Depth report

　　

January 1 this year marks the 40th anniversary of the establishment of diplomatic relations between China and the United States. Life is forty without confusion, but the 40-year-old Sino-US relationship seems to be increasingly confused.

    As one of the founders of the establishment of diplomatic relations between China and the United States, Mr. Kissinger has talked about Sino-US relations several times recently, saying that "China-US relations will never go back to the past." The fundamental problem between the two countries is not whether the two sides can resolve trade. Disputes, but how to co-exist in a new international political environment. Kissinger said that this will be a unique departure in history, and the United States and China will find a way to resolve trade disputes. He also predicted that a new type of economic relationship will emerge (see Dr. Kissinger's speech during his visit to China in November last year and his speech at the 2018 National Committee on U.S.-China Relations.) What Dr. Kissinger made was just a prediction. In the future, how to construct a new Sino-US economic and trade relationship is still a question to be solved.

The relationship cannot go backwards but only forward

    "Can't go back to the past", on the one hand, means that the United States will no longer provide more "convenience" for China's trade and investment, and that economic and trade exchanges will face more and more obstacles. On the other hand, it also means that bilateral economic and trade relations cannot simply return to zero and return to the low level at or before the establishment of diplomatic relations. No matter how much the Sino-US economic and trade relationship is hit, the foundation is already quite solid, and we can only move forward on the existing foundation.

    Since China’s accession to the WTO, Sino-US economic and trade exchanges have become increasingly close, and trade volume has continued to rise, from 80.485 billion U.S. dollars in 2001 to 583.697 billion U.S. dollars in 2017, with a compound annual growth rate (CAGR) of 13.2%, especially during the period from 2000 to 2008. , Sino-US trade volume has always maintained double-digit growth. At present, China and the United States are each other's largest trading partners. Sino-US trade always accounts for more than 12% of China's total trade, and the proportions of exports and imports are also at a stable level. In 2017, they were 18.99% and 8.36% respectively.

    In 2017, U.S. exports to China were 150 billion U.S. dollars, accounting for 7.6% of the total U.S. exports. It accounts for 0.6% of U.S. GDP. The United States imported 506 billion US dollars of goods from China, accounting for 21.6% of total goods imports. At this stage, the trade relationship between China and the United States is very close, and the dependence of Chinese products on the US market is much higher than the dependence of US products on the Chinese market.

    In 2018, Sino-US trade frictions continued to escalate, and trade and investment restrictions continued to be introduced. As of the end of November, due to the effect of early shipments, the impact of tariffs on China's exports to the United States has not yet appeared, but it has already had a certain impact on US exports to China. In November, US exports to China fell by 25% year-on-year. As a result, the US trade deficit with China continues to expand. However, the levy of tariffs will eventually usher in an inflection point for China's exports to the United States. The growth trend of Sino-US trade that has lasted for nearly 40 years (of which there was only a small setback in 2016 and a quick recovery in 2017) may undergo a turning point. However, in the long run, economic globalization will change its form, but the momentum is still there. The impact of tariffs will only be temporary, and technical blockades will also be invalidated. Regardless of the prospects of Sino-US trade negotiations, Sino-US trade, investment, and technological exchanges will continue to advance in twists and turns.

    In terms of trends, the U.S.'s merchandise exports to China accounted for only 2.07% of its total merchandise exports in 2000, and it had risen to 7.96% in 2016; while China’s exports to the U.S. accounted for 20.94% of total exports in 2000. By 2016, it had dropped slightly to 18.24%. If service trade is added, the proportion of China and the United States' exports with each other as the target market will be closer. Almost all of China’s trade surplus now comes from the United States (98%), and almost all China’s trade surpluses are deficits with other countries. As China's supply-side structural reforms and comprehensive opening-up are deepening, it is foreseeable that in the near future, China will turn from a surplus country to a deficit country. China is working hard to expand imports from the United States and balance Sino-US trade in goods. The surplus with the United States will gradually narrow. In the future, the dependence of US exports on the Chinese market will gradually exceed the dependence of Chinese exports on the US market.

