Trump is misjudging China’s resolve on trade: Bloomberg

Trump’s true purpose of launching a trade war against China has been revealed in a latest article by #Bloomberg on July 13, arguing that the extra tariffs on China mean a longer trade war, with greater damage to the US economy.

Entitled “Trump is misjudging China’s resolve on trade,” the article reported that Trump’s strategy in his trade war with China is to eventually force China into concessions by inflicting sufficient economic pain. That’s the obvious purpose of the $200 billion in additional tariffs he plans to impose on Chinese-made goods.

Trump’s latest moves are a reality show before midterm elections to make him appear tough. But the approach is also mired in misperceptions—and bluntly, plain ignorance—of modern China. To Trump and his advisers, China appears poor, dependent on America, and susceptible to coercion. The reality is that China is a global economic force and that China’s leaders will not be so easily intimidated, the article emphasized.

Team Trump’s first big miscalculation is over economic leverage, according to the article. Because China exports more to the US than vice versa, the Trump administration reckons it has the upper hand. Stephen Moore, a Heritage Foundation fellow and former Trump economic adviser, claimed that the “Chinese economy cannot grow without access to the US market.”

The facts suggest otherwise, it noted. China is now a $12 trillion economy, and far from vulnerable. Julian Evans-Pritchard, senior China economist at Capital Economics Ltd., said in a July 11 report that the total $250 billion of exports facing US tariffs represents only 1.3 percent of China’s GDP, and the damage done by those tariffs might be only around 0.5 percent of output.

The article went on pointing out that Trump is assuming Chinese companies and workers will bear the brunt, but that ignores global supply chains. Hannah Anderson, global market strategist at J.P. Morgan Asset Management, commented recently that “the majority of the value in the imports the US has imposed tariffs on so far comes from other countries besides China.” The tariffs will punish US consumers and companies with higher prices, costing jobs, profits, and growth and roiling financial markets.

Washington tramples on multilateralism with domestic laws

Trade is about competition, collaboration, and above all, a great chance for win-win results. But nowadays US President Donald Trump is using hegemonic clauses like Section 301 and 232 to turn trade into a war, shaking the multilateral trading system through unilateralism, like a bull in a china shop.

Since the end of World War II, a wide range and large scale of global issues have emerged. Quite a few such problems were difficult if not impossible to solve through traditional channels of bilateral negotiations. This led to the rise of multilateralism and organizations such as the World Trade Organization.

The establishment of this multilateral system was essentially led by the US. But Washington is now turning into its destroyer, treating multilateralism as a threat to the US and bringing upon itself more losses than gains.

Many US laws, such as Section 301 and Section 232, are domestic trade laws adopted as emergency measures against declining US competitiveness.

In the 1970s, Japan’s economy grew rapidly with its products occupying a growing number of international markets previously dominated by the US. In this context, Washington passed the Trade Act of 1974 in which Section 301 enforces US rights to addresses “unfair” foreign barriers to US exports and to retaliate unilaterally.

In other words, when the White House one-sidedly believes that its trading partners are practicing unfair trade, it can initiate investigation, make final decisions and reactions all by itself, bypassing the international community. Section 232 is much the same. It authorizes the US president to impose import restrictions on other countries in the name of US national security. Both sections deploy domestic law to deal with international affairs.

While Washington busies itself accusing others of jeopardizing the world order, it itself is becoming the greatest disruptor of the system it once established.

In his new book 21 Lessons for the 21st Century, historian Yuval Noah Harari noted that human tribes coalesced into nations as no tribe could deal with major challenges alone. Today, countries find themselves in the same situation: No power can singlehandedly resolve the constant changes the world is facing. That’s why global consensus is urgently needed.

Multilateralism is one such consensus. China is firmly opposed to unilateralism through substantial practices. It is now a major driving force of global economic growth as well as a crucial player in multilateral mechanisms.

China is doing so not only to safeguard its own interests, but also to maintain the normal operation of the global trading system. In this regard, China shares interests with many other countries.

