Yu Zhi: China should take measures to prevent the expansion of the trade war

The author believes that China should take measures to prevent further expansion of the trade war.(File photo)

On July 6, the United States officially implemented a 25 % tariff on the first batch of US $ 34 billion in Chinese products. China immediately carried out the same degree of countermeasures, marking that the Sino -US trade friction officially entered the trade war stage.The United States subsequently announced that because China did not resolve its reasonable concerns, it would revenge on it, and would impose tariffs on more $ 200 billion in Chinese products.

China said it would take quality measures and increase lawsuits against the United States in the WTO.This means that the trade war has a risk of further expanding.The author believes that once the scope of the trade war expands, the level of impact on the Chinese economy will accelerate, and it will be significantly greater than its impact on the US economy; China should take measures to prevent further expansion of the trade war.

First, the impact on China's exports will be accelerated.At present, the United States has imposed tariffs on US $ 50 billion Chinese products (the first batch of US $ 34 billion and the second batch of US $ 16 billion), which is worth 50 billion US dollars, accounting for 10 % of China's total export to the United States in 2017 and total global exports to the world.About 2.2 %.These products are mainly & ldquo; Made in China 2025 & rdquo; planned products, concentrated in high -tech fields, with a relatively high average profit margin. Relevant export companies can impact on profit and partial absorption tariffs.Therefore, the impact of the first wave of trade war on China's export industry should be within the controllable range.

However, if the trade war expands, the United States will impose tariffs on other US $ 200 billion or even 500 billion US dollars in products, which is equivalent to half or even all of China's exports to the United States in 2017, 10 % or even 20 % of global exports.This will expand to the main body of China's exports, that is, the level of many profit margins is low, and even relying on the government's export tax refund and production subsidies to have thin or micro -profit ordinary products.

Once these products are imposed on tariffs, it is difficult to absorb tariffs by reducing profits, and it is difficult to survive in the export market.Therefore, if the trade war expands, the impact on China's exports is not a simple straight line, but an increase in acceleration.To put it simply, tariffs are imposed on US $ 200 billion in export products, and tariffs are imposed with 50 billion US dollars of export products. The former's impact on export and employment may not be four times that of the latter, but six times or even greater.

The second is that the impact on China's imports will accelerate.If the trade war expands, China expands the scope of taxation for American products, and its influence products will be expanded from current cars, aircraft, etc. to many intermediate products. This will increase the use of these intermediate productsCosts even affect the normal operation of some companies that have to rely on intermediate products in the United States.

Third, the extension effect is produced in other areas outside the import and export.For example, upstream companies that provide intermediate products and auxiliary services for export companies will be affected; foreign companies investing in China and exports to the United States will be affected. It may be transferred to other countries or withdrew from their country.Employment and technology overflowing effects; Chinese and foreign investors' confidence in China's economic growth will be hit, which will cause turbulence and crisis in the stock market, bond market, and foreign exchange market.Therefore, the impact of the expansion of the trade war on China's overall economy will never be limited to the trade field, but there will be an expansion effect, that is, the multiplication effect.

Once the trade war expands, the negative impact on China will be far greater than its impact on the United States.First of all, this is because China's export and dependence on the United States is far higher than the degree of dependence and dependence of the United States on China. Therefore, the United States can impose tariffs on more Chinese products, and from itEnterprises that suffer from tariffs.Secondly, the average profit margin of Chinese export companies is much lower than that of US export companies, so its ability to resist pressure in the trade war is much lower than American companies.China should not underestimate the impact of the trade war on its own and overestimate its anti -countermeasures to the United States, otherwise it will cause serious strategic misjudgment.Facts have proven that & ldquo; did not succeed in the battle & rdquo; it only led to the expansion of the trade war.

The Chinese government should make greater efforts in solving the core differences between China and the United States to prevent the expansion of the trade war.The recent statement of Chinese official media has completely pushed the responsibility of the trade war to the United States, arguing that China has made the greatest effort to avoid the trade war, and the United States has stepped into force and adheren to it is the root cause of the outbreak of the trade war.This statement has a strong emotional color, not calm and objective enough.In fact, China can make more efforts in reducing Sino -US differences and preventing the expansion of the trade war.

