U.S. “theft theory” enough to make Don Quixote blush

Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

Some American politicians, when talking about Sino-U.S. trade disputes, have recently described the United States as the “piggy bank” that everyone wants to raid and take advantage of. Such remarks reflect a basic lack of general economic knowledge, little more than self-deception worthy of the fictional fantasist Spanish nobleman, Don Quixote.

[Photo: IC]

The law of the market has proved that if a buyer and a seller conduct a deal on their own accord, then the business must be mutually beneficial. The same is true for Sino-U.S. economic and trade cooperation. Over the years, both China and the United States have gained enormous economic benefits through complementary cooperation and mutual exchanges. On the one hand China has purchased a great amount of machinery, electronic and agricultural products to bridge the supply gap on its domestic market. Meanwhile, the United States has gained cross-border investments and expanded market opportunities which have benefited its own economic growth, consumer welfare, and industrial upgrading. But Washington has turned a blind eye to all these facts. Instead it’s been unfairly accusing China of “stealing” America’s technologies, jobs and capital, trying to demonize China and use it as a fig leaf for its increasing use of tariffs.

However, a lie may be told a thousand times but that doesn’t make it true. Statistics have shown that the United States has profited greatly from its access to the Chinese market: in 2017, royalties paid by China to the U.S. reached 7.13 billion U.S. dollars, accounting for a quarter of the total intellectual property charges China paid to other countries. U.S.-funded enterprises have annual sales revenue of 700 billion U.S. dollars, with 50 billion dollars in profits. From 2008 to 2017, U.S. exports of goods to China increased by 86%, while U.S. exports to other markets grew by merely 21%. When it comes to services exports in the travel, transport, intellectual property, and insurance sectors, the United States has a large trade surplus. U.S. goods and services have not only taken a big share of the Chinese market, but have also generated huge profits. And yet some U.S. politicians continue to make unfounded countercharges. They are either poor mathematicians or simply playing the victim to gain advantage.

More than 70% of the world's trade is settled in the U.S. dollar. This dollar hegemony allows the country to obtain trillions of dollars of seigniorage every year. By printing greenbacks and borrowing from around the world, the United States has been continuously enjoying the economic benefits of other countries. Its population, accounting for 4.4% of the world’s total, consumes 22% of the world’s commodities. Why don’t those critical American politicians mention a single word about these facts?!

There is no truth at all in the U.S. accusation of stealing made against China. It reflects U.S. anxiety over industrial hollowing-out and financial bubbles, as well as its inability to cope with its own challenges. The U.S. is trying to redirect its troubles outwards. Renowned American economist Stephen Roach has said, “America’s scapegoating of China would make Don Quixote blush. It is a convenient excuse for ducking the tough issues of economic strategy that the United States has avoided for decades – namely, its saving and productivity imperatives.” Roach has also noted the “contrast between the zero-sum imagery of the conflict and a win-win outcome of mutual success is of great potential importance in understanding and ultimately resolving the strains in the US-Sino relationship.”

Former U.S. treasury secretary Larry Summers has also pointed out that the lead of Chinese companies in some technologies are not the result of theft from the U.S. Instead, “It’s coming from terrific entrepreneurs who are getting the benefit of huge government investments in basic science. It’s coming from an educational system that’s privileging excellence, concentrating on science and technology,” said Summers. He cautioned against the Trump administration that “The real approach to maintaining technological leadership is through leading technologically, not through trying to hold China down.”

China’s astounding achievements over the past 40 years have been made by its people who are creative, diligent, united and dare-to-dream, not by stealing or bestowing. They are the result of a nation unswervingly promoting reforms and opening up its market with great courage. The so-called "theft theory" used by some U.S. politicians will not deceive the rest of the world. Nor can it stop the pace of China's development.