China is not alone. Multilateralism still matters to many nations. The EU and Japan reached the world’s largest bilateral free trade deal on Tuesday, which shines “light in the increasing darkness,” according to European Council President Donald Tusk. China and the EU are also considering forging a free-trade agreement.

In the current global trade system, there can’t be a unilateral win.

Commentary: US accusation of China stealing its technologies is nothing but a lie

“China stealing US technologies” is completely a lie made up by the US. However, not satisfied with its shell game, Washington later cooked up an even bigger story that China has been threatening the US through “economic aggression”.

By twisting the facts, the US is trying to label China’s technology development as a “threat to the world”. Its intention of defaming China and fooling the world can’t be more obvious.

Just imagine, can China really reach where it is today by just stealing the US technologies?

China is the world’s second largest country when it comes to the number of patent application, and is expected to surpass the US in three years in this regard.

According to data from the World Intellectual Property Organization (WIPO), China-based applicants filed 48,882 Patent Cooperation Treaty (PCT) applications in 2017, up 13.4 percent year on year.

China outranked Japan to the second place last year, only after the US. Most of the country’s patent applications were in the field of digital communication, and it is the only country to have recorded double-digit growth in the number of patent applications, according to the WIPO.

China also tops the world in terms of the number of domestic patent applications. The country’s intellectual property office received a total of 1.3 million applications in 2016, which was even more than the add-up of those from the US, Japan, South Korea and Europe, revealed the 2017 report of WIPO.

Chinese companies and individuals filed 90 percent of those applications, and the rest 10 percent came from overseas.

Attaching increasing importance to research and development (R&D), China spent 1.75 trillion yuan ($260 billion), or 2.12 percent of its GDP on this sector last year, 11.6 percent more than that in 2016. The rising input in R&D is a firm support for China’s innovation system.

The total R&D expenditure of Chinese enterprises grew by 13.1 percent to 1.37 trillion yuan in 2017. It was the second straight year for this figure to increase on a double-digit basis.

Meanwhile, the R&D spending of the country’s governmental institutions and universities stood at 241.84 billion yuan and 112.77 billion yuan last year, up 7 percent and 5.2 percent respectively from the previous year.

Last year, 92 billion yuan was invested on the country’s fundamental research, 11.8 percent more from the previous year and accounting for 5.3 percent of the R&D expenditure. The input in R&D serves as a strong driving force for China’s technology development.

Besides, China has been paying more and more for intellectual property royalties. Over the last year, the country paid $28.6 billion worth of intellectual property right royalty, a 15-fold increase from 2001 when it joined the World Trade Organization (WTO).

China ranked the fourth in the amount of money paid to acquire foreign technologies, prior to Japan, France, the UK, Canada, Germany, Singapore, South Korea and India, said Nicholas Lardy from the Peterson Institute for International Economics.

According to the latest statistics released by China’s State Administration of Foreign Exchange, the country’s export of intellectual property royalties increased by 311.5 percent from a year ago to $4.79 billion last year, becoming China’s fastest-growing sector in trade in services. In this sense, China has grown into a technology exporter.

The increase indicated China’s transmission from a user to a maker of technologies and from a world factory to an innovation hub. It is a result of the country’s innovation-driven development and its enhanced efforts on the creation, protection and utilization of the intellectual property.

It is Chinese enterprises that have pushed and guided the technological advance of the country. This point can be well illustrated by a WIPO report issued on Mar. 21, 2018.

Two Shenzhen-based telecoms companies-Huawei Technologies and ZTE Corporation-occupied the top two spots with 4,024 and 2,965 published PCT applications, respectively, said the report, adding that they were followed by Intel Corporation of the US who filed 2,637 applications.

China’s leading LCD panel maker BOE Technology Group was in the seventh place with 1,818 PCP applications. Besides, 10 Chinese enterprises made it into the top-50 list, including China Star Optoelectronics Technology that ranked 18th with 972 applications, Tencent that ranked 32nd with 560 applications, and Yulong Computer Telecommunication Technology that ranked 34th with 517 applications.

