Economic globalization has expedited international competition, as well as industrial structural adjustments in the US. Labor-intensive industries have become "sunset industries", and the US is outsourcing its manufacturing to other countries, including China. More than half of China's exports to the US are manufactured by China-based foreign-funded enterprises, including US-funded ones. What China has gained from such a manufacturing chain is only a meager portion of the profits while foreign investors have snatched the lion's share.
But will China's decreased exports to the US, as a result of the imposition of higher tariffs, increase jobs in the US? The answer is clearly no. The decrease in imports of labor-intensive products from China will only mean the US imports them from other countries. If the US does choose to impose tariffs, then the spending of its consumers will increase, its investors in China will suffer declining profits and its domestic inflation will grow.
The prospects for the world economy still remain uncertain. European countries are struggling to remedy the sovereign debt crisis and the US economy is also struggling. Under these circumstances, world members, especially the big countries that have the major responsibilities for global economic growth should continue to cling to the spirit of "being in the same boat", instead of trying to shift their crises to other countries.
That the world economy began a nascent recovery only one year after the global financial crisis can be attributed to the joint efforts by the world's major countries to overcome difficulties and resist trade protectionism. The strong development momentum from emerging economies has also contributed much to the global economic recovery. At a time when the world's economic recovery is still tenuous, any attempt to force China to make concessions on the exchange rate issue will hamper the much-needed cooperation between China and the US and among all world members.
China and the US are highly interdependent in the economic realm. For the sake of the interests of their own and the whole world, the two countries should try to use the established mechanisms to strengthen communication in a candid manner to resolve bilateral disputes.
The author is a senior researcher with the Center for US-China Relations at Tsinghua University.