White Paper Clarifies Facts about China-US Trade Negotiations

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

The Chinese Government issued a white paper on Sunday (June 2) entitled "China’s Position on the China-US Economic and Trade Consultations". The document explains the ins and outs of the trade talks, covering information about the impact of Sino-US economic and trade frictions, how the U.S. side went back on its promises, and China’s principled stance in dealing with the consultations. The white paper is designed to clarify the facts and help the international community gain a full and frank understanding of the situation.

Wang Shouwen, Vice Minister of Commerce and Deputy China International Trade Representative speaks during a press conference of the State Council Information Office to release the White Paper on China's Position on the China-US Economic and Trade Consultations in Beijing, June 2, 2019. [Photo: IC]

Over the past year or so, China and the United States have held 11 rounds of high-level consultations and made substantial progress. However, the U.S. has repeatedly imposed tariffs and has blamed China for the sense of frustration in the negotiations, with the intention of putting extreme pressure on China to seek absolute interests, while deceiving the international community.

In order to safeguard the right of the Chinese people to develop economically, the Chinese side has always been restrained in the course of consultations. But, this does not mean that China will accept any unreasonable demands or "mud-slinging" by the U.S. This white paper aims to offer the world the true situation of the Sino-US economic and trade consultations, and to demonstrate once again China's determination not to back down on major issues of principle, in the hope that those who are addicted to the use of extreme pressure will give up their illusions as soon as possible.

Specifically, the 8000-character-long white paper focuses on establishing three essential truths about the Sino-US trade talks:

First of all, the consultations have suffered severe setbacks because the U.S. government has “backtracked on its commitments” to consultations.

The white paper reviews the three times when the U.S. side went back on its promises - in March 2018, May 2018, and May 2019 - pointing out that the U.S. side has “persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and has insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, which only served to delay the resolution of remaining differences.” The U.S. has irresponsibly accused China of “backtracking on its position,” attempting to shift the blame for the so far inconclusive talks onto China, and looking for an excuse to impose more tariffs. However, the fact is that “the more the U.S. government is offered, the more it wants.” In defense of its own interests, China has been forced to take measures in response.

Secondly, China achieved technological breakthroughs by means of innovation and diligence, not by theft or robbery.

Intellectual property theft and forced technology transfer are the major excuses used by the United States to initiate the trade war against China. During multiple rounds of negotiations, the US has consistently expressed major concern over these issues. The white paper clarifies the issue by incorporating plentiful statistics, citing views of such institutions like the US Chamber of Commerce, and explaining what China has done to protect intellectual property and guard against forced technology transfer. It shows that the US accusations are utterly unfounded and Washington is acting arbitrarily by slapping increased tariffs and imposing investment restrictions.

Thirdly, raising tariffs benefits no one and certainly has not made America great again.

The US government claims that raising tariffs will lead to a narrower trade deficit with China and greater economic growth for the US. But the truth is that, in 2018, the US commodity trade deficit with China expanded by 11.6% from a year earlier, while US soybean and auto exports to China plummeted by 50% and over 20% respectively. Citing research results from US institutions and the IMF, the white paper provides evidence on how the increased tariffs have elevated production costs for US businesses, raised consumer prices for US households, put the brake on the US economy, and placed a lid on US exports to China. Worse still, the increased tariffs also pose a challenge to global economic recovery, taking the wind out of the sails of economic globalization. The US suggestion that the trade war has made America great again is a false statement.

The white paper also stresses China’s principles in the trade negotiations, namely that both sides should push forward with consultations based on good faith and credibility in a spirit of respect, equality and mutual benefit. China will not backdown on major issues of principle, which means these principles must be respected in order for the negotiations to continue. It also means that any trade deal that both sides were to agree to must be based on equality and mutual benefit. The white paper makes it clear that “one prerequisite for a trade deal is that the US should remove all additional tariffs imposed on Chinese exports and that China’s purchase of US goods should be realistic while ensuring that a proper balance in the text of the agreement is achieved to serve the common interests of both sides.”

Forced to play defense in a trade war, China has consistently called for dialogue and reason to resolve differences and address the trade disputes. The white paper defines the China-US commercial relationship as “the ballast and the propeller of the overall bilateral relationship.” But negotiations need two willing parties; China and the United States must come together in order for the negotiations to work. China does not want a trade war, but it is not afraid of one. It will fight one if necessary.

China remains committed to its own cause no matter how the external environment changes. The fundamental solution to economic and trade tensions is to grow stronger through reform and opening up.