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Chinese PM: US-China Trade War Would be Worse for America

Chinese PM: US-China Trade War Would be Worse for America

“We do not want to see any trade war breaking out between the two countries,” said Chinese Prime Minister Li Keqiang this week during China’s annual parliament session. 

“That would not make our trade fairer and would harm both sides,” he continued, suggesting that such a war would hurt America more than it would hurt China. 

PM Li says China’s trade and investment relationships with the US created as many as 1 million American jobs last year.

Economist Christopher Balding argues that “China is much more dependent on trade with the US as a percentage of GDP” and says it would be easier for American firms to reorganize supply chains than for China to alter its industrial structure. 

“The world pays attention to China-US relations,” said Li, “so our hope on the Chinese side is that no matter what bumps the China-US relationship hits, we hope it will continue to move forward in a positive direction.” 

US Secretary of State Rex Tillerson landed in Tokyo on Wednesday and will make his first trip to China later this week. US-China relations will be among his topics of discussion, but the most important talking point will be North Korea’s nuclear program. 

As I wrote earlier this week, US-South Korea military operations east of the peninsula have earned criticism from China and threats from North Korea. 

“Tensions may lead to conflict, which would only bring harm to all the parties involved,” said Li. “It’s just common sense that no one wants to see chaos on his doorstep.” 

President Donald Trump has been tough on China throughout his campaign, threatening to levy a high tax on imported goods and to label China a “currency manipulator.” He has criticized China’s apparent lack of concern in dealing with North Korea and its growing nuclear capabilities.

China was furious with Trump in December when he spoke with Taiwanese President Tsai Ing-wen and implied that the US did not necessarily need to stick to the “one China” policy.  

Chinese President Xi Jinping is expected to fly to the US to meet face-to-face with President Trump at his Florida estate in April. Personal chemistry (or lack thereof) between the two leaders will be key in future negotiations. 

Author’s Note: When you haggle, the seller always starts with a price he knows he won’t receive and the buyer starts with a price he knows he won’t pay. 

Much of the verbal sparring between Trump and China is simple posturing. Unlike Obama, who couldn’t negotiate his way out of a paper bag, both China and the Trump Administration understand the basics of negotiation. Each side is establishing a hard line now so that a “middle ground” can be reached in the future. 

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