The above-mentioned cases prove that China’s technology development and its source of power come from the country’s mechanism and system for innovation-driven development. The scientific and technological interaction between China and the rest of the world is positive and mutually-facilitating, and to blame China for stealing US technologies is nothing but merely a joke.

(By Li Yong, deputy director of the China Association of International Trade Expert Committee) 

Chinese companies revitalize South African economy, change local life

The city of Nelson Mandela Bay, located along the southern coastline of South Africa, is an important port city connecting the Indian Ocean and the Atlantic Ocean. Driving along the coastline all the way to the north, more and more factories would appear in horizon, reminding that this is South Africa’s first special economic zone- the Coega Industrial Development Zone.

Among the logos of settled enterprises the zone put at entrance of the office building, China’s leading automakers FAW Group and BAIC Motor Corp. are eye-catching.

An employee with the park said Chinese enterprises are star companies that have made the place much more attractive, as they were often selected by visitors as a must-to-be destination.

“The policy makers of the park plans to build a car production base with the aim of drawing more investment,” said Liu Shijie, assistant to general manager of FAW Group’s South African manufacturing branch.

Liu said the park, while introducing capital, often takes his factory as a role model to boost potential investors’ confidence in their prospects.

When FAW Group’s South African factory was put into production in 2014, its inauguration ceremony was attended by then South African President, indicating the great importance the South African side placed on Chinese investment.

Now the factory produces over 1,000 trucks each year. “The sales has been rising to exceed that of some European and Japanese brands, updating the public’s impression of China-made cars,” Liu said.

In front of the FAW factory lies the construction site of BAIC Motor Corp’s factory which is about to run for operation soon.

The 54-hectare factory, which is expected to have welding, painting and assembly workshops, is designed to produce 50,000 passenger vehicles by 2022 and 100,000 vehicles in the longer run.

The cars produced here will be sold to not only South Africa, but also to south of the African continent, Europe and the Oceania. Of the cars manufactured by the plant, 60 percent is planned to be sold overseas in the first step.

The factory is estimated to provide 15,000 jobs for local residents, create an added value of 18.6 billion yuan once production capacity is maximized, and expand South Africa’s exports by 6.2 billion yuan.

As the largest greenfield investment in South Africa in the latest 40 years, the BAIC Motor factory is expected to be the biggest auto manufacturer in the country and even the continent in terms of single investment.

“Our dream has come true,” Eastern Cape premier Phumulo Masualle gave his thumbs up to the project.

“Like a Chinese proverb ‘the journey of a thousand miles starts with a single step’, we witnessed how the investment project was turned into a tangible result and felt happy for this, just like an architect when he sees his blueprint has been turned into buildings,” the governor said.

The parts would be supplied by both Chinese and local manufacturers, so that a 60 percent of localization rate would be ensured to drive local economy, said Sakhumzi Somyo, vice governor of Eastern Cape.

South Africa’s non-commercial vehicle market has shrunk in recent years, but the Chinese firms have injected great confidence into local market by bringing businesses to upper and down chains and drawing other foreign firms to increase investment, said Yao Haiyang, a manager of the FAW factory.

The suburb of Nelson Mandela Bay is home to a number of international car manufacturers and their workers, and a great deal of new jobs added by Chinese companies will help them live a better life.

“The Chinese companies gave me a chance to change my life,” said Patrick Mbuyi who now works for FAW factory, adding that he feels comfortable and respected in the job.

“I grew up with the factory. The Chinese technicians helped me warmheartedly and we become good friends,” added the man who was once unemployed and poor before being employed by FAW factory in Johannesburg in 2010. He moved to Nelson Mandela Bay in 2014 as the factory moved there.

Now a skilled worker full of energy, he attributes all his changes to China. “Our Chinese colleagues are hard-working, generous and smart, I told myself to work like them. Not only my life is getting better because of the Chinese companies, the destiny of a lot of other people has changed as well. We are very grateful!” said Mbuyi.

(The story is also published on People’s Daily Online)


Africa needs development partner like China: Senegalese President

“Africa needs a development partner like China,” said Senegalese President Macky Sall on Thursday, stressing that Chinese President Xi Jinping’s state visit to Senegal is a historic trip eagerly expected by all the Senegalese.

