US, China should address trade gap, humanity’s shared challenges like coronavirus and climate change, former trade envoy Long Yongtu says

Countries should relaunch strategic/economic dialogues when Joe Biden takes office to talk trade gap, IP and other topics, ex-trade envoy Long Yongtu says
There is also a litany of issues confronting humanity that requires the combined resources and technology of the world’s two largest economies, he says

US-China relations

Yujing Liu

Published: 9:30pm, 2 Dec 2020

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The world’s two biggest trading nations ought to resume regular dialogue at strategic and operational levels to prevent disputes from spiralling out of control, avoiding the kind of quarrel that led to the ruinous two-year-long US-China trade war, China’s former top trade envoy has said.

The United States and China should relaunch their biannual strategic and economic dialogues (SEDs) when president-elect Joe Biden takes office in January to discuss five issues: their trade gap, protection of intellectual property rights (IPR), end of discriminatory policies against specific companies, the coronavirus pandemic and climate change, said former trade vice-minister Long Yongtu.

“For the next year, I believe that [US-China] relations will be difficult because many of the fundamental issues are still unresolved,” Long said in a recorded speech for the China Conference: United States webinar organised by South China Morning Post.

“I do believe that if this kind of dialogue, including some other mechanisms, could be resumed, it would already be half [way] to repair the US-China relationship.”

Long Yongtu, China’s former trade envoy and the former secretary general of the Boao Forum for Asia (BFA) during a conference in Hong Kong’s Wan Chai district in 2008. Photo: SCMP

The comments by Long, the eminence grise of China’s trade diplomacy and formerly the public face of the nation’s 15-year journey to join the World Trade Organization (WTO), reflects the keen interest among Chinese policymakers to return bilateral relations to a “healthy and stable” track.

The US had been running an annual trade deficit against China since record-keeping began in 1993, a constant sore point that previously led to accusations against China of currency manipulation and suggestions for China to import more for domestic consumption.

With Donald Trump in the Oval Office, the US-China trade gap became a hot-button issue for the American president, who accused China of engaging in “unfair” mercantile policies that “stole US jobs.”

In July 2017, Trump fired the first salvo of his trade war with China by slapping tariffs on Chinese exports to the US, followed in quick succession by tit-for-tat retaliatory duties by China.

Relations between the two countries have deteriorated into the worst point in decades, with new battlefronts opening in technology, currency, a spat over the origins of the coronavirus pandemic and over attempts to eject Chinese companies from Wall Street.

Two years into the trade war, the US-China trade gap barely budged, narrowing slightly to US$345 billion in 2019 out of a record US$558 billion in bilateral commerce, from US$347 billion in 2016 before Trump’s first tariff, according to US data.

America’s trade deficit with China narrowed to US$63.9 billion in September, after widening to a 14-year record of US$67.1 billion a month earlier, still a yawning gap that should be brought to a “healthy, reasonable and acceptable level”, Long said.

“I hope that we can have a serious talk with our US colleagues on how to narrow the gap through a dynamic process, through the market mechanism,” he said, adding that administrative interference is not the right choice to close the gap.

An American flag flies with shipping containers stacked at the Port of Los Angeles in November 2019 in San Pedro, California. Photo AFP

For a decade until Trump took office in 2017, covering two terms of Barack Obama’s administration and the final two years of George W Bush’s second term, Beijing and Washington DC took turns to host annual dialogues between the two country’s top leaders and cabinet-level officials.

Bush met five times with Chinese President Hu Jintao during the dialogues until Barack Obama renamed it the US-China Strategic & Economic Dialogue (S&ED) in 2008 to reflect the broader “strategic” nature of the talks. Hu and Obama met eight times during the dialogues.

The dialogue “has truly become the cornerstone of our bilateral economic relationship,” said Jack Lew, the US Treasury Secretary in Obama’s second term between 2013 and 2017, in June 2016 during a meeting in Beijing in June 2016.

There is plenty to talk about besides trade, Long said. China’s government also wants to step up IPR protection, especially since many Chinese companies from the drone maker DJI to the smartphone maker Xiaomi are now technological champions in their own right, with brand names, patents and copyrights to protect.

Negotiation with the US on this aspect can place some pressure on Beijing to better its IPR protection, Long said.

02:06

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Another major issue for discussion could be US measures that target particular Chinese companies, such as Trump’s sanctions and attempts to ban Huawei Technologies, ZTE, ByteDance’s TikTok app and Tencent Holdings’ WeChat app from the US market. For now, court action by US users has put the ban on TikTok and WeChat in abeyance.

“It’s horrible to see a country use a [the entire nation’s] administrative power to hit, attack one single Chinese enterprise,” Long said. “It created a very bad precedence in the world trade relationship.”

There is a litany of problems confronting humanity that would require the combined technology, financial resources and brain power of the two most powerful nations on the planet to overcome, not least of which are the coronavirus pandemic and climate change.

China, where the coronavirus was first reported in late 2019, has become the first major nation to emerge from lockdown, and looks to be the only economy to grow this year, and possibly in 2021. The US is still the world’s most infected nation, with daily cases showing no signs of slowing.

Climate change, high on Biden’s political agenda and part of his campaign platform, can also be a major area of cooperation through dialogue, Long said. Chinese President Xi Jinping pulled a surprise in September when he pledged at the United Nations for China to be carbon neutral by 2060, becoming the second major economy to put a schedule on the ambition.

A slew of restrictions, punitive measures and executive orders are likely to be thrown up in the waning weeks of Trump’s tenure, as the outgoing president “flips over the chess board and leaves Biden to pick up the pieces”, said Gabriel Wildau at Teneo Risk Advisory in New York.

Still, the relationship between the US and China will settle into a more “predictable and stable” one, in which rough patches can be ironed out, Long said.

“As long as there are dialogues, communications and understanding, we can still find a lot of things in common, and a lot of areas to [cooperate on],” he said.

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