    In addition, China will replace the United States as the world's largest market. In 2000, the scale of China's consumer market was only 472 billion U.S. dollars, the U.S. was 3.3 trillion U.S. dollars, and the U.S. market was 7 times that of China. From 2000 to 2017, the size of the U.S. market grew to 5756.4 billion U.S. dollars, an increase of 74.4%. The Chinese market has soared all the way, growing to 5422.3 billion US dollars, an increase of 11.5 times. U.S. agencies predict that the Chinese market will reach 5.8 trillion U.S. dollars in 2018, which is the same as that of the United States. It is a high probability event to surpass the United States in the future. An Oxford Economic Analysis report in January 2017 predicts that US exports of goods and services to China will increase from US$165 billion in 2015 to US$520 billion in 2030. According to statistics from the U.S. Department of Commerce, Chinese tourists spent 33 billion U.S. dollars in 2016, ranking first in all countries. It is estimated that by 2021, Chinese tourists will rise to 5.7 million. Boeing predicts that China will need to purchase 7,240 passenger planes in the next 20 years, worth 1.1 trillion U.S. dollars. General Motors reported that from 2010 to 2017, sales to China exceeded sales in the United States. Sales of auto parts to China accounted for 42.1% of the global total. China is currently second only to Canada and is the second largest export market for American cars.

    Although the Sino-US economic and trade relationship started from political thawing, after 40 years of development, it has made good use of the complementarity of the supply and demand structure between the two countries, and highly conforms to the requirements of the division of labor in the economic globalization value chain, and has become irreversible. development trend. The historical experience of Japan-US trade friction shows that tariffs and other restrictive measures can neither effectively correct trade imbalances nor block the path of technological progress. The US government hopes to adjust and reconstruct bilateral economic and trade relations. It is reasonable, but it is wrong to choose unilateral pressure, tariffs, and other punitive measures. It will not achieve any positive purpose and will only have a destructive effect, not only harming the interests of the two countries, but also harming the world economy.

Looking forward to transcending history

    The existing model does not meet expectations, and China-US economic and trade relations need to introduce new thinking. The development of Sino-US relations over the past 40 years and the basic experience of international relations show that economic and trade relations are an important foundation of bilateral relations, but political relations often determine the direction and depth of economic and trade relations. The crux of the current development of Sino-US economic and trade relations is that the United States has changed its perception of China. The United States judges that China has the potential and intention to threaten the dominant position of the United States, and the geopolitical goals of the two sides are in conflict. For this reason, economic and trade relations have become the "hostages" of US policy. If evolving along this line of thinking, Sino-US economic and trade relations will develop in a fractured direction.

    To transcend history, China and the United States cannot rely solely on existing toolboxes. The current economic and trade disputes between China and the United States have a long history, and most of them are related to structural issues. Even if the two parties are in good faith to negotiate a settlement, it will take time and it will be difficult to achieve obvious results in the short term. President Trump's alternative governance and the political cycle in the United States have made it more difficult for China and the United States to reach necessary compromises around disputes.

    As a step to rebuild mutual trust, China and the United States may be able to negotiate economic and trade rules in these areas as soon as possible in areas that are not yet covered by the WTO or are emerging. One is investment. At present, there is no uniform international standard for investment protection. China has become a major investment country in the world (in 2017, it was the third largest foreign investment country and the second largest foreign capital inflow country). Sino-U.S. investment in the world can be competitive, and it can also create opportunities for cooperation. The investment of China and the United States aimed at each other needs to be regulated and guaranteed, and this is also true around the world. The second is the digital economy. According to a report by McKinsey, e-commerce and digital trade have accounted for 12% of international trade, and data flow will increase by 5 times by 2022. China and the United States are currently playing games around WTO reform to promote the formation of a new trade order. This is very important. At present, the United States has locked its reform goal on regulating China's traditional trade practices. In fact, digital trade is the big market in the future. While promoting WTO reforms, China, the United States and other partners may wish to focus more on promoting the establishment of a rule system in emerging fields, and seek more win-win opportunities in the bigger pie. Do not let the differences in the traditional trade field hinder all parties’ Cooperation in emerging fields.

    In addition, the current world economic situation is good, and the US economy is at the top of the cycle. However, the World Bank report believes that although the market’s long-term growth prospects are temporarily stable, the potential growth rate and long-term investment prospects have deteriorated, and the main downside risks are There are two: global financial markets may develop destructively, and trade protectionism may escalate when policy uncertainty rises. Both risks are highly related to Sino-US relations. China and the United States conducted effective financial cooperation during the 2008 financial crisis. In the future, this cooperation mechanism still needs to be deepened, not weakened, in preventing systemic crises. The two sides are discussing the resolution of trade frictions, and they must be fully aware of the impact of frictions on the future global economy, not limited to bilateral perspectives. Both parties should realize this important historical responsibility.

    Since "you can't go back to the past", you can only respect reality and devote yourself to building a better future. For the United States, the actual interests lie there. In which direction will China-US economic and trade relations develop, is to respect objective reality, let real interests override crisis judgment, and strive to create a win-win situation? Or let the crisis judgment override reality and lead the relationship to a zero-sum, or even more unpredictable direction?