Summers: Bilateral trade balances are economically absurd

[File photo: VCG]

The trade relations between China and the U.S. have always been a heated topic. Over a mini-summit dinner at G20 meeting, President Xi and Trump brokered a truce to ensure that there will be no further escalation to the current trade friction, and the two sides are entering into 90 days of trade talks to settle the disputes.

In 2019, from January 7 to 9, China and the U.S. held discussions at a vice-ministerial level over the trade relations in Beijing. The two nations exchanged opinions on trade issues and structural problems, which pave the way for addressing common concerns.

As for the China-U.S. future relationship, Lawrence Henry Summers offered his insights. Summers is a former vice president of Development Economics and chief economist of the World Bank (1991–93), senior U.S. Treasury Department official throughout president Clinton's administration (ultimately treasury secretary, 1999–2001), and former director of the National Economic Council for president Obama (2009–2010). He is also a former president of Harvard University (2001–2006).

‍Lawrence Henry Summers. [Photo: IC]

According to Summers, the trade conflict between China and the U.S. is inevitable. China is becoming more and more successful economically. As China moves up the value chain and produces more sophisticated goods, what it provides has more in common with what the U.S. does. The intensity of economic conflicts is thus going to increase. Summers believes, for the complex global economy, the idea of reaching bilateral trade balances is economically absurd. Bilateral trade surplus or deficit is collective, and it is not the metric of right or wrong.

The key point of the China-U.S. trade war is how the trade conflict can be best managed. Summers attached great importance to negotiations rather than tit-for-tat threats. In addition, he said that the business community shoulders the responsibility to support a strong U.S.-China relationship. It will be meaningful endeavors for the business community to make a set of adjustments to suit the mutual interests of China and the U.S.