EDITORIAL: China-US relations underwent a sea change during the Trump administration with the imbalance in trade in favour of China as the major bone of contention to start with but quickly followed by political accusations.
Initially, China and US allies in Europe as well as India sought to point out to President Trump and his team that the US retaliatory measures, particularly slapping tariffs on imports would: (i) penalize US consumers as they would be paying more than before, (ii) trade is mutually beneficial to the two parties as it improves economic efficiency through allowing greater output from limited scarce resources, and (iii) benefits of trade are linked to the comparative advantage over producing any commodity by one country over another in terms of one or more factors of production that include labour, capital, and technology.
China in turn accused the US of fuelling anti-China conspiracy theories, ranging from claiming China spread the coronavirus deliberately with a view to creating chaos in the South China Sea with US National Security Advisor Robert O'Brien stating during a visit to the Philippines and Vietnam that, "we've got your back" while referring to their territorial disputes with China to Mike Pompeo accusing China of "incredibly aggressive action" in Ladakh and imposing sanctions on prominent Chinese and Hong Kong officials in the aftermath of the passage of Hong Kong's new security laws.
President-elect Joe Biden in an interview to the New York Times stated that he will make no immediate moves to lift tariffs Trump imposed on Chinese products worth 360 billion dollars before a full review of the existing phase one trade deal and consult with US traditional allies in Asia and Europe and bring them on the same page in the opening weeks of his presidency while accusing China of "abusive practices", including "stealing intellectual property, dumping products, illegal subsidies to corporations" and "forced technology transfers."
Ironically, WASP (White Anglo-Saxon Protestant) countries defending their trade surplus with the US during Trump's tenure, particularly key members of the European Union, claimed that China did not extend reciprocity in terms of opening its markets to their products/companies with non-trade barriers routinely employed. And it is in this context that the recent EU-China trade figures come as a surprise as China has emerged as the EU's top trade partner with total trade estimated at 425.5 billion Euros while the EU's trade with the US was 412.4 billion Euros.
It has been widely argued that while China has increasingly adopted a policy of reciprocity with the US in terms of tariffs yet it refrained from adopting a similar reciprocal approach with other countries that were publicly endorsing the Trump narrative. Australia as a case in point banned Huawei from its 5G network, called for an inquiry into the origins of the Covid-19 and criticized China's actions in Hong Kong, Xinjiang, Taiwan and the South China Sea. China first levied tariff on Australian beef imports, and last month imposed 200 percent tariffs on Australian wines and is expected to block further imports, including sugar, lobster, coal and copper ore. China accounts for 35 percent of Australia's total trade which if effected could cost Australia 6 percent of its GDP while Australia accounts for less than 4 percent of China's commerce.
In marked contrast, India engaged in a bitter border dispute with China nonetheless exported 8.4 billion dollar worth of goods to China (April 2019 to September 2019) and raised exports to 10.6 billion dollars in the comparable period of 2020. Indian exports to the US were less than half at 4.4 billion dollars.
Clearly, China has emerged as the major player in commerce and Pakistan perhaps is one of the few countries in the world that have consistently retained extremely cordial relations with China. This begs the question as to what our commerce ministry doing to ensure a marked increase in exports to China?
Copyright Business Recorder, 2020