How can the United States and China manage to resolve a serious conflict between them and stabilize the global economy? They should hold a series of constructive dialogues and continue to seek a path to avoid turmoil.
The United States and China recently held ministerial-level talks to work toward resolving trade frictions. In addition to China's measures to expand imports from the United States, representatives discussed structural issues in its violations of intellectual property rights.
U.S. President Donald Trump said after the talks, "We have made tremendous progress" at the latest meeting. He also expressed his intention to hold a summit meeting soon with Chinese President Xi Jinping to work toward reaching a final agreement.
The talks between Washington and Beijing have made a certain amount of progress. This is partly because the trade friction has begun having an adverse impact on their economies.
The Chinese economy grew in 2018 at the slowest rate in 28 years, while the business performance of some U.S. companies operating in China has been deteriorating.
The U.S.-China confrontation poses major risks to the global economy. To prepare for a summit meeting, the two governments need to further advance in-depth discussions to heighten the momentum toward reaching a compromise.
However, it is premature to assume that the U.S.-China relationship will smoothly move toward improvement. This is because the confrontation between them has extended not only to trade, but also to issues that could affect the existence of each country.
Beijing has led measures to strengthen the high-tech industry such as providing a large amount of subsidies to state-owned enterprises.
In response, Washington has intensified its criticism of China, saying it is distorting the environment for fair competition, and demanded Beijing redress such practices.
Find ground for compromise
Strengthening the high-tech industry means supporting the development of Beijing's military technology. Washington seems to be wary that its security may be threatened if China overrides U.S. predominance in the field of advanced technology.
Boosting the high-tech industry constitutes the basis of China's national strategy. Beijing therefore will not easily respond to U.S. demands to constrain it.
However, as the world's second-largest economy, it is not appropriate for the Chinese government to provide such excessive patronage to state-owned companies. Beijing should be fully aware of its responsibility and correct the unfair practices on its own initiative.
There are also problems on the U.S. side. Trump has pledged a policy of unilaterally raising tariffs on Chinese goods if a deal cannot be reached by March 1. Washington has been wielding punitive sanctions to force Beijing to come around to make concessions. Is such a method not against international rules?
Washington's method of setting a deadline for negotiations has also created a situation where market players have to be constantly aware of the possibility that the United States may impose sanctions on China. Depending on the progress at the talks, it could also give rise to various speculations among traders and cause disturbances in the markets, including volatile stock prices.
The United States and China are in a mutually dependent relationship in a number of fields, including trade and finance. The troubles of the other country always bounce back on one's own.
They should be aware of the heavy price they may have to shoulder as a result of the ongoing confrontation and find grounds for compromise.
(From The Yomiuri Shimbun, Feb. 3, 2019)
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