Trade surplus result of structural issues in US economy: China
The trade imbalance in goods between China and the United States is both an inevitable outcome of structural issues within the US economy and a consequence of comparative advantages and international division of labour between the two countries—not a result of China’s deliberate pursuit of a trade surplus, a Chinese white paper outlining its position on US tariffs stated on Wednesday.
As US imposed a cumulative 145 per cent tariffs on Chinese goods due to high trade deficit and unfair practices, China argued that the benefits derived from economic and trade relations between the two countries are “generally balanced”, and that a comprehensive and nuanced assessment is required to determine whether China–US bilateral trade is indeed balanced, as it cannot be judged solely on the basis of “trade in goods”.
“Services and local sales of domestic enterprises’ branches in the other country (i.e. local sales generated through two-way investment) should also be taken into account. When the three components—trade in goods, trade in services, and local sales of domestic enterprises’ branches in the other country—are considered together, it becomes clear that the economic and trade benefits accrued by China and the US are roughly balanced,” the white paper stated.
Several experts in India have also pointed out that the 26 per cent reciprocal tariffs announced by the US on India were based solely on goods trade, while ignoring services trade—an area where the US and other Western countries hold considerable advantages over developing nations.
Citing data from the US Department of Commerce, China said that in 2023, the US recorded a surplus of $26.57 billion in trade in services—a clear advantage for the US. Furthermore, in 2022, the sales revenue of US-owned enterprises in China reached $490.52 billion, significantly exceeding the $78.64 billion in sales revenue generated by Chinese-owned enterprises in the US. This $411.88 billion gap, China said, underscores the “more pronounced advantage of American enterprises” in multinational operations.
‘Unilateralism and Economic Hegemony’
China also accused the US of resorting to “unilateralism and economic hegemony”, thereby undermining the multilateral trading system centred around the World Trade Organization (WTO). The imposition of Section 301 tariffs, China said, is a prime example of such unilateral practices.
“The US Section 301 tariff measures are a classic case of unilateralism and protectionism. They seriously damage the global trade order and the security and stability of global industrial and supply chains,” the white paper stated.
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Notably, Section 301 is a legal tool that allows the US administration to unilaterally investigate and take action against what it perceives as unfair trade practices by other countries. Under this mechanism, the US had earlier revoked India’s Generalized System of Preferences (GSP) benefits.
“In April 2018, China brought a case concerning the US tariff measures to the WTO’s dispute settlement mechanism. On 15 September 2020, a WTO panel ruled that the US tariffs imposed on certain Chinese products violated the Most-Favoured-Nation obligation under Article I of the General Agreement on Tariffs and Trade (GATT) 1994. This ruling fully upheld China’s claims. The US filed an appeal on 26 October 2020. However, due to US obstruction, the WTO Appellate Body remains paralysed, leaving the case in limbo,” the paper added.
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