2009: a year of cooperation and conflicts for China-U.S. trade relations

08:41, December 23, 2009

As the ballast and engine for overall bilateral relations, China-U.S. trade ties have witnessed intensive exchanges in 2009 amid soaring trade disputes.

Undeniably, though, the trade ties will encounter conflicts from time to time during the process of cooperation, analysts say, noting that trade expansion between the world's largest developed and developing country is in line with the interests of both sides, and even the whole world at large.

SIGNIFICANCE OF CHINA-U.S. TRADE RELATIONS

Amid the economic downturn in 2009, Chinese and American leaders made frequent contacts at both bilateral summits and international meetings. Dialogues on strategic and economic development were subsequently opened.

Following U.S. President Barack Obama's visit to China in November, the two countries issued a joint declaration saying "they are committed to building a positive, cooperative and comprehensive China-U.S. relationship for the 21st century, and will take concrete actions to steadily build a partnership to address common challenges. "

In the newly defined China-U.S. relationship, trade and economics bear strategic significance. Today, China and the U.S. are each other's second largest trade partner and their trade volume has increased by 130 times in the past 30 years.

"Currently, trade and economy have apparently become the ballast and major impetus in their relations," said Wang Yong, director of the Center of International Political Economy at Peking University.

The constantly changing definition of their bilateral relations reflects the shift in the balance of economic strength and in the extent of mutual dependence, said Chen Dongxiao, vice president of the Shanghai Institute for International Studies.

Since China's entry into the World Trade Organization, China and the U.S. have gradually developed a dependent relationship, which considering their economic strength and dependence extent, is one of the most influential relationships in the world, restraining the two countries from potential conflicts in the fields of security and politics, Wang said.

If China and the U.S. cooperate well, the G-20, APEC and the International Monetary Fund would consequently be better-functioning, said Eswar Prasad, a senior fellow at the Brookings Institute.

He noted that the nature of China-U.S. relations, whether to be cooperative or not, would set the tone for various multilateral issues including international monetary reform.

Nevertheless, some analysts believe the interdependency is not poised and China's excessive dependence on exports and the U.S. excessive dependence on consumption are not sustainable. Whether or not their relations will develop healthily and continuously is of great significance to the economies of the two countries, and even that of the world.

CHINA-U.S. TRADE SPAT IN EXPERTS' EYES

As China and the U.S. have seen ever-closer economic ties over the past 10 years, the frequency and number of bilateral trade disputes are also on the rise.

Some media described today's China-U.S. relations as "a clumsy couple dance," during which the dancing pair often steps on each other's feet.

With a still high jobless rate, the United States has begun turning to trade protectionism, which, as a result, has pushed its trade conflicts with China into the limelight.

China-U.S. trade tensions sharply escalated this year, as the United States implemented a series of trade protection measures against China, including the imposition of special protectionist tariffs on Chinese tire imports.

In the first three quarters of 2009, the United States launched14 trade remedy investigations against China, involving 5.84 billion U.S. dollars, a year-on-year rise of 639 percent.

The result of upgraded China-U.S. trade tensions is "a dangerous game of chicken that could easily spin out of control" if the desire to pander to domestic audiences trumps rational collective policymaking in one or both countries, Prasad said.

Wang stressed that cooperation is still the mainstream of China-U.S. trade relations.

China and the U.S. could ensure their "absolute gains" through making a bigger "cake of trade," Wang said.

The two could also win respective "relative gains," which could lead to trade disputes in the process of interest distribution, he said.

Wang said that during the process, it was important for both sides to view their ever-increasing common interests from a strategic perspective.

The growing trade conflicts, from another point of view, actually reflect the increasing interdependence between the two countries, Chen pointed out.

"It might be a zero-sum game for both China and the U.S. when it comes to specific industrial sectors, however, it is a positive-sum game for their overall economic relations," Chen said.

Fu Mengzi, a senior researcher at the China Institute of Contemporary International Relations, described the present China-U.S. relations as "multi-faceted." Fu said the "stable framework" (of their bilateral relations) should not be shaken by minor frictions.

PROSPECT OF CHINA-U.S. TRADE TIES

Analysts said the tone of the China-U.S. relationship was positive in 2009 and marked an upgrade from previous links between the two countries.

The two nations were highly interdependent and enjoy a solid foundation built on common interests, Fu said.

"There is no point for them to straying away from the status quo," Fu said.

According to Chen, China and the United States share common ground on many issues. That includes pushing for the world's economic recovery, safeguarding a multilateral trade mechanism, reform on international financial institutes, combat against climate change and efforts to reduce poverty, he said.

Having witnessed ups and downs, China-U.S. ties are heading for a partnership committed to jointly dealing with global issues.

World Bank President Robert B. Zoellick said in an interview with Xinhua that both China and the U.S. enjoy common interests and shared responsibilities in working on the current financial crisis and future economic development.

The global financial crisis served as an opportunity for both sides to improve their relations.

The Chinese government is striving to shift its economic growth pattern and expanding domestic demand, Wang said. China's effort would promote a more balanced and sustainable relationship between the two sides, he said.

However, conflicts do go with development in China-U.S. trade relations, as Chen said that their differences would at first center on how much responsibility each side should take.

The difference was featured as the U.S. continued to press for the appreciation of China's currency and in other trade disputes, Chen said.

Jin Canrong, associate director of the School of International Studies at Renmin University, also pointed out other fields where trade conflicts between the two countries would be likely to show up.

Those include green tariffs and other trade restriction measures, labor protection, product quality problems, high-tech export controls, cooperation in East Asia and policy fluctuations brought by interest groups within the U.S., Jin said.

Although there probably will be setbacks, the overall framework of the bilateral trade would be stable thanks to the great importance attached by each government as well as increased bilateral coordination mechanisms, Jin said.

In the past 10 years, the number of bilateral coordination mechanisms at the ministerial level has been increased to more than 60, he said.

Wang also said that a sound interaction between China and the United States would not only benefit both countries, but also contribute to the peaceful development of the world.

Source: Xinhua