[Epoch Times October 08, 2021]On October 4, US Trade Representative Dai Qi delivered a speech, mentioning that the Biden administration will handle trade relations with China in a new way. But what is interesting is that both the United States and China have very different opinions on Dai Qi’s speech, with mixed praise and criticism.
Many people believe that Dai Qi’s “direct contact”, “frank dialogue”, “not intensifying trade tensions”, and the “re-linking” of US-China trade are all signs of weakness. But some people think that the Biden administration’s position seems to be tougher than expected.
So, what is the real situation? Is the US trade policy towards China tough or weak? Let’s share today our views on this issue.
China’s economic model hurts the U.S. and the world
In April of this year, Katherine Tai was appointed by Biden as the U.S. Trade Representative. On October 4, this speech event held at the Center for Strategic and International Studies (CSIS), a think tank in the United States, attracted much attention before it was held. .
Let’s take a look at what Dai Qi said in detail. First, let’s take a look at how Dai Qi evaluates China’s role in the global economy.
Dai Qi said that as the two largest economies in the world, the economic and trade relations between the United States and China not only affect these two countries, but also the entire world and billions of workers. Trade regulations have weakened the prosperity of Americans and the rest of the world.”
Dai Qi also criticized the state-led economic model that the CCP has always adopted. Even after the signing of the first phase agreement, Dai Qi believes that the Chinese Communist government continues to invest billions of dollars in target industries and continues to shape its economy in accordance with the country’s wishes, harming the interests of workers in the United States and around the world.
Dai Qi also gave a special example to illustrate the negative impact of the CCP’s unfair industrial policies on the United States and the world economy.
For example, in the steel industry, China’s production capacity has surged, causing low-priced Chinese steel to flood the global market, driving out companies in the United States and around the world. Today, China’s steel output in one month exceeds the annual output of the United States and most other countries. Employment in the US steel industry has fallen by 40% since 2000.
Furthermore, the United States used to be a global leader in the photovoltaic solar (Photovoltaics) battery industry, but now, China has accounted for 80% of global production, and the United States, a large part of the solar supply chain, does not even exist anymore.
In addition, American agriculture has not been spared, and its market share is shrinking. And China’s regulatory authorities continue to deploy measures to restrict or threaten the market access of American producers.
In addition, China’s actions in the semiconductor industry are like the expansion intentions in the steel and solar industries. According to reports, China has invested at least US$150 billion in the semiconductor field.
Therefore, Dai Qi concluded that the CCP’s industrial policy has strengthened the “zero-sum state” in the world economy, because “China’s growth and prosperity are at the expense of workers and economic opportunities in the United States and other market-based democratic economies. At a price.” Therefore, the US strategy is “must solve these problems while also responding flexibly to the challenges that China (the CCP) may present in the future”.
The first phase agreement did not fail but did not achieve its purpose
So, how does Dai Qi comment on the first phase of the trade agreement?
In her speech, Dai Qi especially reviewed the evolution of US-China trade relations in recent decades.
She mentioned that from the late 1970s to the mid-1980s, in less than 10 years, China had risen from the eleventh largest economy in the world to the eighth largest economy, thus laying a foundation for China’s accession to the World Trade Organization (WTO).了基。 The foundation. However, behind China’s economic growth, the United States has contributed a lot. Because during this period, U.S. exports to China have increased by about 4 times, while imports have increased by 14 times.
China formally joined the WTO in December 2001, and in the 15 years since then, the United States has adopted a dual-track strategy against Beijing: on the one hand, it has a dialogue with the top level of the Chinese Communist Party. The purpose is to promote the Chinese Communist Party to comply with WTO rules and regulations, Other market-oriented reforms were made; on the other hand, it focused on WTO dispute settlement cases. It filed 27 lawsuits against China and won a victory in each of the judged cases. However, whether it is dialogue or law enforcement, this dual-track strategy has failed to make Beijing change its approach.
Dai Qi said that in the face of this reality, the former President Trump’s administration decided to use a different method to try to change Beijing’s approach through unilateral pressure from the United States. In the end, the United States and China reached a “phase one agreement” in January 2020 against the background of increased trade tensions.
But the reality is that this agreement, although the promises in some areas have been fulfilled and some commercial interests have already seen benefits, it has deficiencies in other areas. The agreement does not meaningfully address the fundamental concerns of the United States. In other words, Dai Qi believes that basically, in the past few decades, the U.S. trade policy toward China has been unsuccessful.
The U.S. adjusts its trade policy to China from four aspects
So, what does the Biden administration plan to do? Dai Qi mentioned that the Biden administration’s strategic vision for China’s trade policy is “worker-centered” to benefit a wide range of stakeholders, to defend the interests of American workers, businesses, farmers, and producers, and to strengthen the United States. Middle class.
As the starting point of this strategic vision, Dai Qi elaborated on four aspects of the plan.
First, the United States will discuss with China on China’s performance under the first phase of the agreement. She said that the promises made by China are beneficial to American agriculture and other industries, and the United States must implement them.
Second, the United States will initiate a targeted tariff exclusion procedure to ensure that the existing law enforcement structure is most in line with the economic interests of the United States; if necessary, this additional exclusion procedure will continue.
Third, the United States has expressed serious concern about the CCP’s “state-centered non-market trade practices”. While striving to implement the provisions of the first phase, the United States will also raise these broader policy issues with Beijing. Dai Qi also mentioned that in order to protect American economic interests from harm, the United States will not only use all the tools it currently has, but also develop new tools as needed.
