Time for US, West to accept trade is not a zero-sum game: former Italian official

An aerial drone photo shows cargo ships and containers at a terminal of Yangzhou Port in East China’s Jiangsu Province on May 14, 2025. Photo: IC

The US administration has imposed steep tariffs on China, citing its “massive trade deficit” with China, although tariffs have been significantly reduced by now amid strong opposition from states, businesses and consumers within the US. A closer look at this narrative reveals the US government’s fundamental misunderstanding of economics, as a trade deficit does not inherently indicate economic harm but simply reflects the structural differences in production capacity, specialization, and consumer demand.

In the interconnected world today, international trade not only plays a crucial role in national economic development but also contributes to global prosperity. While the first meeting of the China-US economic and trade consultation mechanism held in London serves as a positive development to global uncertainties caused by the US’ sweeping tariffs, the US needs to be “analytical” instead of “political” on the trade issue.

It is wrong for some US politicians to claim that trade deficit is inherently harmful to the US economy. First, American businesses and consumers are not forced but choose to import more from China because their imports of large amounts of consumer goods, components and raw materials support US manufacturing value chains and enrich American consumers’ choices.

According to media reports, Chinese exports to the US mainly include smartphones, computers, batteries, toys and furniture. These products complement, rather than compete with, American-made goods.

Secondly, US imports from China over the last few years have had a positive deflationary impact on the US economy, precisely when the US economy is suffering from high inflation caused initially by the unraveling of the US’ quantitative easing policies during the COVID-19 pandemic.

Thirdly, and more importantly, there is no economic trade theory that postulates that bilateral trade deficits, that is, between two country pairs, is damaging to economies. A simplistic, non-expert observation of the standard GDP = C + G + I + Exp-Imp would infer that the negative sign before “Imports” indicates that an increase of this item would lead to a decrease of the GDP. However, this is a mistake we teach first year students to avoid making.

Meanwhile, China’s rapidly growing demand for services has fueled the expansion of service trade between China and the US. According to the US Department of Commerce, between 2001 and 2023, two-way trade in services between China and the US expanded from $8.95 billion to $66.86 billion, while the US listing China as its fifth-largest services export market.

Taking both goods and services into account, trade between the world’s two largest economies is generally balanced. After decades of economic and trade cooperation, China and the US have developed deeply intertwined and highly complementary economic and trade relations. This relationship not only benefits both nations but also contributes to prosperity across the Asia-Pacific region and the wider world.

Win-win cooperation

Economic and trade negotiations between China and the US still have a long and challenging road ahead, with many issues requiring in-depth dialogue and joint efforts to resolve. Nevertheless, their recent meetings have set a positive tone for bilateral consultations, demonstrating greater cooperation room between the two countries than differences and conflicts. Moreover, the phone conversation between the two heads of state recently has provided fresh direction and momentum to consultations between the two governments.

As the largest developing country and the largest developed country, China and the US share extensive common interests, and win-win cooperation not only benefit both sides but also has significant implications for peace, stability and prosperity in the Asia-Pacific region and beyond.

According to a recent survey released by the American Chamber of Commerce in China, although tariffs pose rising challenges to US companies in China, most companies are not planning to exit China, none report shifting production back to the US.

Clearly, these US companies are making economically sound decisions, as it would be difficult to relocate the entire ecosystem, skilled labor and advanced transport infrastructure that they benefit from in China back to the US in a short period of time.
I recognize China’s efforts to welcome American CEOs to Beijing, facilitate investment and keep the relationship at not only government-to-government but also government-to-business.

At present, China is pursuing high-quality development. For me, quality development means innovation, technology, while improving the service sector, manufacturing, and agriculture. Thus, it is not just about services, but it’s across all three sectors of the economy, which is expected to offer new opportunities for multinational companies.

It is time for the US and other Western countries to accept that trade is not a zero-sum game. Such a mentality, where one party’s gain is another party’s loss, is outdated and counterproductive. Instead, countries should adopt a win-win approach to international trade relations. By cooperating with China, the US and other Western countries can create synergies that benefit all sides. This collaborative mindset fosters an environment in which innovation, resources and growth are shared, leading to greater overall prosperity.

Decoupling will not halt China’s development, nor is it something anyone truly wants to see. Because we do want to see a prosperous China. We want access to a large market for our export products. So, it is also in our own interest to make sure that China’s economy is stable and prosperous.

In conclusion, it is essential for all countries to resolve differences and disputes through dialogue on an equal footing within the WTO’s framework, jointly uphold multilateralism and free trade, and ensure the stable and smooth functioning of global industrial and supply chains.

The author is former undersecretary of state at the Italian Ministry of Economic Development. bizopinion@globaltimes.com.cn