China can weather the impact of the trade frictions with the U.S.

China Plus Published: 2019-08-29 22:07:39
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

Washington has been pressing Beijing for trade concessions by time and again imposing tariffs on imports from China. Months into the dispute, it's obvious that the United States has underestimated China's determination and capacity to safeguard its national interests and that Washington's misjudgments are leading it to make decisions that could be detrimental to the economic health of the United States.

China’s State Council approved a plan on August 6, 2019, to include Lingang New Area in the Shanghai Pilot Free Trade Zone. [Photo: IC]

China’s State Council approved a plan on August 6, 2019, to include Lingang New Area in the Shanghai Pilot Free Trade Zone. [Photo: IC]

Beijing has repeatedly voiced its unwillingness to get involved in a trade war. But it has also made it abundantly clear that it's not afraid of fighting one if that's what it needs to do. Faced with escalating provocations by the United States, China has replied with three rounds of countermeasures. This was an inevitable response from Beijing, said John Ross, a former director of economic and business policy for the mayor of London. Behind Beijing's decision to hit back is the confidence provided by the country's enormous development potential and the leeway the government has in managing the domestic economy.

Consumption has become the biggest driving force of economic growth in China. Many of the products that were exported to the United States can be sold in the domestic market, giving the country's 1.4 billion consumers greater purchasing choice. And with the government promoting balanced development by cultivating new sources of growth in hinterland areas, export-oriented companies affected by Washington's additional tariffs can embrace the opportunities provided by these newly thriving regions.

The government's strategy to encourage more diversity in China's trading partners has also helped to bolster the country's capacity to deal with the trade frictions with the United States. Last year, China's imports and exports to emerging markets accounted for nearly 58 percent of its foreign trade. And trade with Belt and Road countries made up 27.4 percent of total trade last year, 2.4 percentage points higher than what was recorded five years ago when the initiative was launched.

The country's ongoing reforms and continuing opening up are also serving as a cushion against the negative impacts caused by the trade disputes with Washington. It has issued a revised negative list, which has the effect of further reducing the number of industry sectors closed to foreign investment. It has also introduced the new Foreign Investment Law and established more pilot free trade zones across the country. Thanks to measures such as these, in the first seven months of this year, foreign investment in China was up 7.3 percent over the same time last year, despite the general slowdown in global foreign direct investment.

China has expressed its desire to resolve the trade disputes with the United States through fair and reasonable negotiations, and it resolutely opposes any escalation of the conflict. But China's willingness to talk shouldn't be interpreted by decision makers in Washington as a sign of weakness – Beijing is determined to defend China's national interests. Further attacks on China's economy are destined to fail to have the desired effect, and leave Washington open to misjudgments that could be detrimental to the health of the domestic economy in the United States.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of chinaandgreece.com, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.