Possible China-US trade war on hold

(VOVWORLD) - A possible trade war between China and the US appeared to be on hold after the two completed a 2nd round of talks in Washington last weekend. A statement released following the negotiation said the two will work to resolve economic and trade problems, including the US’s import surplus.
Possible China-US trade war on hold  - ảnh 1

China-US trade relations has been a recent focus of the international community. The two have imposed tit-for-tat retaliatory measures including new tariffs on export products, raising the specter of a trade war which could seriously damage both sides and the world economy.

Efforts to ease tensions

Chinese and American negotiators issued a joint statement agreeing on the need to reduce the US’s annual trade deficit to 300 billion USD. China promised to import more American farm produce. It’s the first time China has agreed to reduce barriers and import tariffs for American goods. President Trump said China’s commitment is one of the best things for American farmers in many years. An American delegation will be sent to China to discuss specific measures to increase agricultural exports.

Looking back at the US-China trade history, no matter which country ignited a dispute, they left room for compromise. Both countries once again have taken into consideration their deep interests. The US and China are major trading partners. Together they contribute 40% of global GDP. China is the world’s biggest consumer market and a lucrative investment destination. It has a huge demand for high-quality products and services from the US.

Remaining difficulties

Economists say the US exports only $130 billion in goods a year to China. Finding more goods to buy to reduce China’s trade surplus by $200 billion would be extremely difficult, except if China cut its own exports to the United States.

Liu He, a Vice Premier and envoy for President Xi Jinping, says the two countries have reached a shared awareness but it will take a long time to resolve their trade problems.

One paradox is that what the US wants to sell to China costs much less than the 200 billion USD it wants to recover. The US has limited high-tech exports to China. If China stops purchasing from other countries, Airbus aircraft from the EU and soy beans from Brazil for example, and turns to US goods, it will only reduce the trade deficit with the US by about 60 billion USD. In the short term, the US will find it difficult to produce goods worth 200 billion USD to export to China. The US Treasury Department is about to reveal new measures to limit Chinese investment in the US, buy China’s shares in strategic sectors, and create barriers against Chinese technology companies.

Economic and trade problems have been big challenges to US-China relations. But, for now, both sides have de-escalated their demands to avoid an all-out trade war.

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