Recently two dramas are being presented on the global stage. One is the trade talk between China and the US; the other is the filing by the EU to the WTO on US tariffs against EU countries.
During the past weekend, the world has been closely watching the enticing performance by China and the US in Washington.
In the very beginning, many experts expressed their pessimistic outlook about the talks because they think that the difference between the two sides is "too big to overcome." However, the outcome of the talks are "fruitful, constructive and practical." This tells the whole world that its two largest economies can find a "reasonable and rational solution" to solve the most difficult problem. This tells you a truth: There is no problem that cannot be solved with mutual understanding and respects.
US Treasury Secretary Steven Mnuchin, a member of the U.S. trade delegation to China, waves to the media as he returns to a hotel in Beijing, China, May 3, 2018. /VCG Photo
These trade friction talks can be regarded as a "textbook" for the history of trade relations. It will provide many valuable experiences in following points:
- How to take reform on trade structure
- How to build up a balanced trade mechanism
- How to manage trade deficit and surplus between countries
- How to establish a fair and rational tariff mechanism
- How to seeking solution from question
- How to set up mutual trust to each other
- How to use Chinese wisdom and philosophy to handle today's troubles
US Secretary of Commerce Wilbur Ross speaks during a US and China comprehensive Economic Dialogue at the US Department of the Treasury on July 19, 2017 in Washington, DC. /VCG Photo
This trade talk has announced that China would import more goods and service products from the US for the following three purposes: To meet the demand of the Chinese people for a better life, to improve the quality growth of Chinese economic development and to reduce the trade deficit of the US with China.
"No trade war" will take place! This is the most important message sent to the world.
This is really good news for the consumption and capital market in China. In China, we have the largest group of middle-level income that shows a strong desire for consumption.
From June to October each year, this period is a high time for the Chinese people to travel and entertain all over the world. If we can have more goods from the US during this time, that could be the best season for selling. This is the contribution made through "trade talks between the two super market powers."
The 19th CPC National Congress had also set up the target as "to shift from high speed growth to high quality growth." This clarified the needs and demands for high-quality products, smart technologies and high performance of devices to serve the society and the people.
The real nature of trade friction between China and the US is simple to understand: it is only a question to buy more from the US and can reduce the present trade deficit. How much deficit reduction the talk can bring will be decided by what the US can sell to China. So this is fair play. Both sides can relax for a while.
VCG Photo
The whole world is happy to see the ceasefire between China and the US but still worry about the outbreak of fire between the EU and the US.
Since EU has different trade structure, it will incur great risk if EU takes real confrontation against US tariffs, simply because they are two "strong economies" in the world.
When these two confront each other, no one will be lucky enough to escape. Most of the EU companies have overwhelming business focus in US market; they could not afford any new heavier losses by fighting with American partners.
This unpredictable future will also cause concern for WTO members. We have to be more patient to see that both EU and the US can find a compromise or middle ground to reach another "ceasefire agreement" to stop the trade conflicts.
Under today's conditions, it would be the best chance to set up a "unified market mechanism" for China and the US. If the two "largest-market-powers" (Ref. as to "LMP") could reach such a pact, that will definitely give more powerful forces to promote the global business and could benefit all partners.
Within the "unified market" China, we are able to buy or sell all products on a free and fair tariff base. This would bring millions of opportunities for job-creation and technological innovation.
China needs ample time to fulfill its mission: To develop its economy and upgrade the quality of life of its people. Now China has not only won the trade talk, but also won new opportunities to learn more from those developed countries, including the US and EU, for a modernized and prosperous society.
This is no longer a dream, but a reality for China.
(Liu Zhiqin is a senior fellow of Chongyang Institute for Financial Studies of Renmin University. The article reflects the author’s opinion, and not necessarily the views of CGTN.)
