China should seize the opportunity for peace talks against the United States to stop war and stop loss

Li Guogang Yu Zhi

Not long ago, the U.S. government invited the Chinese government and proposed another Sino -US trade talks.However, on September 18, Trump announced that since the official implementation of the official implementation of US $ 200 billion in Chinese export products, which was officially implemented on September 24, it stated that if China countermeasures, it immediately launched another $ 267 billion in other China other China.Export products are imposed on tariffs.

Obviously, this is the Trump administration to perform extreme pressure to China before the negotiations, expressing its posture that does not stop.On the same day, China also announced the official implementation of counter -control measures before, imposing tariffs on US $ 60 billion in US products.This marks the beginning of the second stage of the Sino -US trade war, and the trade war has been intensified.

However, the trade war has been confronted, and both China and the United States have maintained restraint.The United States announced that the tax rate was reduced from 25%of the original announcement to 10%. If the contradiction between the two sides failed to resolve it, it would increase to 25%in early 2019.The tax rate announced by China contains 10%and 5%grades.

The spokesman of the Chinese Ministry of Commerce is also relatively restrained. It has not mentioned the fierce speech of "Fengyou" as "at all costs" as before, nor has it announced the cancellation of China -US negotiations because the United States has implemented tariffs on tariffs.This shows that both parties have reserved the space to resolve differences and stop the trade war through negotiations.

The author believes that China ’s statement this time is rational; China should accept the invitation of the United States to use the opportunity to negotiate, and respond to the US demands positively to stop war and prevent the further expansion of the trade war to China.Negative impact.

Negative impact of defense of the expansion of trade wars

Trump has repeatedly announced that its purpose of imposing tariffs on Chinese products is to promote the Chinese side to conscientiously solve its core concerns and stop unfair trade measures.If China can make positive responses in this regard, it is possible for the United States to revoke taxation decisions.

If the Chinese side insists on no concessions and the negotiations break down, the US tariffs on $ 200 billion in Chinese products will continue to implement and increase to 25%early next year.Increase tariffs.This will bring a huge negative impact on China.

First, the expansion of the trade war will accelerate the expansion of China's import and export, related industries, investor confidence, stock market, bond market, foreign exchange market, and employment.One of the author (Yu Zhi) on July 26th's article on the "Lianhe Zaobao" has analyzed this.In terms of exports, the core reasons for the accelerated influence of the trade war are that after the expansion of the trade war, the vast majority of Chinese products involved are ordinary products with low value -added, and it is difficult to withstand the impact of high tariffs.

The Trump administration has reduced the tax rate from 25%to 10%. Exporters of some products may use the price reduction to reduce tariffs with the US importers in the short term and digest it.However, the price reduction of exporters will undoubtedly affect its income and profits, and increase the risk of anti -dumping lawsuits in the United States in the future.

At the same time, it should be seen that this adjustment of Trump, on the one hand, considering that Christmas and New Year are not far, the United States needs to import a large number of holiday consumer goods from China. It does; On the other hand, it is also to keep American importers looking for a new source of imports.Once American importers find new suppliers, Chinese exporters will face more intense competition and even lose the US market.

More importantly, if the negotiations between China and the United States cannot reach an agreement, it will cause the United States to increase the tax rate to 25%in early 2019, and even impose tariffs on the rest of the products exported to the United States.Most Chinese products are unable to bear and digest it due to the low added value. It is also difficult to transfer sales to other countries in the short term. A large number of export companies may face the risk of bankruptcy and failure.

According to the study of Morgan Chase in the United States, if the United States impose tariffs on all 500 billion US dollars of products exported by China, China will lose 5.5 million employment opportunities, which will bring tremendous pressure and challenges to society.

Second, the uncertainty of trade policies will further affect foreign trade and investment.Sino -US trade frictions have been delayed for a long time, which will lead to unclear trade policies between the two parties and bring strong uncertainty to the market.It is impossible for people to predict whether the tariff war is over, when it is over, and the implementation time of phased tariffs, the level of product scope, and tariff level.This will have a serious negative effect on bilateral trade and related investment.

From the perspective of exports, American importers are unwilling to bear the risk of paying more tariffs in the future. After the increase in tariffs, the risk of unable to sell related products after the tariff is increased.New investment in the production of products is made to prevent losses from being unable to export US exports after investing.The impact of imports is also similar to this.

Third, the expansion of the trade war will cause the risk of "decoupling" Sino -US economic and trade relations and even bilateral relations.It should be noted that the US decision -making level now has a tendency to get rid of the dependence on the supply chain of China and decompose Sino -US economic and trade relations, so that in the future, it can be comprehensively curbing China.

U.S. tariffs on Chinese export products only exempt a few US companies in China, and there are no exemptions to most other companies. The goal is to force these companies to return to the United States or transfer to other countries to achieve decoupling.