“China has helped improve Africa’s infrastructure through engineering projects of railways, highways, bridges and energy, especially clean energy,” Sall explained, adding that Africa needs to better cope with the short boards like infrastructure construction.

Sall told the Chinese media that he and his country are very honored to welcome Xi on his visit.

“President Xi and I have had conversations in China and on multiple international occasions. We have established profound friendship and agreed to upgrade bilateral relations to a comprehensive strategic cooperative partnership,” the Senegalese President noted.

He added that both sides are now devoted to a closer cooperation under the framework of the Forum on China-Africa Cooperation (FOCAC).

During Xi’s visit, the governments of the two countries will sign a series of agreements on bilateral cooperation, disclosed Sall.

“We will see China’s role in the implementation of the Plan for an Emerging Senegal. I believe Xi’s state visit to Senegal will be a historic one with great importance to the future of bilateral ties,” Sall remarked.

“Xi is admirable for his wisdom and foresight, and his vision for global cooperation is being evidenced by the great Belt and Road Initiative that aims to connect peoples and facilitate international exchanges,” lauded the president.

He stressed that the future of the world should be built upon cooperation, fair trade and partnership of win-win results.

The Senegalese leader applauded the China-proposed Belt and Road Initiative, saying it will traverse oceans and continents and connect people from China, Africa, as well as the rest of the world.

Lauding the marvelous achievements made by the Chinese people via hard work and ceaseless efforts, Sall noted that China’s successful experience is worth learning from for Africa.

While preserving the splendid culture accumulated in thousands of years of history, China has embarked on a path of modernization through practices and exploration and grown into the world’s second largest economy, he hailed China’s development model.

Africa’s development path needs to suit its own characteristics, just as the Agenda 2063 of the African Union was formulated on the basis of Africa’s development conditions, he stressed.

Sall added the FOCAC is one of the world’s most important cooperative partnerships, and also one of the best operated forums.

The FOCAC Beijing summit to be held this September and the Johannesburg summit held in 2015 are a showcase to the world of China’s important role in Africa’s development, said the president, calling on a persistence to the current cooperation model which has already been proved as correct.

He expects active participation of more Chinese enterprises in the development and infrastructure construction of Africa, and calls it a new prospect of bilateral cooperation.

Sall expressed strong interest in the China International Import Expo to be hosted by Shanghai this November, pledging that Senegalese enterprises are willing to take part in it.

“Senegal-China economic and trade cooperation is in a rapid development, and we hope to maintain the momentum,” he added.

(The story is also published on People’s Daily Online)

Commentary: China’s exportation is able to withstand challenges from trade war

How much will China be impacted by the tariff slapped by the US? The question can only be answered after evaluation of multiple factors on production and trading links.

Only when the domestic production cost in China remains on the same level while the US imports has infinite price elasticity of demand, the trade war would severely threaten Chinese industries. But the fact is that the cost of exported commodities usually has enough flexible room during production and trading, thus leaving the impact on China limited.

Under the background of China’s supply-side structural reform, a tax reduction would be the most direct approach to cope with trade protectionism by lowering costs.

Having similar effect as fiscal subsidies, a tax cut is in line with the big direction of China’s ongoing structural adjustment and economic reform, while not violating related World Trade Organization (WTO) rules such as the anti-subsidy duties.

The exchange rate of the Chinese yuan that would be lower in the medium term will be another factor, in that a downward slide of its exchange rate can effectively ease the negative influence of the increased tariffs.

The intra-trade and internal settlement is another weapon to buffer the costs. After the outbreak of the global financial crisis in 2008, China has seen more and more of its enterprises seeking opportunities overseas, giving rise to a great number of small- and medium-sized transnational corporations.

These enterprises are able to change the rules of origin without making large-scale production transfer through the approaches such as intra-trade and internal settlement, and export their products through third-party countries.

Especially with China’s continuous industrial adjustment and upgrading, the country has established its comprehensive competitiveness in the production of intermediate goods that require certain extent of technological integration.

