Trade war would put U.S. business interests at risk: reports

Xinhua Published: 2018-04-03 19:05:44
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As U.S. business interests in China are much larger than what is shown by trade data, a looming trade war between the two countries would put U.S. business interests at risk, according to industry reports.

A looming trade war between China and U.S. would put the latter’s business interests at risk, according to industry reports. [File photo: IC]

A looming trade war between China and U.S. would put the latter’s business interests at risk, according to industry reports. [File photo: IC]

The U.S. goods trade deficit with China is considered the main reason for U.S. President Donald Trump's recent actions, but the figure does not show the full picture of China-U.S. economic ties, according to a Deutsche Bank research report.

The report said there were 310 million active iPhones in use in China in 2016, but these iPhones cannot be found in U.S.-China bilateral trade, because Apple, like many other U.S companies, has set up subsidiaries to operate in China.

"From an international trade perspective, iPhones sold by Apple's Chinese subsidiaries are not counted as imports. But from an economic and financial perspective, the iPhone is a U.S. product, and the U.S. benefits the most from it," said the report.

The report concludes that the trade balance approach is "clearly misleading," and the most damaging retaliation from China is to "punish U.S. business interests in China."

A Standard Chartered report estimated that U.S. GDP could fall 0.2 percent if China retaliates by banning U.S. food and transport imports, and 0.9 percent if all imports are banned.

"We maintain our China GDP growth forecast of 6.5 percent given strong Q1 growth and uncertainty on U.S. remedies," said the report.

It said that China's economic dependency on the U.S. fell from 6.3 percent of GDP in 2006 to about 3.0 percent in 2017, while U.S. economic dependency on China rose steadily from 0.1 percent of GDP to 0.7 percent during 2000 and 2014.

"A trade war would be in no one's interests," said the report, adding that a trade war could affect 20 percent of the global economy.

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