Zero sum thinking detrimental to all

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

The U.S. recently announced its intention to slap 10 percent tariffs on 300 billion U.S. dollars’ worth of Chinese exports to the United States from 1 September. This move runs against the consensus reached by the heads of state of the two countries at their Osaka meeting in June. It suggests that certain people in the U.S. are still unwilling to abandon their zero sum thinking. Inevitably this will undermine economic and trade consultations between the two countries and will also harm the interests of the two peoples and the world at large, exacerbating the dangers of global economic recession.

National flags of China and the United States [File Photo: IC]

Zero-sum thinking describes a mindset which believes that one person's gain would be another's loss. However, the trend of globalization is unstoppable in this ever open and inter-connected world. We already share the ups and downs, along with a common destiny. In this context, zero sum thinking is outdated and out of touch with reality. It should have been consigned to the history books long ago.

However, there are some in the United States who are still governed by this unhelpful mindset. They believe that the economic growth of other nations is detrimental to their own economy and therefore feel obliged to take retaliatory measures. Since last year, Washington has been constantly flip flopping in the economic and trade consultations with China. They have broken their own promises and exerted maximum pressure on China, making unreasonable demands in the trade talks. Their behavior has embodied the concept of zero sum thinking. They went against the rules of economic development, contradicted the historical trend, and will only bring harm to all parties.

That is why there was strong objection from various sectors within the U.S. immediately following the announcement to impose a new round of additional tariffs on Chinese products. Industrial associations and media outlets have spoken out, noting that the new tariffs will hurt U.S. consumers in a more blunt way, because it will force more retail stores to shut down business and cause large scale layoffs. Just in the past week, the yields of ten-year U.S. treasury bonds registered the biggest weekly drop since 2012. As an important barometer, the drop indicates that the capital market is deeply concerned about the prospects for the U.S. economy.

As China-U.S. trade tensions escalated, the World Bank in June lowered its global growth forecast for 2019 to 2.6 percent in its semi-annual Global Economic Prospects report, down 0.3 percentage points from its previous estimate in January. Without a doubt, the planned new tariffs on China, if implemented, will gravely disrupt global industrial and supply chains and drag the world into the trap of economic recession. The new tariffs will also seriously violate WTO rules and damage the multilateral trading system.

Thus, it can be seen that zero sum thinking will only bring about a lose-lose outcome for all parties, instead of global dominance for the United States. Former U.S. Vice President Walter Mondale along with 100 others, recently added their names to an open letter to President Donald Trump and U.S. Congress calling on them to address their concerns about the country's current policies towards China. The letter is entitled “China is not an enemy”. In fact, more and more people are beginning to realize: in a globalized world economy, the “gains” of one country cannot be based on the “losses” of another country. The zero sum thinking should be replaced by the concept of win-win cooperation.

As the world’s two largest economies, trade relations between China and the United States are intricate and complex. The two sides need sincerity, concrete actions and time to resolve the issues through consultations. It is advised that the U.S. recognize the historical trend, respect the laws of economics, discard zero sum thinking and create favorable conditions for the economic and trade consultations with China, rather than the other way around.