中文
By Yi Fan
As the United States works to address inflation at home, U.S. Treasury Secretary Janet Yellen is quoted saying in a June 19 interview that some tariffs on China inherited from the Trump administration "serve no strategic purpose and raise cost to consumers," and that "President Biden is reviewing tariff policy toward China." Lifting of the tariffs would certainly come as good news for Chinese as well as American businesses and consumers.
China-U.S. business relations have been through a lot since U.S. President Richard Nixon's ice-breaking visit to China in 1972. The thawing, burgeoning and fluctuation of bilateral trade and investment over the past five decades have shown that close business ties benefit both countries and peoples, and that any attempt to disrupt the ties would only backfire.
The Shanghai Communique released during Nixon's visit in February 1972 defined the mutually beneficial nature of China-U.S. economic relations:
"Both sides view bilateral trade as another area from which mutual benefit can be derived, and agreed that economic relations based on equality and mutual benefit are in the interest of the peoples of the two countries. They agree to facilitate the progressive development of trade between their two countries."
After diplomatic ties were established in 1979 and an agreement on trade relations signed, in which both sides agreed to accord each other Most Favored Nation treatment, China-U.S. business relations entered a period of rapid growth.
Every number tells a story. Trade in goods between China and the United States grew 252 fold from 1979 to 2018, from less than $2.5 billion to $633.5 billion; two-way trade in services roses 3.6 fold in just 12 years, from $27.4 billion in 2006 to $125.3 billion in 2018. Last year, despite the fluid political landscape and COVID-19, trade in goods grew 28.7 percent to $750 billion, which reflects the explicit choice of Chinese and American peoples, businesses and markets. Incidentally, bilateral business cooperation has created 2.6 million American jobs, and few things put a bigger smile on the whole family than a solid job.
Today, two-way investment has exceeded $250 billion. More than 70,000 American businesses are operating in China, making some $700 billion in revenue and $50 billion in profits in 2021. Starbucks alone runs more than 5,400 stores in the Chinese mainland.
Phoenix Paper LLC's paper mill in Ballard County, Kentucky is an epitome of modern-day win-win investment. From 2009 to 2019, this American county saw two tire plants and one paper mill shut down, and many local youngsters left home for jobs in cities. At one point, 16.4 percent of the county's 8,200 population were living below the poverty line.
In 2018, a Chinese company purchased the closed paper mill and refurbished it with a $150 million investment. The reopened mill was named Phoenix Paper. After a year, the company invested an additional $200 million to build a paper recycling facility there. Like the mythical bird, the paper mill rose from the ashes, and created five hundred full-time positions for local job-seekers. Kentucky statistics in 2019 showed that Chinese companies had brought more than 8,700 jobs to the state.
That said, China-U.S. business relations have not been all sunshine and roses. Disruption happens. Let's rewind to 1993. When some Washington politicians peddled ideology-based rhetoric in a shifting political climate, such a move threatened the economic interests of not just China, but the United States itself. American businesses, in turn, would follow the laws of the market and vote with their feet.
That year, the Clinton administration sought to politicize trade issues by linking the Most Favored Nation status for China with so-called progress on human rights in China, through which it hoped to improve its "terms of trade with China" and reduce an "$18 billion trade deficit," among others. However, as a New York Times article recorded, "many American companies are vigorously lobbying the White House and Congress for an extension of China's trading privileges, pointing out that billions of dollars in exports are at stake, as well as thousands of jobs." To be precise, "exports to China created about 150,000 jobs in the United States last year." The next year saw solid business ties prevail when the U.S. government announced support for renewing most-favored-nation status for China.
The more recent Trump-era tariffs on some $370 billion worth of Chinese imports set a poor example of shooting oneself in the foot.
To put it bluntly, the additional tariffs were imposed supposedly to boost American exports and economy as a whole, and save American jobs, at the expense of Chinese interests. But in reality, just as an Economist article found at the beginning of this year, "American importers in fact bore more than 90 percent of the cost of America's tariffs. The obvious explanation was that they had little choice but to rely on Chinese suppliers, ... and could not negotiate lower prices."
In other words, American retailers, consumers and downstream producers are bearing the brunt of the trade war. As for the effect on the American economy and jobs, a U.S.-China Business Council report published in January 2021 estimated that the trade war cost the United States around 0.5 percent of its GDP ($108 billion) from 2018-2019 and $675 per household in real income, or $88 billion in total, and 245,000 jobs at its peak.
While the current U.S. Treasury Secretary warns of the tariffs due to their contribution to rising domestic inflation, a walk through the past five decades of China-U.S. business relations brings us to the fundamental big picture: Sound business ties are mutually beneficial, and must be kept for the sake of both sides.
As Chinese President Xi Jinping observed in his virtual meeting with U.S. President Joe Biden last November, "Business is business. Economic and trade issues between the two countries should not be politicized. The two sides need to make the cake bigger for cooperation." For such a vision to materialize, one only hopes that the United States would do the right thing in the days to come.
The author is a Beijing-based current affairs commentator.
