China-US economic and trade relations are the bilateral ties between the largest developing country and the largest developed country. China and the United States have different national conditions, and are at different stages of development, market economy and market maturity. They both have sensitive economic fields and their own focuses of concern in economy and trade. Factors such as national conditions and stages of development determine the status, division of labor, openness and developing paths of the two countries in globalization. A correct view on their differences is important to accurately grasping the historical trend and promoting the balanced development of the bilateral economic and trade relations.
WTO rules and multilateral and bilateral agreements provide the legal guarantee for China-US economic and trade relations. The WTO rules provide a stable and strong institutional protection for the development of China-US economic and trade relations, which are bilateral ties within the framework of WTO rules. Consensus and commitments reached by the parties of the G20, APEC and other mechanisms should be seriously implemented. China and the US should also honor commitments made at high-level economic and trade dialogues, including the China-US Strategic and Economic Dialogue and China-US Joint Commission on Commerce and Trade (JCCT).
Economic globalization is a basis for the further development of China-US economic and trade relations. China-US trade and economic cooperation is both a natural result of mutual complementarity, and an inevitable choice for international industrial specialization and optimizing resource distribution. With the world’s largest and most complete industrial system, and a high-quality and low-cost work force, China is becoming a key node in the global industrial chain and supply chain, but is generally at the mid- and low-end of the value chain; while the US, with its outstanding science and technology strength, innovation capacity and a developed service industry, is at the mid- and high-end of the global value chain. The highly complementary relationship formed between the two countries provides a powerful driving force for their win-win cooperation for mutual benefit.
Both China and the US benefit from trade and economic cooperation. China has maintained a surplus in trade in goods, but the US has also gained tangible benefits. For the US, China is the largest export market outside North America, and an important export destination for soybeans, cotton, aircrafts, automobiles and integrated circuits. In 2016, the US had a trade surplus in agricultural products of US$16.4 billion. China imported US$13.8 billion of soybeans, US$12.6 billion of aircrafts, US$12.1 billion of automobiles, and US$8.8 billion of integrated circuits. Over the past 10 years, the average growth rate of US exports to China was nearly three times the growth rate of US exports, and twice the growth rate of China’s exports to the US. The US has maintained long-term surplus in trade in services. In 2016, the US exported to China 51 movies, obtaining revenue of US$16 billion. Chinese tourists and students in the US spent more than US$51 billion.
With respect to investment, US-invested enterprises in China have maintained good performance and gained high profits. Sales revenue in 2015 totaled US$517 billion, and profit reached US$36.2 billion. Investment of Chinese enterprises in the US is growing rapidly. Chinese investment projects have covered 46 states and 425 congressional districts, creating over 140,000 jobs for the US. According to the US-China Business Council (USCBC), in 2015, US exports to China and China-US two-way investment contributed US$216 billion to the US GDP, and supported 2.6 million US jobs.
The US is China’s largest export market, accounting for 16% of China’s total exports, and is providing China with huge and stable external demand. The US is China’s second largest trading partner in services, an important trading partner in technology and cultural trade, and China’s largest contract awarding market. The 67,000 US-invested enterprises in China have brought to China capital, technology and managerial experience, created jobs and tax revenues, trained a large number of specialized personnel, and played a positive role in promoting China’s economic development and industrial transformation and upgrading.
China and the US have concerns for each other in economic and trade areas. The US is concerned about its trade deficit with China, RMB exchange rate, overcapacity, market opening, intellectual property protection, etc. China is concerned about the US’s willingness to fulfill the obligations of Article 15 of China’s Protocol on the Accession to the WTO, the US export control against China, Chinese enterprises investing in the US, trade remedy measure abuse, etc. The two sides have conducted in-depth exchanges on these issues through various channels. For the US trade deficit with China, China believes that it should be viewed in a historical and comprehensive way. The bilateral trade balance is ultimately determined by the economic structures, industrial competitiveness and international industrial specialization of the two countries. In the global value chain, although the surplus is in China, the benefits are shared by both sides, and the result is mutually beneficial and win-win on the whole.
Over the years, China has been active in promoting the balanced development of bilateral trade and economic relations. It has sent delegations to the US for trade and investment promotion activities, addressed a number of specific concerns of US companies through platforms including the JCCT and China-US Strategic and Economic Dialogue, vigorously promoted the trade ties between Chinese and US provinces/states and cities, and actively set up exhibition platforms to expand import from the US.
Looking into the future, China is willing to make joint efforts with the US to encourage Chinese enterprises to participate in US infrastructure construction, further open up markets, promote two-way investment, and promote bilateral investment treaty negotiations to further strengthen China-US trade and economic cooperation at sub-national levels. China will also consider increasing import from the US in energy, agricultural products, high-tech products and services, so as to increase the total benefit while realizing a balanced development of trade and investment. At the same time, the two sides should properly deal with economic and trade frictions through dialogue and consultation under the principle of mutual respect, equality and mutual benefit. China-US economic and trade cooperation has great prospect and huge potential.
The original source of the 117 page report is http://images.mofcom.gov.cn/www/201705/20170525093626470.pdf.