Accommodation is the key to resolving the trade dispute

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

China and the United States wrapped up their 11th round of trade talks in Washington on Friday, with the two sides agreeing to hold further talks in Beijing. China’s chief negotiator, Vice Premier Liu He, said the two sides had relatively good communication and cooperation, and that China is cautiously optimistic about the future of the talks, adding that “small setbacks are normal and inevitable” and “negotiations have not broken down”. The second day of talks was held in the shadow of an escalation of the dispute by the United States, which hiked tariffs on 200 billion U.S. dollars of Chinese goods from 10 percent to 25 percent. China said it would have to take necessary countermeasures in response.

[Photo: IC]

Right before the latest round of talks, Washington announced its intention to raise the tariffs, triggering concerns that the talks would break down. Despite this pressure, the Chinese delegation went to Washington, highlighting their sincerity and strong sense of responsibility towards the interests of the two countries and the rest of the world.

It is unfair for the United States to blame China for the failure of the talks by accusing it of trying to renegotiate some parts of the agreement. Negotiation is a process of exchanging opinions, solving problems, and reaching a consensus. It’s normal for the two sides to have differing views. It’s also normal to see an agreement amended before a final deal is reached. These changes should not have been used as an excuse to raise the tariffs, which was obviously an overreaction – one that has set artificial obstacles in the negotiation process.

The United States accused China of backtracking and reneging on its promises. But these so-called promises are words chosen by Washington; they were not China’s words. Washington has been eager to talk about whether Beijing is meeting its economic and trade demands, but has said conspicuously little about whether it is willing to address China’s concerns. This is also an important reason why progress wasn’t made during this round of talks.

China has its own core concerns and principles that must be met if an agreement is to be reached. These are not negotiable. First, all of the extra tariffs imposed by the United States must be cancelled so that bilateral trade can return to normal. It is these tariffs that triggered the dispute, and they are not a solution to trade problems. The extra tariffs inevitably impact on the economies of both countries and global industrial value chains. Over the past year or so, the negative impact of the dispute has proved that there are no winners in a trade war. Opposition to the extra tariffs has been increasing around the world, including among the American people.

Regarding procurement, Washington has repeatedly asked Beijing to expand its imports from the United States, and has specified the amounts of the purchases. But China’s imports should expand based on the demands of its domestic market and the country’s high-quality development, and purchases should be based on the principle of comparative advantage. If a product is globally competitive, it will be popular with Chinese consumers. Forced selling or buying is not a solution.

There is also the issue of the wording of the agreement. It should include not only the demands of the United States, but also China’s position. This means that the wording should be acceptable to the Chinese people, without compromising the sovereignty and dignity of their country. Only then will the agreement reflect the outcomes of the talks, and only then can it be properly implemented.

Washington’s persistent tariff increases have inevitably led to countermeasures from Beijing, which once again escalates the tensions. China has expressed its regret over the situation, but will also face it calmly. Over the past year or so, its domestic economy has been affected to some degree by the continuous pressure from the United States. But the impact of the tariffs has proved to be manageable and affordable. In the first quarter of this year, China's economy grew by 6.4 percent. And better-than-expected performance was recorded in major economic indicators such as employment, inflation, and wages. The country has also become the only major economy whose growth forecast in 2019 has been raised by the International Monetary Fund.

Taken together, these indicators show that China handled external shocks over the past year with reinforced economic resilience, further domestic market potential, and enhanced investor and consumer confidence. This is why Vice Premier Liu He said that China has sufficient policy tools to cope with the current internal and external uncertainties, and would look to fine-tune policy according to changes in the country’s economic situation.

It’s noteworthy that both sides have decided to maintain a dialogue despite the differences in their core concerns. This shows that, despite the twists and turns, the two sides are aware of each other’s bottom line principles. They both have a strong willingness to continue to find solutions. After all, economic and trade cooperation is the ballast and propeller of China-U.S. relations, and this cooperation has greatly benefited both sides.

In the future, China will likely continue to talk with the United States in a bid to narrow their differences and expand their consensus. However, these talks need to respect each other’s core interests and major concerns, and be based on the principles of equality and mutual benefit. Only then can both sides make it through the final stage of the marathon trade talks.