DESPITE trade frictions over the past few years and constant calls for “decoupling with China” from some U.S. officials, new trends emerging in Sino-U.S. economic and trade development show where momentum really lies for the world’s two biggest economies. In the first eight months of this year, Chinese exports to the United States, rather than falling, expanded 22.7 percent year on year, according to official data. Likewise, a report by the American Chamber of Commerce in China earlier this year shows that two-thirds of the enterprises surveyed said they would increase investment in China. Complementary strength Yang Nan, president of a supplier in East China for major retailers of pet products and loungewear in the United States, said his firm has maintained growth in exports despite the trade frictions. “Each day, we send more than 30 containers to the United States. That’s more than 10,000 containers a year,” he told Xinhua. His company’s exports to the U.S. market have maintained double-digit growth since June last year. Customs data presented a similar trend in the larger picture. Since the United States imposed additional tariffs on Chinese products in July 2018, Sino-U.S. trade dropped in 2019 but was soon back to growth from 2020. Inevitably, the U.S. tariff increase took some toll on China, especially on products such as farm produce, light industrial goods and electrical appliances, but it has not dampened the U.S. market’s “rigid demand” for Chinese goods, which comes from the competitive prices and quality of made-in-China products as well as the economic complementarity between the two countries. Imports from China accounted for 19 percent of all U.S. goods imports in 2020, the highest among all trading partners of the United States, while four of 10 of the fastest-growing imports in the U.S. came from China, according to Forbes. Fu Xiaolan, founding director of the Technology and Management Center for Development at Oxford University, said based on the comparative advantages and market choices, the two economies have established a mutually beneficial relationship that is highly complementary in structure and has a convergence of interests. Such economic and trade complementarity has been enhanced in times of the pandemic. In 2020, China’s exports of mechanical and electrical products to the United States increased 9 percent, and those of laptops and mobile phones expanded 23.4 percent and 4.6 percent, respectively. More robust trade is in the interests of China, the United States and their peoples, said a spokesperson of China’s Ministry of Commerce, and “the U.S. tariff increase is not conducive to China, the United States, and the world economic recovery.” U.S. importers absorbed more than 90 percent of the additional costs caused by the increased U.S. tariffs on Chinese goods, according to a report from Moody’s Investors Service in May. Calculation by Americans for Free Trade, a coalition of more than 150 industry associations that are united in the fight against tariffs, also showed that Americans have paid over US$90 billion in tariffs since the trade war began. In August, more than 30 of the most influential business groups from the United States called on the U.S. Government to restart trade negotiations with China and cut tariffs on imports, saying they are a drag on the U.S. economy. “If we compare China-U.S. relations to a giant ship, then economic and trade cooperation has been its ballast and propeller. When the ship sails against heavy winds and huge waves, we need to add more strength to the ballast and propeller,” said Qin Gang, Chinese ambassador to the United States. Magnet for foreign investment With a large market, complete industrial chain and favorable business environment, China has become a “strong magnetic field” for foreign investment. Rising above the challenges brought by the COVID-19 pandemic and the global economic recession, China recorded a 4-percent growth in inflows, overtaking the United States as the largest foreign direct investment recipient last year, a report by the United Nations Conference on Trade and Development shows. Some U.S. politicians, in the meantime, attempted to “decouple” from China by trying to bring manufacturing back to the United States, calling on U.S. enterprises to withdraw from China, increasing restrictions on technology investment in China, and isolating China with its allies. Such moves resulted in a decline in the U.S. investment in China last year, especially in the fields of information technology and electronic equipment. On the contrary, the European Union saw its actual investment in China rose 10.3 percent year on year in the first half of 2021, while countries along the Belt and Road and the Association of Southeast Asian countries reported an investment increase of 37.6 percent and 36.8 percent in China in the first eight months, respectively. U.S. companies are fully aware of the cost of missing the China market. “If American companies are prevented from operating in China, our competitors will be able to take advantage of China’s economies of scale and rapid adoption of technology to outcompete U.S. companies everywhere else, including in our home market,” said Craig Allen, president of the U.S.-China Business Council. China and the United States not only have direct links but have indirect links through other countries as well. The “decoupling” of the world’s first and second largest economies will have a far-reaching effect, said Yu Miaojie, a professor with the National School of Development at Peking University. A complete industrial system and a strong supply chain is another reason why China is so attractive to multinational companies. The U.S.-China Business Council said in its 2021 member survey that a majority of companies remain profitable, and more than 40 percent have plans to increase resource commitments in China over the next year. The vast majority of respondents invest in China to serve the Chinese market, where they see strong growth prospects, the survey shows. In recent years, China has introduced a raft of measures to accelerate opening up and foster a market-oriented, law-based and internationalized business environment. The country has shortened the negative list for foreign investment for four consecutive years and released a negative list for cross-border trade in services at the Hainan free trade port, among others. Leading global asset management giant BlackRock established a subsidiary in Shanghai in June this year, which became the first wholly foreign-owned public fund management company in China. Further opening of China’s financial sector has provided the company with greater opportunities and space for development, the company has said. Cooperation prevails The “decoupling” mindset has led to a host of calculated shots at Chinese high-tech companies in an attempt to suppress China’s scientific and technological innovations. These heavy-handed measures, such as restricting investment from Chinese tech firms, blocking export to Chinese entities, or bluntly torpedoing investment deals with executive orders, strapped some Chinese companies in temporary supply crunch and revenue slump. But they cannot derail China’s scientific and technological pursuits. China’s expenditures in research and development (R&D) are growing steadily. R&D spending in 2020 topped 2.44 trillion yuan (US$378 billion), after hiking 12.5 percent year on year to reach 2.21 trillion yuan in 2019. Spending on basic research stood at 150.4 billion yuan last year, nearly doubling that of 2015. An August ranking from Harvard University’s Growth Lab showed rising technological level of China’s exports since the start of the trade war in 2018. China ranked 16th globally on the Economic Complexity Index in 2019, climbing one slot from the previous year despite trade restrictions. To China, innovation has always been about opening arms rather than closing doors, with cooperation as the overriding theme of scientific and technological undertakings, according to Chinese Minister of Science and Technology Wang Zhigang. So far, China has established innovation dialogue mechanisms with multiple countries, conducted joint research with over 50 countries and regions, and participated in major international science projects such as the International Thermonuclear Experimental Reactor. Under the support of the Belt and Road science, technology and innovation cooperation plan, over 8,300 foreign young scientists have come to work in China, and 33 joint laboratories have been established. Attempts to cut off the exchanges of ideas, people and technology and disrupt the supply chains will, in turn, undermine U.S. innovations, American industry insiders said, cautioning that continued “de-sinicization” acts would ultimately lead to “de-Americanization.” (Xinhua) | 