Stephen Middot; Roach
On December 1, US President Trump will meet at the G20 summit at the 20th G20 (G20) summit held by Buenos Aires.Prior to this highly anticipated meeting, the two countries accusited each other, and the resolution of conflict became urgent.Other choices constitute serious risks to both countries: the continuously upgraded trade war, cold war, and even hot war.These risks can be avoided, but the premise is that both leaders of the two countries are willing to make in principle compromise.
There is no doubt that this serious conflict has been brewing for a long time.Contrary to the United States, the problem is not that the huge bilateral trade deficit between the two largest economies in the world, but mainly because it plagues the macroeconomic imbalance between the two countries: China has too much savings, while the United States has too little savings.The above -mentioned savings differences have led to the unbalanced multilateral trade that cannot be resolved by bilateral efforts.
In 2017, the United States had a deficit in commodity trade in 102 countries, and in 2016, China had trade surplus to 169 countries.Squeezing a certain part of the multilateral imbalance between the deficit country or the surplus savings country will only cause these imbalances to be transferred to other trading partners.For the United States, this will lead to higher import costs, similar to the role of increasing taxes on consumers.For China, this means increasing export penetration to other markets.
The accusations of the accusations of bilateral trade imbalance may ignore that this may be a typical interdependence dispute.
It is true that China has long relied on the United States as its main source of external demand for its export -oriented economy.However, the United States also needs to import low -cost commodities from China to maintain the balance of income and expenditure of consumers with limited income. The United States also relies on China as the largest foreign buyer in US Treasury bonds to assist in balanced long -term government budget deficits.In addition, as the third largest and fastest export market in the United States, China has become the increasing source of demand for American companies.
The framework of interdependence is very important because it emphasizes the necessity of joint solution and compromise.Like interpersonal relationships, economic mutual dependence may destroy stability and eventually bring devastating consequences.When one of the partners changes to the string, the other party who feels that it feels at a fierce reaction will be made.
At this stage, China is a promoter of change. It has shifted a growth model from manufacturing to service industry, exit to internal consumption, and from import technology to independent innovation.At the same time, China is also shifting from surplus savings to savings to absorb, thereby reducing loans to the US deficit partner.
The United States, who feels uneasy about itself, feels the threat from the partner country, because this partner country is changing the rules of each other's relationship.Although Trump's actions taken by these threats are far more aggressive than his predecessors, there is no doubt that the two parties in the United States are now consistent with China.
According to a survey conducted by Axios in September 2018, as many as 80%of the Republican Party, which has long supported free trade, believes that increasing tariffs will be beneficial to the United States.Major Republicans such as Vice President Pence and former Treasury Minister Henry Paulson warned that the United States may have a new cold war with China.Democrats have agreed that China has given up its responsibility as a global interest -related party.
In this era of threats and anti -threats, it must not ignore the necessity of compromise.Xi Te's upcoming meeting provides an opportunity to redefine this conflict as a strategic challenge facing the world's two major economies.We can consider the following four possible ways.
Market access: After 10 years of tortuous negotiations, the US -China Bilateral Investment Agreement (BIT) is about to make breakthroughs.Both sides must make concessions.The US -China bilateral investment agreement will increase the upper limit of ownership of multinational enterprises in the two countries to foreign direct investment, thereby eliminating China's controversial joint venture mechanism.The United States has always insisted that this joint venture arrangement has become a mechanism for coercive technology transfer, and in my opinion, this persistence in the United States has no reason.The bilateral investment agreement will also expand China's ownership of registered assets in the United States, which will challenge the anti -China legislation that recently expands the supervision power of the US Foreign Investment Commission.
Savings: Both countries must be committed to responsible macroeconomic adjustments.The United States must increase savings to completely reverse the incomplete budget collapse of the incomplete consequences of inconsistent and excessive tax reduction last year.Rebuilding savings, rather than tariffs, is the most effective strategy to reduce trade deficit with China or any other trading partners.At the same time, China must reduce savings and use the accumulated large amounts of funds to build the country's social security network, which is essential for consumers' leading economic balance.
Cyber security: The digital field is the main battlefield in the information age, and the agreement reached by former US President Barack Obama in September 2015 is obviously not enough to alleviate the continuous tension caused by cyber spy, hackers and destruction activities.The two countries should take the lead in formulating a global network agreement, which should include comprehensive indicators such as network invasion, reducing attack targets and sound dispute resolution mechanisms.
Dialogue: After two face -to -face talks in Beijing and Haihu Manor earlier, the two leaders met again, which is undoubtedly a blessing.These meetings follow more formal arrangements, such as strategic and economic dialogue.But all these efforts can actually escape the occasional nature. Although they are dazzling, they lack substances.Establishing a permanent secretariat to carry out all -weather cooperation on key policy issues (including data sharing, joint research, and public and private consultation), which will be a more effective measure.
In view of the recent controversial development between the United States and China, it is difficult for people to be optimistic about making meaningful breakthroughs on both parties.It should be checked to test any agreement that Trump may reach in compliance with a substantive content list.The whole world is waiting to wait and see.
Author Stephen S. Roach is a former chairman of Yale University, former chairman of Morgan Stanley Asia, and author of imbalances: The United States and China ’s United: The CodePendendee America and China).
English Title: An Agenda for Resolving the us-china conflict
Copyright: Project Syndicate, 2018.
