Traveling with Company

by+Liu+Ying

In November， U.S. President Don- ald Trump made a state visit to China with the “most luxurious”business delegation in history in tow. Ten of the business leaders in the delegation were from energy enterprises， causing considerable anticipation for future China-U.S. cooperation in natural gas and nuclear energy.

At a crossroads of globalization， the world is facing many challenges such as lack of economic growth momentum and rising trade protectionism. In this context， analysts around the globe are closely watching the direction ChinaU.S. trade moves， as well as where the two countries will lead globalization and the world.

Shouldering International Responsibility of Globalization

Economic globalization is a cornerstone and a booster for further ChinaU.S. trade and economic cooperation. Since the two countries established diplomatic ties in 1979， their trade and economic relationship has been developing steadily and cooperation has become even more intimate. By 2016， China-U.S. trade volume had multiplied 209 times over the figure of 1979， from US$2.5 billion to more than US$524 billion. Bilateral investment volume now exceeds US$200 billion， and the cooperation has expanded from primarily trade and economics to various fields including agriculture， science， technology， energy， education and tourism.

Both countries tendencies to seize opportunities offered by economic globalization and ride historical waves were key factors helping China-U.S. trade and economic cooperation reach unprecedented height and depth. In particular， after China joined the WTO in 2001， U.S. exports to China increased five times， while during the same period， U.S. global exports increased by only 90 percent. Along with other economies， China and the U.S. promoted negotiations and talks on a number of mechanisms including the Trade Facilitation Agreement and the Environmental Goods Agreement. China and the U.S. have also joined hands to facilitate global trade and investment， enhance the global value chain， and provide urgently-needed international public goods via various multilateral trade platforms including the WTO， G20 and APEC. Every move the two countries have made together influences global economic recovery and draws high attention from the international community.

Huge Potential for Cooperation

Today， China is the largest trading partner of the U.S.， while the U.S. is the second largest trading partner and the largest export market of China. Both countries have a solid base for economic and trade cooperation， and rely heavily on each other in many areas such as natural resources， manpower， funds， science and technology.endprint

In recent years， China has witnessed rapid development of infrastructure construction. It proposed the Belt and Road Initiative which aims to promote connectivity across more than 100 countries. After Trump took office， he proposed a US$1 trillion infrastructure overhaul plan. However， the plan has proved difficult to implement due to a variety of factors such as funding. Thus， strengthening China-U.S. cooperation could prove to be a key driver of U.S. infrastructure development.

From a long-term perspective， China-U.S. trade and economic cooperation enjoys even greater potential， and the two countries are highly complementary to each other in terms of international division of labor and industrial structure. China now is at the mid and low-end of the global value chain. The country enjoys tremendous advantages in manu- facturing， especially on 220 categories of industrial products. It also features relatively low labor costs. The U.S. is at the high end of the global value chain. Its scientific and technological strength leads the world， and it features a highlydeveloped service industry. The two countries enjoy massive potential for further cooperation.

Trade Imbalance

Some Americans blame the U.S. trade deficit with China for unemployment in the U.S， even though it actually has little influence. One of the most typical cases involves Trump. Within his first 100 days in office， Trump promised to create 25 million new jobs by reducing the trade deficit with China.

Various studies have shown that the U.S. trade deficit with China has no direct relation to the drop in manufacturing jobs in the U.S. The decrease can be attributed to technological progress and industrial upgrading. Statistics from the U.S. show that from 2010 to 2016， the U.S. unemployment rate dropped to 4.9 percent from 9.6 percent， while the U.S. cargo trade deficit with China increased from US$691 billion to US$797 billion. Moreover， when China-U.S. trade volume grew by a significant margin， the U.S. unemployment rate dropped to a low point of 4.1 percent， which proves that the China-U.S. trade promotes more employment in the U.S.， rather than the other way around. In 2015 alone， U.S. exports to China created 1.8 million new jobs in the U.S. Factoring in bilateral investments， a total of 2.6 million new jobs were created in the U.S. that year. Chinese e-commerce giant Alibaba is now adding 1 million U.S. small businesses to its online platform， which will create at least 1 million new jobs in the U.S.endprint

Balancing China-U.S. Trade

China and the U.S. are different in many aspects such as developmental stage， industrial structure， resources， and comparative advantages， which causes trade imbalance in some areas. The two economies should realize that this imbalance is naturally formed based on the international division of labor in the long term， and both sides have the responsibilities and obligations to gradually balance trade and optimize industrial structure.

In an effort to balance bilateral trade， China opened markets for crossborder settlements and agricultural products such as beef and cut automobile tariffs as part of the 100-Day Action Plan of the U.S.-China Com- prehensive Economic Dialogue， an agreement reached by the two sides in May 2017. China asked the U.S. to be more open with China， adopt open and transparent trade rules and recognize Chinas market economy status as the relevant WTO protocol specifies. The U.S. is the largest technology import source for China， which means if the country opens more high-tech fields to China， bilateral trade will become more balanced.

Now， at the historic globalization crossroads， both China and the U.S. should first reach consensus on development concepts. Both sides should oppose trade protectionism， stick to principles of extensive consultation， joint contribution and shared benefits， strive for winwin cooperation， seek common ground while setting aside differences and attach importance to long-term development.

Next， both sides should continue to open wider to each other to optimize development. While attaching importance to bilateral trade， the two countries should recognize multilateral trade as the major trading channel， promote the development of multilateral trade systems and actively provide public goods to international society.

Last but not least， the two countries should strengthen connectivity in economic globalization. They should expand cooperation areas to enhance connectivity， further promote trade and investment liberalization and facilitation， and upgrade China-U.S. trade structure by using multilateral platforms such as the G20， WTO and APEC.

The lone traveler doesnt necessarily go fast， but those traveling in company go far. Further China-U.S. trade and economic cooperation must be carried out with economic globalization in mind. These two big countries should voluntarily shoulder international responsibilities， lead the globalization process and create a sound international environment for joint development.endprint