After investing in the large-scale production in Southeast Asia in recent years, China has preliminarily built a regional production and trading network led by Chinese transnational companies. As a result, such labor division adjustment can be easily completed in the production network of Asia.

Besides, China is undergoing industrial transmission and making its economy “real” again. After an over-development of fictitious sector, which was the largest threat for Chinese economy in the last decade, China is now pulling itself back and getting to the track of real economy once again.

Though those irrational days witnessed unwise capital flow into the internet industry and the mismatch of social capitals, the false prosperity is getting back under control with systematic management of financial risks. The difficult financing of some fictitious economy projects in the first half of 2018 was a living proof.

The recovery of real economy, which is structural, can not find a clue immediately in statistics such as purchasing managers’ index (PMI), but the trend is unstoppable.

The wholly-owned factory built by the US electric vehicle maker Tesla in Shanghai indicates the coming of a new era. Lingang New Area, where the factory locates, is a cluster of industries including international manufacturers of machine tools and robots. The mass production and supply of production materials will result in wide-ranging reform of technology and raise efficiency of domestic manufacturing industry.

Over the past years, the progress in mechanization has been reshaping China’s competitive edge in manufacturing sector. Thanks to China’s enhanced efforts in intensive, as well as technology- and capital-centered production, its advances in technology will substantially ease the impact of the price elasticity of demand on the industry.

The conclusion can also be echoed by the agreement recently reached by Chinese and German automakers. After years of studies and confusion, China has been policy-ready to face a new round of industrial upgrading and transformation.

The redesign of production layout by BMW and Volkswagen in the Yangtze River economic belt is a response to the call of the Chinese market with huge demand, and also an important proof of Chinese cities’ progress in industry growth and business environment.

(By Wang Yuzhu, Research Associate with Shanghai Institute for International Studies) 


Commentary: US should back down from trade war, find a way to right track

By Li Yichu

The arrogant US seems to fear nothing in the trade war it unilaterally ignited against China, but it is unaware that there would be no winner in a trade fight.

The White House fired the first shot of the largest trade war the world has ever seen by levying 25 percent tariffs on $34 billion of Chinese products starting from July 6. Five days later, Washington worsened the tensions by threatening to slap an additional 10-percent tariff on $200 billion worth of Chinese goods.

The US, as the instigator of a trade fight between the largest two economies of the world, is doomed to swallow the bitter fruits at last.

The trade war is unquestionably a damage to the reputation of the US. China and the US had reached consensus on not starting a trade war after four rounds of tough negotiation. But the US soon ate its words and turned hostile.

There’s an old Chinese saying that a person without credibility would fall, a nation without credibility would collapse. Being a major country that throws credibility away, the US has disheartened other countries when making a contact.

In addition, the trade war hurts the US economy. The US consumers would finally pay for the trade war because those added tariffs on Chinese products will be finally transferred to them as a result of the high economic integration between the two countries.

Statistics indicated that the consumer price index of the US would be 1 percentage points higher if the White House keeps amplifying the tariffs.

The US enterprises operating in China would face severe challenges as well. Over $20 billion of the products on the $34 billion tariff list are produced by overseas companies in China, of which the US ones take a considerable ratio. In this sense, the trade war is nothing but a slap on the face of these US companies.

Moreover, many of the US citizens would suffer from unemployment due to the trade war. Mark Zandi, chief economist of Moody’s Analytics, warned that the tariff policies released so far are expected to cost the US 145,000 jobs by the end of 2019, and this figure would further expand to 500,000 if the US administration increases tariffs on an extra $100 billion of Chinese products.

What’s worse, the US would miss chance in the broad Chinese market. With the world’s largest middle-income population, China remains the largest auto market, outbound tourists resource, and the second largest medical, drug and box office markets. The trade war initiated by the US against China is shutting down the door to the Chinese market for many American products.

Besides, the trade war leads to a tarnished international image of the US. Claiming the world is taking advantages of the US, the White House is turning the “America first” to “America only”. It might help the country gain short-term profits, but such practice also exposes the country’s selfishness.