Once the trade war expands to half of Sino -US trade, all products will not only reduce bilateral trade volume sharply, but also cause a large number of American companies to withdraw from China and realize the strategic intention of the United States to decompose Sino -US economic and trade relations.As China said, Sino -US economic and trade relations are the cockpit stones of bilateral relations between China and the United States.Once China -US economic and trade relations are decoupled, it will cause a significant negative impact on Sino -US overall relations, the overall structure of China's opening up, and China's foreign strategic environment.

Fourth, the expansion of the trade war will have a significant impact on China's position in the global supply chain.China is currently recognized as a global supply chain center with mature infrastructure and skilled labor.Multinational companies in many countries have set up branches, subsidiaries or joint ventures in China. The products produced by produced to developed global developed consumer markets, especially the US market.A considerable part of China's export products to the United States are produced by these foreign multinational companies.

However, the U.S. tariffs imposed on the Internet did not open these foreign -funded enterprises.If the United States exports half or even tariffs on all products exported by China, these foreign investment in Chinese companies and exports to many products exported to the United States will not be able to enjoy the most beneficial tariffs in the United States.tariff.This will naturally lead to Southeast Asia such as lower laborers and the most beneficial benefits of products to the most beneficiary of the country.

At the same time, the United States and the North American Free Trade Agreement in Mexico and Canada are being updated, and the trade agreement between the United States and the European Union and Japan is also negotiating.Once they reach a trade agreement between them, they will enjoy more preferential tariffs or even zero tariffs than the most beneficial tariffs than the most beneficiary.The industrial chain of these countries will also be transferred to them internally.These will cause a strong negative impact on China's global supply chain center position.

It should not be expected that the "interim election inflection point"

The Chinese government had previously implemented the "equivalent countermeasures" or equal proportion of the United States, and its goal was to want to achieve the effect of "stop war".

However, due to the main body of the United States and the DPRK parties, it has adopted a tough position on supporting Trump's trade issues, and the sound of anti -war on all walks of life was insufficient.The decline in China's dependence on the North Korean nuclear, China's countermeasures not only did not meet the expectations of "stopping the war", but also led to the risk of expanding the trade war.

China's $ 50 billion against the United States has led to the introduction of US $ 200 billion in retaliation measures; and a $ 60 billion against the United States may lead to further retaliation of US $ 267 billion (Trump announced the announcement this timeTo.

Some Chinese people believe that after the mid -term elections of the US Congress at the end of this year, the Trump administration's election pressure has decreased, and it may be more considering lobbying the interest groups affected by Chinese countermeasures and changing its trade war decisions.This idea of looking forward to the emergence of the "mid -term elections" is unrealistic.

This is because the American people and the main body of the court, the Trump himself, and the cabinet most members are deeply ingrained thatSome will have a strong negative impact on the status of China's global supply chain center.

It should not be expected that the "interim election inflection point"

The Chinese government had previously implemented the "equivalent countermeasures" or equal proportion of the United States, and its goal was to want to achieve the effect of "stop war".

However, due to the main body of the United States and the DPRK parties, it has adopted a tough position on supporting Trump's trade issues, and the sound of anti -war on all walks of life was insufficient.The decline in China's dependence on the North Korean nuclear, China's countermeasures not only did not meet the expectations of "stopping the war", but also led to the risk of expanding the trade war.

China's $ 50 billion against the United States has led to the introduction of US $ 200 billion in retaliation measures; and a $ 60 billion against the United States may lead to further retaliation of US $ 267 billion (Trump announced the announcement this timeTo.

Some Chinese people believe that after the mid -term elections of the US Congress at the end of this year, the Trump administration's election pressure has decreased, and it may be more considering lobbying the interest groups affected by Chinese countermeasures and changing its trade war decisions.This idea of looking forward to the emergence of the "mid -term elections" is unrealistic.

This is because the American people and the main body of the court, the Trump himself, and the cabinet most members are deeply believed that the Sino -US trade model has harmed the fundamental interests of the United States and needs to be fundamentally changed.

More importantly, since China exports to the United States (US $ 500 billion) is much higher than that of the United States exports to China ($ 150 billion), the number of tariffs that can be imposed in the United States is much higher than that of China, which can be used to compensate for tariffs on both parties.The negative impact of measures to resolve their anti -war lobbying.Therefore, after the mid -term election, the Trump administration will not make concessions on trade on China.

In short, China should not expect "to stop war" or the US decision -making "inflection point in the mid -term election", but decisively seize the olive branch that the United States has taken the initiative, responds to the United States on the frontEssence

Author Li Guogang is a consultant to the International Trade Law of the International Law Association

Yu Zhi is a professor of economics at Shanghai University of Finance and Economics in China