Xu Chen, chairman of the China General Chamber of Commerce – USA (CGCC) Photo: Courtesy of CGCC
Economic ties serve as the ballast in Sino-US relations and there is great momentum for more bilateral development as the two economies are highly complementary, a Chinese business leader said late on Tuesday.
Business agreements worth a total of $9 billion were signed between Chinese and US enterprises on Wednesday, the first day of US President Donald Trump’s three-day visit to China, according to media reports.
US aircraft manufacturer Bell Helicopter signed a deal with Reignwood International Investment Group Co, with the latter agreeing to buy 50 Bell 505 Jets, Bell told the Global Times on Wednesday.
JD.com Inc also committed to buying more than $2 billion of US goods in the next three years, including over $12 billion worth of US beef and pork, and Mobike tied up with Dow Chemical Co.
“Based on the business delegation traveling with the US president, the deals are likely to center on China buying American energy and farm products, as well as aircraft and other machinery,” Xu Chen, chairman of the China General Chamber of Commerce – USA (CGCC), told the Global Times on Tuesday.
The two presidents are expected to focus on topics like the trade imbalance between China and the US, Xu said, noting that after July’s Comprehensive Economic Dialogue in Washington, both countries expressed their interest in narrowing the US deficit.
With the gradual deepening of economic and personnel exchanges between China and the US, the business development between the two countries has seen some big achievements in recent years, according to Xu.
“Notably, 2016 was a fruitful year for Chinese investments in the US. We saw the figure hit a record high of $45.6 billion, up by 200 percent from 2015, and more than 70 percent of it was from private-sector firms,” Xu said.
Xu noted that Chinese companies continue to show confidence in the US market under the Trump administration. “Most of the Chinese companies involved in the CGCC have increased or plan to increase their investment and hire more local staff,” he said.
Q&A with Xu Chen
GT: Do you see any challenges and difficulties in the bilateral trade relations?
Xu: We understand the US trade deficit with China is a concern for the Trump administration. US exports to China totaled $116 billion in 2016 and imports from China were $463 billion, so the deficit was $347 billion.
However, it is important that we understand the meaning behind this figure. One should not look only at the “surface data.” For example, to suggest that China accounts for 50 percent of the US trade deficit requires careful analysis.
About 37 percent of China’s exports to the US come from other parts of the world and come from the global supply chain. Actually, from a value-added perspective, only 16 percent of the US trade deficit comes from China, slightly higher than the 13 percent of Japan and 11 percent of Germany. In addition, a large portion of China’s exports to the US comes from US multinational companies operating in China.
The trade structure between China and the US is more of a complementary relationship rather than direct competition, which means that it is not a zero-sum game.
As long as leaders from the US understand this notion and recognize that trade deficit reduction is a time-consuming process, I believe there will be a way to resolve this issue.
GT: Have you observed increased obstacles in investing in the US?
Xu: In recent years, the trend of protectionism in the US has been greatly strengthened. The Committee on Foreign Investment in the US (CFIUS) has repeatedly restricted cross-border mergers and acquisitions (M&As) involving Chinese-funded enterprises on the grounds of national security.
In 2016, the CFIUS instituted a record number of probes into foreign investment projects, 170 in total, and the main focus was Chinese companies. As the overall Chinese investment in the US has risen, the US has also proposed increasing scrutiny of investment in industries such as high-tech. In particular, it fears China’s growing interest in artificial intelligence and machine learning.
With the increase in economic integration between China and the US, it is not surprising that there are some differences and frictions. Both parties can properly handle this through dialogue and consultation.
(Source: Global Times)