Fourth, it is crucial that the United States will continue to cooperate with allies to formulate fair trade rules for the 21st century, and promote market economy and competition among democracies.
From these four points, we can at least see that, unlike the Trump administration’s unilateral pressure policy, the Biden administration believes that it is vital to “cooperate closely with allies and like-minded partners.” , Regional and multilateral participation to strengthen this alliance.
Dai Qi also mentioned that in order to achieve these goals, the United States and the European Union have reached an agreement in June this year, agreeing to stop the nearly 17-year aircraft subsidy dispute and suspend a series of tariffs that have deteriorated the relationship between the two parties for 5 years; and in September On the 29th, the U.S.-Europe Trade and Technology Committee (TTC) also held its first meeting. The two sides agreed to strengthen transatlantic cooperation in the semiconductor supply chain and combat unfair trade practices by “non-market economy countries.” In addition, in G7, G20 and The WTO and the United States are also discussing market distortions and other unfair trade practices.
Therefore, it can be seen that creating a fair and open market through cooperation with allies is the core of the Biden administration’s strategy.
To maintain a global competitive advantage, the United States must improve its own strength
In addition, Dai Qi also said that with the development of economic relations with China, it has become more important to improve the competitiveness of the United States. And different from the past, the government will participate in a strong position, such as investing in U.S. infrastructure, because China and other countries have been investing in infrastructure for decades. If the U.S. wants to compete in the global market, it needs to do so domestically. Equal or greater investment to ensure that the United States can maintain a competitive advantage throughout the 21st century.
Moreover, the United States must also become the most innovative country in the world through investment in education and worker training, through research, development, and creation of new technologies. Dai Qi also said that manufacturing is an important part of the innovation ecosystem. Therefore, the United States must invest in and research and develop clean energy technologies, strengthen the manufacturing base, and encourage companies to purchase American products upstream and downstream of the supply chain.
Is the new US trade policy with China strong or weak?
In the past period of time, the US business community has been conducting intensive lobbying activities, demanding the removal of punitive tariffs on China and asking the Biden administration to clearly state its policy toward China. And the U.S. Treasury Secretary Janet. Yellen (Janet Louise Yellen) also said that tariffs on China hurt American consumers.
However, Dai Qi’s speech will obviously disappoint these people, because the United States currently does not intend to abolish the tariffs during the Trump period. As for the launch of the tariff exclusion list plan, it is also for the benefit of the United States and continues the practice of the Trump period. , Because the tariff exemptions for most commodities expired at the end of last year.
In the Q&A session, Dai Qi also mentioned that in recent decades, the American business community has been eager to increase market access to China, but in the face of reality, the United States needs to think about what is the goal of the United States? Is it freer and more trade, or smarter and more flexible trade?
Dai Qi said, “it will not intensify trade tensions with China”, so in her speech, Dai Qi did not specifically criticize China for not implementing the first phase agreement. According to the Peterson Institute for International Economics (Peterson Institute for International Economics) data, so far, China’s purchases from the United States this year have only completed 62% of the target.
However, Dai Qi also emphasized that there is currently no plan to restart negotiations with China, because the first phase of the agreement must first be implemented.
Dai Qi did not directly answer the question of “whether China will change”, but she said that in order to defend the economic interests of the United States, she has all the policy options, including launching the 301 investigation and imposing new tariffs.
As for whether the supply chain will be “decoupled” from China, Dai Qi believes that it depends on what the definition of “decoupling” is. If this means that the United States and China stop trading with each other, this is not a realistic result, so the problem may be that, In recoupling (recoupling), what kind of goals the United States is looking for. When the United States occupies a strong position in the supply chain, the trade relationship established with China is “trade” rather than “dependence.”
So, how does Beijing interpret the Biden administration’s China policy? The Xinhua News Agency commented that on the one hand, the United States stated that it had no intention of intensifying trade tensions with China, but on the other hand, it ignored the consequences of the US-China trade war and did not take constructive measures.
Judging from the Xinhua News Agency’s argument, the CCP official is not satisfied with Dai Qi’s speech. Although the Biden administration is not as tough as the Trump administration in terms of wording, its position on the CCP is as clear as it is that the CCP poses a threat to the United States, and the United States must face this threat squarely.
At the end of March this year, Biden also stated in his first press conference after taking office that the competition between the United States and China “is a contest between democracy and autocracy in the 21st century” and that the United States “must prove that democracy is feasible.” To this end, the United States is working hard to enhance its own strength, while cooperating with allies to dominate global trade rules and technical rules, and to increase its military deterrence against the CCP.
For now, the US’s trade stance with China cannot be said to be very tough, but it is not weak either. Judging from Dai Qi’s speech, the U.S. trade policy adopts a holistic and pragmatic approach, and especially attaches great importance to cooperation with allies, which may achieve more positive results in resisting the threat of the CCP.
But for the United States, the real test is still after the United States and China have formal contacts on trade issues, because no matter what strategy the United States adopts, it will be necessary for the CCP to comply with global trade norms and change unfair trade practices. Impossible, and how the United States will respond to this by then is the crux of the problem.
Institute of Finance and Economics
Planning: Yu Wenming
Written by: Li Songyun
Editor: Wei Ran, Yu Wenming
Editing: Songs
Producer: Wen Jing
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