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Experts warn against trade war

By LIA ZHU in San Francisco | China Daily USA | Updated: 2018-05-07 04:23

"Trade war" dominated the talk at a forum in Silicon Valley, where experts and opinion leaders expressed hopes that the US government can avoid anything that resembles a trade war.

"We Americans and Chinese are so economically dependent upon each other, we're joined at the hip. The commercial and economic relationship is really the ballast in the relationship," Max Baucus, former US ambassador to China, told China Daily at the annual conference of the Committee of 100 in Santa Clara, California.

Tensions between the two countries have risen since the Trump administration threatened to impose tariffs on up to $150 billion in Chinese goods and China retaliated with tariffs targeting US wines, soy beans, pork and other products.

Farmers in California have already felt the initial fallout from the trade dispute as China's new tariffs on US fruits, wines and other agricultural products went into effect on April 2.

Even the suspension of the imposition of the tariffs creates uncertainty and a sense of uncertainty is not good because it makes it difficult for farmers, ranchers and businessmen to make decisions, said Baucus, who is also co-chair of Farmers for Free Trade, a non-profit that supports expanding export opportunities for US farmers and ranchers.

As a US trade negotiation team left Beijing on Friday with few gains, Baucus said the administration needs to "talk out more of their strategy" and come up with an effective offer.

"The last offer is ridiculous" and the list of demands is "way way out of bounds", he said.

"President Trump is impatient. He's not one with subtleties who thinks through facts," he said. "I frankly think the American negotiators, when they came back and got nowhere in China, are starting to realize the last tactic and the list of demands are probably not a very smart thing to do.

"The question is what's next. I'm hopeful that ultimately after a few ripples and verbal sparring back and forth, cooler heads will prevail," he said.

Chas Freeman, a senior fellow at Brown University's Watson Institute for International and Public Affairs, said Washington has misdiagnosed the trade problem and its remedies won't work.

"What it is doing will harm the United States and other countries as much or more than it does China," he said in his keynote speech at the forum, which attracted hundreds of people from government, business and academia.

According to a US-China relationship perception survey conducted by the Committee of 100 in 2017, the majority of Americans were concerned about the trade deficit with China while admitting that the trade relationship with China benefited the country.

Freeman said the overall trade deficit of the US was a result of that fact that Americans consume more than they save, which means the country imports more than they produce.

"Ironically, the Trump administration has just taken steps guaranteed to increase this deficit," he said. "It has reduced tax revenues and boosted deficit spending, mostly on military research, development, and procurement." 

The common misconceptions on the trade deficit with China partly affected the US policies on China.

China's trade surplus is actually not responsible for the US' trade deficit, Yukon Huang, a senior fellow in the Carnegie Asia Program, told the forum.

He used iPhone as an example. People think iPhone is a Chinese export but in fact only 5 percent of the value goes to China. People also tend to ignore the US' huge exports of services to China, he said.

It's also unfair to use the $150 billion tariffs threat to stop China from becoming a technology powerhouse, said Gary Locke, former US ambassador to China.

The US is in the lead right now because of the government's education and research programs, he said. However, the Trump administration has cut scientific research funding and boosted defense spending.

"The US needs to have its own plan to move ahead in terms of innovation," said Locke.

In Omaha on Saturday, the first question put to Warren Buffett at the 2018 Berkshire Hathaway Shareholders Meeting also focused on the current trade tensions between the US and China.

Always optimistic on China, Buffett said he believed the two nations have a lot of common interests and a lot to gain by working together.

"The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long, long time. We have a lot of common interests, and like any two big economic entities, there are times when there will be tensions," he said.

"It is a win-win situation. The only problem is when one side or the other wants to win a little bit too much," Buffett added.


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