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May 22, 2019

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Trade war will only lead to a lose-lose result

A trade war will solve no problems, only to result in losses for both sides, an economic researcher said in an interview with Xinhua.

“From an economic perspective, Washington’s argument that tariff hikes bring benefits is nothing but false,” said Liu Shijin, deputy director of the economic committee of the National Committee of the Chinese People’s Political Consultative Conference and former deputy head of the Development Research Center of the State Council.

Noting China and the United States account for about 40 percent of the world economy, Liu said that a trade war would solve no problems. On the contrary, it will lead to losses on both sides and have an impact on the world economy and economic globalization.

“The formation and development of Sino-US trade ties have been based on the differences between comparative advantages and competitive edges,” Liu said, adding that the existing means of economic cooperation, a result of the trading behavior of the producers and consumers of the two countries, is beneficial to both sides.

He noted that made-in-China has lowered the production costs and prices of US domestic products, helping keep the country’s consumer prices stable and bringing a wide range of benefits to American consumers.

Shocks and challenges

“The argument that tariff hikes only hurt the Chinese economy and does not harm the US economy is not tenable,” Liu said. While the United States is using tariff hikes to escalate trade frictions, Liu foresaw only short-term pressure and limited influence on Chinese economy.

In tandem with developing diversified markets, China’s exports have become less dependent on the United States, Liu said. China’s export sectors are capable of coping with the shock and challenge from escalating trade frictions.

“As China’s economic strength keeps growing, the contradictions between the two countries are also growing,” Liu said.

He said the United States is leveraging state power to curb Chinese companies such as Huawei, aiming to suppress China’s growing technology strength.

Suppressing Chinese companies such as Huawei will not only hurt the direct suppliers of the company and other firms in the relevant industrial chains but also cause US companies to lose out on the Chinese market.


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