Tackling trade imbalances topped the agenda of the U.S.-China Think Tank Symposium on June 12 in Des Moines, Iowa, where over 20 Chinese and U.S. experts exchanged views on economic and trade cooperation, local cooperation and the prospects for the relationship between the two countries.
The U.S. trade deficit with China through April 2017 stood at around US$106.5 billion, according to the U.S. Census Bureau, while for the whole of 2016, the deficit exceeded US$347 billion.
The trade deficit has been declining over the years, which mainly reflects the different development stages of the two countries, said Zhang Yuyan, director of the Institute of World Economics and Politics under the Chinese Academy of Social Sciences. He added that structural issues have contributed to the trade imbalances.
China has maintained a high savings rate during its economic expansion, while the U.S. consumes a large amount of global products and services and has a very low savings rate, said Zhang.
“From a long-term historical perspective, the U.S. enjoyed a trade surplus when it was developing rapidly after World War II, until its population started to age, and savings started to decline. China is now approaching that stage,” he said, predicting that the trade gap would narrow further.
The U. S. has been concerned about the deficit in the trade of goods with China, while China runs a deficit in the bilateral services trade. Statistics showed that in 2016, China’s deficit in the services trade with the U.S. hit US$55.7 billion, making it a top source of China’s services trade deficit globally.
Tori Whiting, a research associate at the Washington-based think tank The Heritage Foundation, said that the Trump administration’s focus on the trade deficit is misleading.
The trade deficit “means that we in the U.S. consume more,” said Whiting. She added that all financial flows in or out of the U. S., such as imports, exports and foreign direct investment, are inter-connected, and attempts to influence one part, such as the deficit in the goods trade, will impact the others.
Whiting estimated that if the U.S. seeks to impose punitive tariffs on products, such as steel and aluminum, American businesses and consumers will get hurt.
“I am very optimistic we won’t have a trade war,” said Kenneth M. Quinn, president of the World Food Prize Foundation, adding that the April meeting between Chinese President Xi Jinping and U.S. President Donald Trump in Florida is “a step in the right direction.”
Quinn believes that the 100-day action plan resulting from the meeting is a “good idea” designed to enhance economic cooperation between the two countries. Last month, the Chinese and U.S. sides announced the initial results of the 100-day action plan, covering agriculture, financial services, investment and energy.
“We have to understand we won’t make huge leaps forward or make great steps in just 100 days. However, we are spurring things into action,” Quinn said.
Mike Naig, deputy secretary of the Iowa Department of Agriculture and Land Stewardship, held that the U.S. and China should focus on commonalities rather than just differences.
“We both face issues such as aging farming populations, access to land and dependence on trade. If we focus too much on our differences, we will forget to work together to deal with those issues,” he said.
“People of both countries have benefited from this economic and trade relationship," said Zhao Qizheng, former minister of China’s State Council Information Office. “China-U.S. economic and trade cooperation promises huge opportunities and potential, and the prospects are very promising.”
“China-U.S. relations are in essence mutually beneficial, and the areas on which we need to work together far outweigh those that divide us,” said Hong Lei, Chinese Consul General in Chicago. He added that economic and trade cooperation is the most active and lasting driving force.
Statistics show that the bilateral goods trade between the two economies jumped from US$2.5 billion in 1979 to US$519.6 billion in 2016, up 207 times. In 2016, the bilateral services trade exceeded US$100 billion, and two-way investment totaled US$170 billion.
Further opening up the markets, promoting bilateral investment, and strengthening trade ties at the local level could contribute to stronger and closer economic ties between China and the U.S., Hong said.