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Ambassador Hong Xiaoyong has a signed article "What US-China trade war is really about: A Chinese perspective" published in The Straits Times
2019/06/07

On 7 June 2019, H.E. Mr. Hong Xiaoyong, Chinese Ambassador to Singapore, has a signed article published in The Straits Times titled "What US-China trade war is really about: A Chinese perspective". The full text is as follows:

The term "trade war" is a misnomer, consisting of two words which should be naturally irrelevant to each other, as countries that trade with each other should not be at war. Yet that term is now catching the eyes of all around the world as China-US economic and trade friction intensifies.

Given the increasing concerns from the international community about the impact of the trade war, I hope the following points - from China's perspective - will help readers understand more about the real story.

SABOTAGED TALKS, ESCALATING TENSIONS

Since the Trump administration took office in 2017, it has never refrained from threatening and bullying its major trading partners. The United States insists that China's "unfair" and "non-reciprocal" trade policies have created a trade deficit.

But, in fact, as many economists and experts have noted, the root cause of the China-US trade imbalance is complex.

Notwithstanding this, the Chinese government has spared no effort to communicate with the US. China has also shown that unremitting efforts and remarkable progress have been made in protecting intellectual property and improving the business environment for foreign investors.

Aiming to resolve problems and demonstrating great flexibility, China engaged in 11 rounds of high-level economic and trade consultations with the US, only to find that the consultations were not free of setbacks, with each setback occurring as a result of a US breach of commitment or backtracking.

Towards the end of April, after painstaking consultations, the two countries had agreed on most of the issues. But the more the US is offered, the more it seems to want.

It persisted in maintaining the additional tariffs imposed since the friction began and insisted on including mandatory requirements concerning China's sovereign affairs in the deal.

On May 6, the US raised the additional tariffs on US$200 billion (S$273 billion) of Chinese exports to the US from 10 per cent to 25 per cent.

On May 13, the US announced that it had launched procedures to slap additional tariffs on remaining Chinese goods, which are worth around US$300 billion.

What's more, the US uses its state power - political and economic - to strike Huawei, a Chinese telecommunications company, aiming to crack down both its supply and sales chains. All these actions have seriously undermined the basis of mutual political trust in the bilateral dialogue.

Despite the fact that its own bullying practices are seriously sabotaging the negotiation process, the US accuses China of backtracking and reneging on its commitment.

As negotiations are meant to bridge the divide between two sides, how can one break its commitment when negotiations are still ongoing, without final results?

The truth is that the US' constant use of its negotiating trick of exerting maximum pressure has ruined everyone's efforts.

CHINA DOES NOT WANT TRADE WAR BUT WILL FIGHT ONE IF NECESSARY

A trade war is not what China wants. China and the US have been benefiting from win-win trade relations. A trade war, we believe, will hurt both countries and even the world economy. China showed its utmost sincerity by not only engaging in rounds of negotiations, but also introducing new policies and measures, including improving the business environment, expanding market access and strengthening intellectual property protection. China's efforts are obvious to all.

China is not afraid of a trade war. Although the trade war has an impact on the economy, China can manage as it has a complete industrial system, a growing capacity for scientific and technological innovation, huge domestic consumption and investment markets, and an irreplaceable position in the global industrial chain.

China, fully prepared with its policy toolbox, is ready for whatever may happen, whether it is talks or confrontations. As President Xi Jinping pointed out, the Chinese economy is not a pond but an ocean. Storms may upset a pond, but never an ocean.

At the same time, while hoping for win-win trade talks, China is prepared for a fight if necessary. Trade deals must be based on equality and mutual benefit.

To achieve a fair trade deal, the US should remove all additional tariffs imposed on Chinese exports. The volume of China's purchase of US goods should be realistic. A proper balance in the text of the agreement has to be achieved.

These are China's core concerns and it will dig in its heels on issues of principle and the bottom line.

A few days ago, China issued a White Paper on its position on economic and trade consultations with the US, in which it clarified that China is still committed to credible consultations based on mutual respect, equality and mutual benefit. We hope the US will soon return to the negotiating table.

TRADE WAR MASKS REAL INTENTION TO CONTAIN CHINA

China firmly believes that its development cannot be achieved without connections to the world, including stable China-US economic and trade ties. If the trade balance was the sole goal of the US, the trade war should not occur.

Unfortunately, what the US wants goes far beyond trade. During the negotiations, the US kept increasing its demand for an exorbitant price, forcing China to make changes to its economic structure, and even pressed for fundamental systemic changes.

When China stood its ground, the US side oppressed Chinese enterprises on groundless charges in an attempt to contain China's development process in high-tech fields such as 5G, and to exclude Chinese enterprises from the global industrial chain.

The US has also constantly thrown out statements such as "reshaping China" and "clash of civilisations". In addition, the Indo-Pacific Strategy Report recently released by the US Department of Defence called China "a revisionist power" and declared that inter-state strategic competition, defined by geopolitical rivalry, is the primary concern for US national security.

All these can hardly stop people from concluding that the real agenda of the US is to contain the rise of China.

Some say the cause of China-US tensions comes from the US' anxiety about China's rapid development. But it is unacceptable for a country to relieve its anxiety by undermining the world trade system and overthrowing the global industrial chain.

In today's highly globalised world, the interests of all countries have become closely integrated. Relations between countries can only be win-win or lose-lose. There is no more zero-sum. It will ultimately turn out to be all-lose if one plays the zero-sum game aiming to be the only winner.

With the Cold War mentality, one is doomed to fail if one tries to launch a new Cold War because the world is different now.

I read retired Singapore diplomat Bilahari Kausikan's article, No sweet spot for Singapore in US-China tensions (The Straits Times, May 30). He holds a widely accepted view that the escalation of the China-US trade war will negatively impact other countries more. However, he attributes the tensions to China, saying that "Beijing has clearly misread the direction of US-China relations".

That is far from reality. Trouble should be ended by whoever starts it. Blaming China is barking up the wrong tree. China's firm determination to safeguard its rights and interests should be neither underestimated nor misread.

China will by no means trade away its core interests. The Chinese people are more united now.

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