In a speech at the Center for Strategic and International Studies earlier this month, U.S. Trade Representative Katherine Tai described the Joe Biden administration’s approach to trade with China and took her distances from former President Donald Trump’s “decoupling” efforts, she called for US-Chinese “recoupling”.
Chinese media response to what appears to be a constructive idea has been cautiously positive. But the irony is that the Biden administration has not removed the tariffs imposed by the Trump administration on $ 370 billion of Chinese goods. He made only limited exceptions. Which seems to be a contradictory approach: abandoning the policy of decoupling but maintaining the tariffs which, paradoxically, aim to decouple the Chinese economy from that of the United States.
Trump has taken several steps to “decouple” the Chinese and American economies, and forced or lured American companies out of China, but failed in his designs.
According to China’s customs data, in the first three quarters of 2021, Sino-U.S. Merchandise trade hit a record high of $ 543.11 billion, up 35.4 percent year-on-year and more than the overall increase in China’s merchandise trade (32.8 percent up). As such, the total Sino-U.S. Trade volume for 2021 could exceed $ 700 billion, more than the all-time high of $ 633 billion in 2018.
In addition, Chinese exports to the United States in the first three quarters reached $ 411.54 billion, up 18.0% from the same period in 2018, and hence the total exports of the set of 2021 could break 2018’s record of $ 478.4 billion, or even exceed $ 500 billion. . There is therefore no “decoupling”.
According to the survey of US-China Business Council members in July 2021, 95% of companies surveyed said they made a profit in the Chinese market last year, and 78% said the Chinese market was better than other emerging markets. A survey of AmCham Shanghai members released on October 6 showed that 82.2% of companies expect their revenues to increase in 2021, and 77.9% are optimistic about their activities in China at least. for the next five years.
And Goldman Sachs and other Wall Street giants have had talks on capital markets cooperation directly with the Chinese government, leaving Washington behind.
So what does “recoupling” really mean?
On September 30, days before Tai mentioned the “recoupling,” US Secretary of Commerce Gina Raimondo told media after the US-EU Trade and Technology Commission meeting in Pittsburg that the US would work with their allies to slow innovation and technological progress. Since the US-European TTC meeting focused on, among other things, the semiconductor chip supply chain, what Raimondo meant was that China will be shut out of the supply chain and ” recoupled ”or re-attached only after the United States and its allies strengthened high-tech supply chains and established their rules.
Tai was therefore only echoing Raimondo. Prior to the “recoupling” proposal, Tai said that the overall China-US trade relationship is one of “lasting coexistence,” stressing that the way “we relate to each other does not affect our two countries. It affects the whole world and billions of people. workers”.
To ensure “lasting coexistence,” Tai called for managing competition and promoting fair competition. Tai’s account places China in a rule-breaker position as a “state-centric economic system” without “meeting world trade standards” that undermines “Americans and everyone else in the world.” She mentioned cases in which China had “violated” World Trade Organization rules and claimed that the sharp increase in Chinese steel production had put 40 percent of US steel workers out of work.
Tai and Raimondo’s goal was to portray China as a rule breaker and claim that the United States is a defender of the rules, and to force China to make fundamental changes to its government, industry, and trade policies. so that a “lasting coexistence” becomes possible. . As for the United States, it will work with its allies to first “save” the supply chain and “tighten” their rules, then “re-couple” with China. To achieve these goals, the United States needs many currencies of exchange. And tariffs are indeed valuable.
China should not give in to the United States’ defamation of its industrial and trade chains and rules, as disputes between the parties can only be resolved through WTO rules. And since a WTO panel has claimed that the U.S. tariffs violate WTO and General Agreement on Tariffs and Trade rules, the Biden administration should unconditionally withdraw them.
Moreover, contrary to what Trump claims, the US tariffs against China have failed to stop the flow of Chinese-made products into the US market, only that US consumers and downstream manufacturers have paid the price. . Tariffs have already cost each household $ 108 billion, 245,000 jobs and an average of $ 675, according to an Oxford Economics study. If they are not lifted, they will cost the United States an additional $ 1.6 trillion, 732,000 jobs and $ 6,400 per household over the next five years.
The Biden administration should have no illusions that China is giving in to its accusations and accepting its rules as international rules. It should therefore work with China to strengthen bilateral economic, industrial and trade relations for mutual benefit.
The author is a senior researcher at the Chongyang Institute for Financial Studies, Renmin University of China.
The opinions expressed here are those of the author and do not necessarily represent the opinions of China Daily and the China Daily website.