General

In 2022, against the complex backdrop of multiple factors impacting the international trade environment, statistical data from both China and the United States showed that bilateral trade in goods reached a historic high. However, at the same time, the potential for trade cooperation between China and the United States has not yet been fully unleashed. What are the current obstacles to Sino US trade? What are the impacts of the US 301 tariff on trade between the two countries? For the hot topics that have received much attention from the industry, the reporter recently interviewed Tu Xinquan, the dean and researcher of the China World Trade Organization Research Institute at the University of International Business and Economics.

How do you think the bilateral trade volume between China and the United States will reach a new historical high in 2022?

Tu Xinquan: Since the United States launched a trade war against China in 2018, according to US statistics, the trade volume between China and the United States has experienced a decline. The trade volume between China and the United States in 2019 and 2020 decreased by about $100 billion compared to 2018. However, since 2021, the trade volume between China and the United States has shown a significant rebound, breaking through $650 billion in 2021 and further exceeding $690 billion in 2022, which is $30 billion more than the peak in 2018. This fully demonstrates that bilateral trade between China and the United States has strong resilience and foundation, and the interdependence between China and the United States exceeds expectations. The power of economic rationality has overcome the barriers of political differences. Especially considering the high additional tariffs imposed by the United States on China, the bilateral trade between China and the United States can still resume growth and reach new highs, indicating that both Chinese and American enterprises have strong and strong demand for each other's products and markets. China US trade is in line with the comparative advantages of the two countries and the interests of their people.

What are the current obstacles to Sino US trade?

Tu Xinquan: It is worth noting that bilateral trade between China and the United States has not fully realized its potential. In 2022, the total trade volume of the United States increased by 16%, while the bilateral trade volume between China and the United States only increased by 5%; In 2022, US exports to China increased by 27.8% compared to 2018, while US imports from China remained below the peak of 2018. This indicates that some artificial obstacles set by the United States have constrained the realization of the potential for trade between China and the United States. The biggest obstacle to trade between China and the United States remains the continuous imposition of protective tariffs by the United States on Chinese products. Although WTO expert groups ruled in 2020 and 2022 that the US 301 and 232 tariffs violated WTO rules, the United States has appealed to the appellate body that has been deliberately paralyzed by it, refusing to implement the fair ruling of the expert group to cancel illegal tariffs against China. According to statistics from the United States, China's exports of products affected by tariffs to the United States are significantly lower than those of products not affected by tariffs, and also far lower than exports to other countries. In addition, the Biden administration not only failed to correct the mistakes of the Trump administration, but also continued to tighten export controls on China, exert extreme pressure on Huawei, continue to include numerous Chinese entities in the physical list, and impose sanctions on Xinjiang related products under the pretext of human rights. This is adding insult to injury above unilateral tariffs and seriously affecting US exports to China. Among the key products under US export control to China, the export of integrated circuits and semiconductor manufacturing equipment from the US to China in 2022 decreased by 23.7% and 24.7% year-on-year, respectively, accounting for a decrease of 5.1 and 6.8 percentage points in US global exports.

How to evaluate the impact of the US 301 tariff on trade between the two countries?

Tu Xinquan: Since 2018, the United States has imposed 25% and 7.5% protective tariffs on over 330 billion US dollars worth of products from China. This is the largest unilateral trade protectionism action in world history, and its impact on bilateral trade between China and the United States is enormous. According to a study by the US International Trade Commission, in 2021, the 301 tariff resulted in an average decrease of 13% in the import volume from China of the top ten taxed industries, especially in semiconductors and electronic components. In 2021, the US import volume from China decreased by 63.8%.

How to evaluate the sustained growth of the US trade deficit?

Tu Xinquan: In 2022, US trade grew rapidly, with a total trade volume increasing by 16%. At the same time, the US trade deficit in goods in 2022 continued to expand, exceeding $1.3 trillion, an increase of approximately $130 billion compared to 2021. China remains the largest source of deficit for the United States, but the growth rate and proportion of the deficit have decreased. According to US statistics, China's share of the US trade deficit has decreased from 48% in 2018 to 32% in 2022. The trade deficit between the United States and multiple trading partners has significantly expanded, such as Canada, Germany, India, Japan, South Korea, etc. In the final analysis, the trade deficit between the United States and China is determined by multiple factors such as the economic structure of China and the United States, international division of labor in industries, and US export controls to China.