(MENAFN- Asia Times) In his September phone conversation with US President Joe Biden, Chinese President Xi Jinping offered cooperation between their countries on climate change, the Covid-19 pandemic and economic recovery. Biden is expected to accept Xi’s offer, as it could be the answer to the President’s prayers.
History will say that cooperation brings prosperity while confrontation harms both the United States and China, but America more so.
Benefits of cooperation
A relatively fluid trade relationship between China and the United States had brought significant benefits to both countries. As America’s factory and market, China has brought economies of scale to American companies, increasing their competitiveness in the international market. China buying large amounts of American products, from foodstuffs to advanced semiconductor chips, has promoted and supported the financial viability of American companies. This has increased economic and employment growth in the United States and China.
China has benefited from US trade and investment, especially in terms of technological advancement and management know-how. The transfer of advanced technologies and management methods from US companies to their Chinese joint venture partners has improved production efficiency.
It can therefore be argued that the United States has played an important role in China’s rapid economic rise, helping it to become the world’s second-largest economy in terms of nominal exchange rate and the largest in terms of power parity. purchase in only about 40 years.
But that close relationship between the United States and China came to an end during the Trump presidency. Fearing that China’s rise to power poses a threat to national security, Donald Trump has declared a trade war, imposing tariffs on more than US $ 350 billion of Chinese goods. The excuses for the trade war were to reduce the US current account deficit with the Asian giant and bring US industry back home.
Impact of the clash
However, Trump’s policies backfired, harming the United States more than China. Tariffs have undermined economic growth because they have raised production costs and consumer prices in the United States. Even more ironically, tariffs actually increased the United States’ trade deficit and reduced manufacturing activity.
According to the International Monetary Fund, the Chinese economy grew by 6.8%, 2.3%, 8.5% in 2019, 2020 and 2021 respectively. Growth figures for the United States for the same period were 2.1%, -3.5% and 6.4% respectively. The pre-Trump annual growth figures were much higher, estimated at over 8%.
Trump banning Chinese-made tech products from the US market and US companies from selling semiconductor chips to China has slowed the Asian country’s technological advance. Preventing US companies from selling advanced chips and chip-making equipment to China, for example, has cost Huawei $ 30 billion in revenue and harmed its smartphone business in 2020.
But the company survived and remained profitable, seeing profits rise 6.5% in the same year, according to the company’s rotating chairman. Indeed, the company has broadened its field of activity, for example by adding smart cars to its business lines.
In addition, China has become the main destination for foreign direct investment (FDI) in 2020, estimated at more than $ 142 billion. The China Global Television Network (CGTN) reported on October 1 that China received an astonishing $ 442 billion in FDI in the first six months of 2021. Much of the FDI came from the United States. .
In short, China has withstood trade and technology wars well. Or at the very least, American companies are not in tune with their government on the âChinese threatâ.
Yet many Western pundits have pounced on each other to say that China is collapsing due to issues such as the Evergrande saga and power shortages. Whether these “experts” are right or wrong, time will tell. But history is not on their side.
The case of American-Chinese cooperation
It is clear that the United States being “tough” or creating conflict against China is shooting itself in the foot. Biden should therefore seriously consider his Chinese counterpart’s offer of cooperation on climate change, the pandemic outbreak and economic recovery.
China could certainly help the United States (and the world) curb the spread of the pandemic. His lockdown measures may seem “draconian” in the United States, but they have worked, giving the term “short-term pain for long-term gain” a whole new meaning.
China’s insistence that the origins of the virus be determined by science and that countries or regions that had the coronavirus before it appeared in Wuhan be investigated is reasonable. Finding the origins would help countries prevent another pandemic.
In other words, China has vast experience and expertise in combating the Covid-19 pandemic and other diseases. Accessing Chinese experiences and information would go a long way in stopping this pandemic and future ones.
The same goes for climate change. China is arguably the world’s largest developer and producer of green energy equipment. With help from China, Biden could more easily switch from fossil fuels to renewables. This would help the US president meet his emission reduction targets.
Resetting the US-China trade and investment relationship will be crucial, if not essential, for the US economic recovery. China’s comparative advantage in manufacturing has made American companies efficient and competitive in the international market. The huge Chinese market had absorbed huge amounts of American goods and services.
Ken Moak has taught economic theory, public policy and globalization at the university level for 33 years. He is co-author of a book titled China’s Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.
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