Politicization — the cause of economic and trade disputes between China and America

Long time trade and economic relations between China and America contributed to the preservation of balance in the relations between the two countries. However, after the election trump President of the United States, a host of concerns about the future economic and trade relations between China and America. These fears are caused by repeated declarations of the new President that China is a “currency manipulator”, as well as its threats to take action to bring to a new equilibrium in Sino-American relations.

However, experts in the field of Chinese-American relations it is obvious that the reason for this imbalance is not in the currency policy of China, and in the structure of the world economy and the competitive advantages of America and China (meaning the country’s ability to produce goods and services with lower costs than anyone else — approx. ed.). For a long time the foreign trade of the USA has a passive balance of trade (value of imported goods above the value of the exported goods — approx. ed.) that is predetermined by structure of the American economy. The fact is that as globalization in this structure, carried out a major transformation. Assessing the cost of the production process, factors of production more and more American businesses moved abroad, and produced them at a lower price of the goods returned to America. This scheme is one of the main reasons for the negative balance of foreign trade of the United States. Chinese enterprises with a large share of American investments contribute to the trade deficit of the USA in the American-Chinese trade, while cheap goods from China help America to ease the pressure of inflation. Outwardly, it seems that America is losing because of the positive trade balance of China, although in reality American businesses and consumers is profitable.

The problem is that in American political circles, there are always forces that are trying to politicize Sino-American trade relations and to transform the originally purely economic issue into a political conflict between two countries. Is it really so? If you follow the fluctuations in the exchange rate of the yuan over the last ten years, it will be seen that the average rate of the dollar against the yuan with the initial 8,2 changed to an average of 6.5. Thus, revaluation of the yuan to the dollar was not immaterial. To what consequences it may lead? The trade deficit of U.S. trade with China not only did not decrease, but will grow rapidly. Calculated in U.S. dollars foreign exchange reserves of China is also increasing constantly. The reason is that even if there will be a revaluation of the yuan against the dollar, it will not affect us imports from China. The higher the revaluation of the yuan, the higher the trade deficit of U.S. trade with China. This not only reduces the trade deficit, but also increases the cost of American consumers.

In America there are many think tanks and research institutes, very well understand the essence of the Sino-American economic relations, which consists in mutual benefits. However, knowledge of these people can’t change the superficial views of those who do not understand the true state of things and has its own political designs. Sino-us relations have become a victim of the American political struggle. As for American politicians, they sacrifice the interests of China often do not require support of any political capital, and attempts to adhere to the principle of real interest in economic relations of China and America are subjected to political attacks.

Since China joined the WTO, the international space for its foreign trade has grown considerably, and due to its comparative advantages, China has felt completely comfortable in the huge world market. Over the last ten years of Sino-us trade is booming. Its volumes jumped from below $ 100 billion dollars to more than $ 500 billion. Trading volumes increased significantly, while in the management system of trade and economic relations between China and America, there have been no significant changes. This is to some extent led to the aggravation of differences between countries in the economic sphere, and marked the beginning of political struggle in America. So the main reason trade and economic disputes between China and America lies in the politicization, and away from it is a key task of development of economic relations.

Today, relying only on the interaction of the top leadership of the two countries, it is impossible to solve the problem of politicization, because the dialogue and the negotiations of the government may be limited domestic political pressure. Therefore, the governments of China and the US should not be active in the management of the business and to force businessmen to avoid dialogue. For example, entrepreneurs such as the owner of Alibaba Group Jack MA or bill gates are well aware of the importance of Sino-us relations and can reasonably approach the resolution of trade-economic conflict. This may be a new way of solving the problem of politicization. At the same time, China and America need to promote reform of the international trading and economic system, accumulate mutual trust, co-create new formats for communication based on the principle of mutual benefit.