zhiyong, Yu Chunhai, Cheng Dawei, and Lei Da to have an extensive discussion on hot issues of the trade war.

Zhao Yong noted that China-US economic and trade relations are interdependent, which results from a combination of the differences and complementation of the two countries’ basic economies. Such a relationship therefore is less likely to be affected by tariff policies. “No matter which country relies more on the other, the trade war will benefit none as no one would come out as a winner,” said Zhao, “serious costs will be paid by both countries in trade conflict, and the closer bilateral economic ties are, the heavier the cost will be.”

Yu Ze stressed that the root of China-US trade war lies in their competition in high-tech sector. In the new round of technological revolution, China’s technical transformation will lead to the change of foreign trade model, incurring trade conflicts with the United States. Yu suggested that China, in this transition period, should on one hand invest more on manufacturing sector, particularly the digital sector, on the other hand, ensure a safe domestic asset market.

Fan Zhiyong believed that there is still great room for China to adjust domestic policies in the backdrop of trade war. The core is to maintain or build a broader and deeper market, of which the top priority is to guarantee a safe domestic financial environment. The main objectives of China macroeconomic policies should be preventing and controlling risks as well as ensuring consistency in our policies. With the escalation of trade tensions, fine adjustments shall be made to the policies in order to offer the optimal portfolio. “I personally am quite positive that China can cope with the trade war with the United States well,” said Fan.

Yu Chunhai estimated that the Trump Administration has been increasingly utilizing American laws to stir up trade disputes and conflicts, aiming to gain comparative advantage and bargaining chip during bilateral or regional negotiation. The China-US trade war tends to be protracted and more complicated considering both the short-term interests and the long-term economic or strategic benefits. In response to the trade war, China shall be flexible and resilient with countermeasures while sticking to the path of supply-side structural reform.

How could China and the US turn current trade disputes into a win-win situation? Cheng Dawei suggested that in the short run, the two countries will both win if they manage to reconvene negotiation talks while balancing respective domestic concerns. In the long run, an all-win re-negotiation under the WTO multilateral system is more desirable. “Multilateral negotiations are constructive, different sides can conduct effective talks based on core rules,” said Cheng, “it will give each country a chance to pursue a win-win result.”

“China must figure out the strategic focus of the trade war in order to handle the pressure from the American side successfully,” Lei Da emphasized. Trump initiated the trade war with China, targeting the rapid growth of Chinese industrial development. The underlying concern of the US is an industrially upgraded China will shock the existing global order. Knowing that, China must hold the bottom line of national economic security, while establishing system of national innovation, improving intellectual property protection and pushing forward a multilateral trade system under the WTO framework. Lei stressed, “We have achieved so much since the opening-up and reform 40 years ago, and there is no ground to arbitrarily deny our values and institutional superiority simply because of a trade war. To conduct reform is our own responsibility and domestic affair. A successful corner-overtaking means not only institutional but also economic surpassing.”