The US not only points a gun at China, but also other countries and regions including the European Union, Canada, Mexico, India and Russia. Such typical unilateralism and trade protectionism undermine global supply chain, damage the multilateral trading system, and diminish the soft power of the US.

Bob Corker, chairman of the Senate’s Committee on Foreign Relations, cautioned that the US tariff policies would lead to worldwide confrontation against the US.

Many analysts believe that the US administration is to a great extent canvassing for the mid-term election to be held in November. The spokesperson of China’s Ministry of Commerce once said that the US is firing shots to the world, including to itself.

The trade war would inevitably harm the interests of US farmers, businesses and consumers, thus putting negative impacts on the Republicans’ polls.

It is reported that the US Chamber of Commerce has launched a campaign against the US tariff policy and will raise millions of US dollars to back candidates who support free trade in the mid-term election.

Of course, China would also suffer from losses in this trade war, but it has no choices but to hit back. China needs to teach the US a lesson out the necessities to safeguard its own interests, protect the multilateral trading system, refute the slanders put upon by the US, and better introduce China to each sector of the American society.

China has to fight back out of the consideration to insist on equal relations among countries and defend the principle of credibility.

China must make the US learn from its mistakes and realize that the trade war is a disaster to itself, the other countries, as well as the whole world at large. China hopes that the US could step back from the brink and find a way back to correct track.

It is believed that more and more countries will join China during this battle against the US unilateralism and trade protectionism.

UAE mobile carriers change names to welcome Xi

Two mobile phone carriers in the United Arab Emirates (UAE) have altered the carrier name on their users’ mobile devices to “WelcomePresChina” to extend a warm welcome to the visiting Chinese President Xi Jinping, according to

The two carriers, Etisalat and Du, are the largest telecom companies in the UAE. They serve a total of nearly 19.7 million users, while the population of the UAE is only 9 million.

The two companies changed their carrier names on July 18, one day before Xi’s visit.

It’s not the first time these two companies have made such changes. They changed their carrier names to “UAE KSA TOGETHER” before the national day of Saudi Arabia last September, to showcase deep ties between the two countries.

A UAE-China Week is being held this year from July 17 to 24 in honor of the Chinese president’s visit to the country, marking the first time in 29 years a Chinese leader has made the trip.

The world’s tallest building, the Burj Khalifa, has been lit up in the colors of the Chinese national flag. In addition, Dubai, which attracted nearly 800,000 Chinese tourists in 2017, promotes multiple China-related projects in trade, investment, culture and tourism.

1.11 billion now use 4G in China

The number of people using China’s 4G network hit 1.11 billion by the end of June, according to statistics released by the country’s Ministry of Industry and Information Technology (MIIT).

Those using 4G make up 73.5 percent of all mobile phone users in China.

In the first half of 2018, China Telecom, China Mobile and China Unicom, China’s three major carriers, made a combined revenue of 476.2 billion yuan ($70.3 billion) from their communication services, up 1.8 percent year on year.

Their combined revenue from mobile data and mobile internet services reached 309.5 billion yuan, a growth of 12.8 percent from the previous year.

China’s most powerful ROV rolls off production line

(photo: the

China’s most powerful remotely operated underwater vehicle (ROV) rolled off the production line of the country’s rolling stock manufacturer CRRC Corporation Limited on Tuesday.

It’s the first piece of deep-sea equipment manufactured by CRRC after its acquisition of the U.K. manufacturer Soil Machine Dynamics Ltd (SMD) in 2015.

The submersible is able to dive 3,000 meters under water and lift up to four tons.

The work-class ROV is expected to largely improve China’s capability in marine salvage and underwater construction.

According to Yan Yun, deputy manager of SMD Shanghai, a subsidiary of the CRRC, the newly released ROV can be operated from the control room through real-time imaging. In addition, the machine is extremely accurate, with the ability to pick up a needle while in the water.

It is China’s first commercial deep-sea robot, and will be mass produced in the future, said Chen Jian, vice president of the CRRC Zhuzhou Institute.