[Correspondent Diary] China's Advice(?) to Biden... 'Withdrawal of Punitive Tariffs'

China and the US: Politically Cold War, Economically Passionate Relationship
Trump's Tariff Policy Ineffective, Free Trade Effective in Reducing Deficits

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese state media cited last month's export and import statistics to raise the necessity of improving relations with the United States. Despite the US-China conflict situation, trade between the two countries has increased significantly, claiming that the two countries have an inseparable relationship. It also evaluated the tariff policy of the former Donald Trump administration as a failure in fact and pointed out that the Biden administration should abolish the punitive tariff policy.

The General Administration of Customs of China announced that China's total export amount last month was $263.92 billion (KRW 296 trillion). This is a 32.3% increase compared to the same month last year. Imports amounted to $221.06 billion (KRW 248 trillion), a 43.1% increase from the same month last year. The trade surplus China earned in one month reached $42.86 billion.

Photo by Global Times capture

China is fully enjoying the COVID-19 special demand. Although it was the first country where COVID-19 broke out, the virus has been controlled, and industrial production has recovered to pre-pandemic levels. Due to production disruptions in factories in other countries hit by the virus, such as India, orders have flooded into China, increasing exports every month. The recovery of the US economy also played a part.

Chinese state-run Global Times cited April trade statistics, emphasizing that the Chinese and US economies have an inseparable relationship. It reported that China's trade volume with the US reached 1.44 trillion yuan ($222.8 billion) from the beginning of this year to April, making the US the third-largest trading partner after the European Union (EU) and ASEAN. It stated that exports and imports between the two countries increased by 49.3% and 53.3%, respectively, compared to the previous year. It added that the trade surplus with the US increased by 47% year-on-year to 653.89 billion yuan.

The media also mentioned the Phase One trade agreement with the US, suggesting that there is room to fulfill the agreement made with the US.

Tian Yun, Vice Chairman of the Beijing Economic Operation Association, said, "The increase in trade between China and the US shows that both sides have demand," adding, "China is implementing the Phase One trade agreement but will focus on increasing demand rather than blindly expanding imports." He said, "This year, China-US relations are politically a Cold War but economically a passionate relationship," and suggested, "Trade liberalization, not regulation, is required for trade balance."

Gao Lingyun, a researcher at the Chinese Academy of Social Sciences, said, "The former Donald Trump administration waged a trade war with China to reduce the trade deficit, but it ultimately caused the opposite result," pointing out that the Biden administration is maintaining the tariff policy of the Trump administration. He further analyzed that while China increased imports from the US by implementing Phase One of the trade negotiations, the rise in prices due to the depreciation of the dollar was also one of the causes of the import increase.

This analysis by Chinese media is interpreted to mean that China holds the upper hand in US-China trade relations. Since punitive policies such as tariffs are ineffective, it argues for reducing the US trade deficit through trade liberalization.