On the one hand, China can work harder to improve in terms of marketization of foreign trade and strategic industries.One of the core demands of the United States is that the Chinese government supports the development of exports and strategic industries (such as direct and indirect subsidies), that is, non -market -oriented measures, which is the root cause of the imbalance of Sino -US trade.Therefore, the fundamental measure of solving problems is not to simply temporarily increase China's purchasing from the United States, but to eliminate the root cause of the problem.This understanding has its rationality.

China should also realize that, first of all, the strategy of foreign economic and trade and industrial development strategies that excessively rely on various subsidies have also brought themselves a lot of problems.For example, the decrease in export prices has caused the deterioration of trade conditions, the industries and enterprises that are subsidized are low, and even false efficiency occur. The development of a nest of bee has caused overcapacity and dumping of external dumping, and even corporate bribe officials even deceive the government to obtain subsidies.These problems are very prominent in industries such as photovoltaic, new energy vehicles, robots.Secondly, the strategy of foreign economic and trade and industrial development in one country is not a country & ldquo; internal affairs & rdquo;, it should be subject to the restrictions of the "Subsidy and Anti -Subsidy Agreement" by the WTO, such as the WTO, and considers the negative impact on other countries.

Therefore, in China -US negotiations, China cannot regard foreign economic and trade and industrial development strategies, which are generally regarded as & ldquo; unsuccessful bottom lines & rdquo; or & ldquo; non -concession's core interests & rdquo;The goal of the development strategy is the core interests of a country, but the specific means and methods of development strategy are not.Although China is difficult to cancel the national strategy that has been announced (such as & ldquo; Made in China 2025 & rdquo;), it can take pragmatic measures to make appropriate adjustments to it.policy.China can adopt more market -oriented policies and measures to support the development of strategic industries. For example, changing specific subsidies to universal tax cuts, so that enterprises rely on their own financial resources rather than government subsidies to develop strategic industries;Basic research rather than the specific production of enterprises.

On the other hand, China can also do more in protecting intellectual property rights, which is another core appeal of the United States.China should realize that strengthening the protection of intellectual property rights is not only in international general practices, but also is essential for optimizing China's own innovation environment, encouraging innovation, and developing high -tech industries.In this regard, China can make improvements on places where it is obviously insufficient, such as cracking down on piracy and preventing plagiarism.As for the United States accusing China of & ldquo; forced technology transfer & rdquo; this is a problem that a World Trade Organization does not clearly regulate and require bilateral negotiations and negotiation solutions.In response to this, China has stated that the Chinese government will not force foreign enterprises to transfer technology.

However, Chinese and foreign companies (especially between Chinese state -owned enterprises and foreign companies) & ldquo; cooperation based on market change technology & rdquo; whether it is counted & ldquo; forced & rdquo; or & ldquo; voluntary & rdquo;In the current atmosphere, China needs wisdom to deal with this problem, and pay attention to moderate compromise when protecting its own interests.

China should not underestimate the impact of the trade war on its own and overestimate its anti -countermeasures to the United States, otherwise it will cause serious strategic misjudgment.Facts have proven that & ldquo; did not succeed in the battle & rdquo; it only led to the expansion of the trade war.

(The author is a professor of economics at Shanghai University of Finance and Economics in China)

However, Chinese and foreign companies (especially between Chinese state -owned enterprises and foreign companies) & ldquo; cooperation based on market change technology & rdquo; whether it is counted & ldquo; forced & rdquo; or & ldquo; voluntary & rdquo;In the current atmosphere, China needs wisdom to deal with this problem, and pay attention to moderate compromise when protecting its own interests.

China should not underestimate the impact of the trade war on its own and overestimate its anti -countermeasures to the United States, otherwise it will cause serious strategic misjudgment.Facts have proven that & ldquo; did not succeed in the battle & rdquo; it only led to the expansion of the trade war.

(The author is a professor of economics at Shanghai University of Finance and Economics in China)