China's economy tenacious despite escalating trade tensions with the U.S., say experts
More than one year after China and the U.S started the tit-for-tat tariff war, the two sides have threatened to impose tariffs on more goods.
In the latest development, U.S. President Donald Trump announced that from September 1 he would levy a 15-percent tariff on part of 300 billion-U.S. dollars-worth of goods and products from China, and raise the 25-percent tariff already levied on 250 billion dollars of goods to 30 percent from October 1.
China's retaliatory tax presently stands at a 25-percent cap on the previous 60 billion U.S. dollars worth of goods, with a 10-percent tariff cap on a new batch of goods to be levied from September 1.
Amid the heightening tensions, CGTN has caught up with several experts for analysis on the situation.
Why did the U.S. initiate the tariff war and keep escalating it?
Zhang Daogen, dean of the Shanghai Academy of Social Sciences, held that the escalation of the trade war by the U.S. is driven by the "America First" strategy.
"Economic globalization has shifted the world order and the U.S. is blaming others for the problems created by themselves, and painting a structural and systematic problem as a trade imbalance problem," Zhang said. "The truth is, no matter how highly they raise taxes, it is still hard to have middle- and low-end industries return to the U.S., because it doesn't have a comparative advantage."
Wang Zhan, managing director of the China Center for International Economic Exchanges (CCIEE), took a similar line. "The contradiction is actually an internal one within the U.S. It is a contradiction between Wall Street's multinationals and native Americans, in other words, the one percent elites with the 99 percent masses. This is very clear."
But the U.S. president and his administration have made an erroneous judgement and they did it consciously in that they needed to find a scapegoat for their internal contradiction. Because China has the biggest trade surplus with the U.S. so it naturally becomes their target, according to Wang.
What's the impact on China's economy and can China handle the pressure?
"Before the start of the trade war, when globalization was proceeding in a fast and peaceful manner, we were only relying on our comparative advantage in labor, so in the whole global industry chain, and the value chain, we were at the low end, without much added value. Or I should say the quality of our growth wasn't high," noted Yuan Zhigang, professor of School of Economics at Fudan University.
"And because those were relatively easy days, we weren't serious about economic transition. Now after the trade war, it is clear that we are in an urgent need to transform the economy.”
Wang Zhan, managing director of the CCIEE, said that for sure China will face a downward economic pressure and that might mean a period of hard days ahead. "But I think China's economy has the tenacity."
"Domestically speaking, the development between our east and west is uneven and now data suggests that the trade frictions have affected more the growth rate in the eastern region, but with middle and western China developing fast, there is still a huge room for potential development in China," said Wang.
"Internationally speaking, with the Belt and Road initiative (playing a more powerful role), although our trade with the U.S. is decreasing, our trade with the European Union and Belt and Road countries is increasing rapidly. This is an emerging structural change," Wang stressed.