Since 2018, the Trump administration has imposed 25% tariffs on Chinese goods worth 200 billion US dollars and 10% tariffs on 200 billion US dollars of Chinese goods on the grounds of the US huge trade deficit with China, China’s infringements on US intellectual property rights, and unfair competition from China. The US has launched an unprecedented trade war with China by imposing tariffs. Through analyzing the current US-China economic and trade relations, the US policies in trade with China since Donald Trump took office, and the demands put forward by the US government so far, we can deduce the nature of this trade war and the trend of the US strategies and policies towards China.
US Did Not Lose in Trade with China
Since Trump’s presidential campaign, he has been attacking China for taking advantage of the US through a huge trade surplus. In his speech at the Hudson Institute, US Vice President Mike Pence emphasized that China’s development as the world’s second largest economy was largely “driven by American investment in China and the Communist Party of China (CPC) has also applied a series of policies inconsistent with free and fair trade”, which has resulted in the US trade deficit. Pence thus concluded that the US has “rebuilt China”. Steve Bannon, the former strategic consultant of Trump administration, went even further, describing China’s economic growth oriented by exports and investment as “funded” by the “the American working class and the middle class”. The Trump administration seems to believe that China has exploited the US through trade and that the rise of China has come at the expense of the US. However, the cause of the US trade deficit is not that China dumps goods to the US, but that the US is selling too little to the Chinese market, which is both an inevitable result of the US economic structure and an outcome of the restrictions on US trade policy towards China.
After the Second World War, the US led the establishment and process of a multilateral trading system with dollar as the settlement currency. This system gradually evolved into the world trading system with the end of the Cold War, and the dominance of the dollar became entrenched. The US domestic capital, with the help of the dollar’s dominant position, began to expand worldwide, and capital expansion became the core of the US foreign economic expansion in the post-World War II era. As more and more American companies went overseas and availed themselves of the cheap labor, natural resources, and the scientific and technological R&D capabilities of other countries to engage in production activities, the US domestic manufacturing industry was gradually hollowed out, and thus its economic structure went through fundamental changes. At present, the US service industry accounts for 84.4% of its total economy, while the manufacturing industry for merely about 10%, with only military enterprises, high-tech firms concentrated in the Silicon Valley, and a small number of firms in traditional manufacturing left in the country. Gradually, US goods available for export has dropped off.
In addition, the US Congress, with a Cold-War mentality, has imposed very strict restrictions on Chinese exports, especially high-end integrated circuits, high-speed computers, high-precision machine tools and other technology-intensive products. By closing its door, the US has further weakened its capability of exporting to China, which had never been that strong before.
Meanwhile, the US trade deficit with China comes mainly from the trade of goods, but the US-China trade is not only about goods, but also services. In this regard, the US well-developed service industry has put it in a stronger position. In 2017, the US has run a trade surplus in services of 54.1 billion dollars with China, but the Trump administration chose to turn a blind eye to that.
Furthermore, trade is only one part of the two countries’ economic ties. Branches of many US companies in China such as GM, Ford, and Apple have far greater annual sales than Chinese companies in the US. For example, in 2015, sales of US companies in China reached 481.4 billion dollars, compared with only 25.6 billion dollars of sales of Chinese companies in the US. American companies are clearly benefiting more. The trade difference between the two countries could almost be taken as negligible if we adding up trade in goods and services, and company sales of branches in the opposite country.
Another fact that cannot be ignored is that a large part of the US imports from China each year are products made by American companies through Chinese branches or foundries. For example, the Apple products sold in the US market are mostly made by foundries in China.(点击此处阅读下一页)