The Yomiuri ShimbunThis is a grave situation that will jeopardize the prospects of the global economy. The United States and China must resume negotiations at an early date and end the quagmire of sanctions and retaliation.
U.S.-China ministerial-level trade talks ended without any developments. While the talks were being held, the United States raised punitive tariffs on $200 billion (about ¥22 trillion) worth of Chinese goods from 10 percent to 25 percent. Washington also began procedures to expand the tariffs to all goods imported from China.
In response, China has announced a policy to introduce retaliatory measures.
The intensifying U.S.-China conflict will stagnate the flow of global trade and investment, and invite market instability. These two countries, which both lead the world, need to immediately put an end to the critical situation in which they are imposing high tariffs on each other’s goods.
They should continue to persistently search for a way to solve the situation through dialogue.
The United States and China are economically in a close relationship of mutual dependence in such fields as trade and finance. The troubles of the other country bounce back on one’s own. They must mutually realize that there is no winner in a trade war.
The trade negotiations are experiencing rough going because Washington and Beijing not only have trade friction, but are also in a battle over supremacy in advanced technologies and security. The United States strongly demands that China review its system for providing subsidies to domestic industries, claiming it hinders free competition with foreign firms.
This policy by China constitutes the bedrock of the country’s national strategy to nurture growing industry under government initiative. Particularly regarding the strengthening of the high-tech industry, Beijing probably cannot accede to U.S. demands because it is connected to the development of military technology.
Multinational approach needed
However, China is already the world’s second-largest economy. It cannot just benefit unilaterally from free trade in overseas markets, it also has a responsibility to create an environment for fair competition within the country and opening its market. It is imperative for China to give assurance to the United States that it will correct its policy to provide subsidies to state-owned enterprises.
The United States is also demanding China create a system for abiding by the terms of their agreement. Beijing should respond to the demand positively.
Washington is trying to force concessions from Beijing by using punitive tariffs as a tool to threaten that nation. It is also problematic that the United States takes such an attitude.
Just because China will not stop conducting unfair practices, that should never mean the United States is also allowed to ignore international rules.
If the United States makes light of the free trade system, which Washington itself has taken the lead in building up, the flow of goods and money will gradually dwindle, and the strength of the U.S. economy will be damaged.
If the United States will correct China’s practices, what it really should do is to cooperate with Japan and European nations to pressure Beijing within a multinational framework.
Japan must pay close attention to how the U.S.-China talks unfold. It is feared that Washington may strongly demand concessions from Tokyo by wielding punitive tariffs also in the Japan-U.S. trade negotiations.
To avoid causing turmoil like that created in the U.S.-China talks, it is important to have a series of constructive talks.