U.S. President Trump and Chinese President ... may have reached an agreement at the just -closed Osaka Group (G20) Summit to re -open trade negotiations between the two countries. However, the path of this trade war is still unclear.After all, the two leaders also reached a similar agreement at the Buenos Aires G20 summit last December, and eventually ended in failure, especially after Trump misunderstood China's reconciliation attitude and believe in weakness.
Whether Trump will repeat the same mistakes this time has yet to be observed.In any case, it is necessary to consider how the trade war will be launched in the next few months and years, and what measures China can take to protect ourselves.
In the foreseeable future, import tariffs may remain stable, and it will neither improve nor reduction.The Osaka Agreement made Trump unable to continue to threaten additional tariffs on Chinese export goods worth 300 billion US dollars, but also failed to take measures to withdraw from the past. For exampleA 15 % tariff (final tariff level) was raised by US $ 100 % of China's export goods.
Although these tariffs have not yet caused a serious impact on the Chinese economy, its impact may continue to deepen over time.If China does not retaliate by improving its tariffs, it is more likely to convince the United States to revoke these additional tariffs, or at least not further improve.On the contrary, China should focus on the way to reduce bilateral trade surplus to the United States.We can also see more and more obviously that Trump tariffs have more damage caused by US companies and consumers than China.
Opposition to the Trump trade war has also increased in the United States.For example, the US Chamber of Commerce (also one of the most powerful business lobbying groups in the United States) is calling for the revocation of all tax customs clearance quotas that have been promoted in the past two years.Given that the presidential campaign in 2020 has begun, Trump's least wants to see anything more opposed in his political basic disk, and he does not want to push the global economy into the fame.
The impact of the trade war has spread to cross -border investment.In recent years, the rise in domestic production costs has prompted many foreign companies, and even more and more Chinese companies have reinstated their business to low -cost countries such as Vietnam and Thailand.The trade war is accelerating this process.According to statistics from the Vietnamese government, foreign direct investment in the first five months of 2019 increased by nearly 70 % year -on -year, the largest increase since 2015.At the same time, the pace of American investment in China is slowing.
The Trump administration hopes that American companies will leave China.China should persuade them to stay.This means improving the local investment environment, including response to the legitimate complaints of foreign companies, such as strengthening intellectual property protection, and strengthening compliance with the rules of the World Trade Organization in a wider sense.
But the pressure on China will not disappear.The United States is also urgent to squeeze Chinese high -tech companies out of the global value chain.After several months of siege of Huawei, a Chinese technology giant, Trump recently announced that American companies can continue to sell products to the company.However, it is difficult to exclude his government (a similar radical policy of ZTE of ZTE of Smartphone Company last year) will abandon the efforts of stifling China's high -tech industry.
There are three options in China.First of all, it may succumb to the United States to demand the pressure on the global value chain.Secondly, it may still be committed to integration, and it is hoped that under the existing situation of interconnection, the harm of Chinese high -tech enterprises (such as Qualcomm) is sufficient to shrink the Trump administration.The third option is to focus on supporting domestic high -tech enterprises, so that they can strengthen their position in the global value chain and formulate emergency plans.
China must also be prepared for the possibility of the trade war into a currency war.If the RMB is in the pressure of depreciation, and the People's Bank of China does not intervene in stabilizing its exchange rate to the US dollar (because it should not do this), the United States may list China as a exchange rate manipulating country.Unfortunately, there is no room for China in this regard.
The Trump administration may use the financial sanctions more frequently, but the prospects of China's response are also dull.In June of this year, an American judge determined that three large Chinese banks despised the court because they refused to provide evidence to investigate North Korea's violation of sanctions.However, the judgment ignored a fact that according to Chinese law, any bank record request should be handled in accordance with the Sino -US judicial assistance agreement.
The possibility of solving such disputes is very small.Therefore, Chinese financial institutions must prepare more troubles, including the risk of being included in the blacklist, that is, the right to be deprived of the US dollar and various important services, such as financial information services by the Global Bank of Financial Telecom Association and liquidation in New YorkThe inter -bank payment system is excluded.Few companies can carry such punishment measures.
A Bank of China has been included in the sanctions list of agent accounts or substitution accounts, which means that it cannot open a proxy account or substitution account in the United States.In this regard, China must be prepared for more stringent sanctions.
The Chinese government has few choices in this regard, but it can strengthen legislation to protect the interests of Bank of China while encouraging Chinese financial institutions to obey US financial regulations with great cautiously.It should continue to work hard to make the RMB international, even if there is still a long way to go in this regard.
China is still committed to its 40 years of reform and opening up.Today, this process must double the energy to strengthen property rights, adhere to the neutrality of competition, and defend multilateralism.But fulfilling this commitment, China must find a way to cope with the tension with the United States that is constantly upgrading, and avoid high -cost reorganizations on the global economy and may be destructive.
The author used to be the chairman of the Chinese World Economic Society, a member of the Monetary Policy Committee of the People's Bank of China (2004 to 2006), and is currently the director of the World Economic and Political Research Institute of the Chinese Academy of Social Sciences.
English Title: The Next Phase of Trumps Trade War with China
Copyright: Project Syndicate, 2019.
