H.E. Cheng Jingye, Chinese Ambassador to Australia: America's trade war is spreading harm around the world

On 5 September 2019, The Australian Financial Review published a signed article America's trade war is spreading harm around the world by Chinese Ambassador to Australia Cheng Jingye. The full text is as follows:

The most recent decision by the US government to impose additional tariffs on Chinese imports, wantonly escalating the trade war with China, has raised enormous concern among the international community, including Australia.

The US move is a gross violation of the Osaka consensus reached by the presidents of China and the US. Furthermore, it tramples on multilateral trading rules, harms both countries' interests, threatens the global industrial and supply chain, and drags down global trade and economy. The irresponsible offensive by the US hurts everyone.

He who tries to blow out the other's oil lamp will set his beard on fire. Economists recently polled by Reuters forecast the probability of a US recession in the next two years has risen to 45 per cent. Indeed, US stocks were hit hard, and its manufacturing PMI plunged to its lowest in 10 years, signalling the looming recession.

A new study from the US Chamber of Commerce finds that $US64 billion ($94 billion) to $US91 billion will be wiped off every year from America's GDP in 2019 and for the coming four years.

Should the US follow through on extending all tariffs to 25 per cent, the aggregate loss over the next 10 years would amount to $US1 trillion. The price of Trump's tariffs will be paid by common American households. JPMorgan researchers estimate that American families will have to pay $US1000 in additional costs annually.

The IMF predicts the intensifying trade friction could cut global GDP by 0.5 per cent in 2020. Analysts at Morgan Stanley say that if the US imposes 25 per cent tariffs on Chinese imports, world economic growth would downgrade to 2.5 per cent or lower.

Germany and Britain have already registered contraction in the second quarter. Growth in Italy stagnated. Exportoriented economies in Asia are among the first to suffer.

As I've noted from the wide coverage of the trade war in Australian media, there has been a lot of concern about the negative impact on the Australian economy. People from all walks of life here are pondering how to deal with the downward pressure.

By unilaterally imposing tariffs, the US has circumvented the WTO dispute settlement system and breached the most fundamental principles and rules of the WTO. It broke the international trade rules and wrecked the multilateral trade system.

Jennifer Hillman, a former member of the WTO appellate body, has pointed out that the US was obstructing the WTO and appeared more willing to destroy the system than fix it.

In the face of US trade bullying and extreme pressure, China's position has always been rational and clear-cut. We do not want a trade war, but are not afraid of fighting one.

We firmly reject an escalation of the trade war, and are willing to negotiate with a calm attitude to find a solution acceptable to both sides through dialogue and consultation on the basis of equality and mutual respect.

We hope the US will work with China towards the same end.

China's countermeasures of tariffs on US goods aim to not only defend our sovereignty and rights of development, but also firmly safeguard multilateralism and free trade in the interests of the international community.

Additionally, in order to justify its trade war, the US has repeatedly accused China of IP theft, which is not true. After over 40 years of reform and opening up, China has made notable achievements in technological innovation.

In 2018, the contribution of China's scientific and technological progress to its economic growth is expected to exceed 58.5 per cent. China is ranked No. 2 in the world in R&D investment, citations of scientific papers and applications of international patent. It is ranked third in applications of international trademark.

In the same year, China's payments for foreign intellectual property reached $US35.6 billion, a quarter of which went to the US. The allegations of IP theft are baseless and untenable.

Accusations of forced technology transfer are equally unfounded. Apart from commercial arrangements between enterprises based on mutual benefits, the US has so far failed to provide proof of any case of forced technology transfer by China.

In fact, scientific research cooperation and transfer of technology between foreign and Chinese enterprises is by no means a coercive act but the result of market rules and profit-driven principles.

Products without a technological edge are unlikely to be popular in China. In the first half of this year, more than 20,000 foreign companies established businesses in China. Why should a foreign company rush to China if it would be subjected to forced technology transfer and lose profits?

China supports necessary reforms of the WTO to enhance its authority and effectiveness.

China believes that reforms should adhere to three basic principles: safeguarding the core values of multilateral trade systems including non-discrimination and openness; upholding the development interests of the developing countries; and following a consensus decision-making mechanism.

China and the EU have already established a vice-ministerial level joint working group for reforms, whereas the aim of the US in proposing reform is to maintain its hegemony in international trade. The US favours international trade rules when they serve its interests and abandons them when they don't.

It even blocked the reappointment of WTO judges, obstructing the normal operation of the WTO, in a move that has stirred up resistance and opposition from other WTO members.

China will unswervingly deepen reform and opening up. Our huge market will bring more opportunities to the world.

We stand ready to step up communication and coordination with other stakeholders, fight against trade bullying, safeguard the rules-based multilateral trading system with the WTO at its core, and work for an international economic and trade regime that is more open, balanced and inclusive.

Embassy of the People’s Republic of China in the Commonwealth of Australia
Address: 15 Coronation Drive, Yarralumla, ACT 2600
Tel: 0061-2-62283999, Fax: 0061-2-62283836
E-mail: chinaemb_au@mfa.gov.cn
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