CCTV:

As for bilateral trade and economic ties, the U.S. side believes the Chinese side has adopted unfair approaches causing the United States to suffer losses. What do you think of this claim? Besides, what do you think of the future of bilateral trade and economic ties between China and the United States? Thank you.

Fu Ziying:

Some people in the United States accused China of unfair competition leading to a huge U.S. trade deficit in goods with China and losses on the U.S. side. This accusation is not consistent with the facts. It doesn't have a leg to stand on, being a totally a misleading accusation.

China-U.S. economic and trade cooperation is the natural outcome of the complementarity of Chinese and American industries and the inevitable choice of the international division of labor. It is in the common interests of the two peoples. After nearly 40 years of development, the economies of China and the United States have become deeply integrated and attached to each other. The annual bilateral trade volume has reached US$700 billion, and the stock of two-way investment has exceeded US$230 billion. The annual sales revenue of American firms in China has reached US$700 billion, with profits exceeding US$50 billion. The common interests of China and the United States are far greater than their differences.

In fact, the gap in China-U.S. trade is merely gap in trade volume, not the gap in profits and losses. I used to be an accountant, so I know why. Similarly, no one knows better than the related enterprises and consumers themselves whether or not the United States has suffered losses in the bilateral trade. In terms of production, China and the United States are in different positions in the global industrial and value chains. The United States stands at the high-end, while China stands at the low-end. Chinese firms are more likely to earn processing fees, while American firms benefit enormously from design, parts supply, marketing and other links. In terms of consumers, Chinese goods of good quality and reasonable price have entered millions of American homes, enriched the American consumer market and improved American consumer welfare. On the whole, the U.S side has gained more from bilateral trade. The profits gained by U.S. enterprises in bilateral economic and trade cooperation are far greater than those gained by Chinese enterprises. It can be said that, the trade surplus is reflected in China, while the "interest surplus" is reflected in the United States.

The formation of the U.S. trade deficit with China is related to the economic structure, international division of labor, statistical divergence and other factors between the two countries. Fundamentally speaking, trade competitiveness is the competitiveness of industries, and the industries with strong competitiveness see relatively higher export volumes. The United States has maintained a big trade surplus with China in competitive industries such as automobiles, airplanes, agricultural products and services. In 2017, China imported US$13.1 billion of automobiles from the United States, while China's automobile exports to the United States only reached US$1.4 billion. The United States enjoyed a US$16.4 billion trade surplus with China in agricultural products. The U.S. trade surplus in services to China exceeded US$54 billion. The China-U.S. trade imbalance can also be attributed to American export controls to China. According to the analysis of relevant American institutions, the U.S. trade deficit with China would be reduced by as much as 35 percent if American control over high-tech products for civilian use exported to China could be relaxed. The United States doesn't want to export what China wants to import, and this situation is also a major cause of the current trade imbalance.

China is willing to work hard to push bilateral trade towards greater balance, and hopes the United States will also show a positive attitude. Currently, our planet has become a close-knit global village. The trend of economic globalization is unalterable, and the trend of China-U.S. economic cooperation is irreversible.

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