NEWSDec 21, 2018

China Takes The Lead in Releasing Signals at a Delicate Period of Sino-US Trade and Economic Relation

Since the United States provoked the trade war, trade frictions and disputes between China and the United States have been escalating and intensifying, and the risks of trade wars have become increasingly widespread. This situation, until December 1 this year, finally ushered in a very positive and significant progress.
During the G20 Leaders' Buenos Aires Summit, the leaders of China and the United States reached an important consensus on Sino-US economic and trade issues, and the US-China tariff war "ceasefire" for 90 days. On the following December 14, the Ministry of Finance's Customs Department website published a message saying, "In the three months from January 1 next year, the 25% tariff on the cars originating in the United States and the different tariffs imposed on the auto components will be suspended, involving a total of 211 tax items. After the suspension of punitive tariffs, cars imported from the United States will be subject to the same 15% tariffs as cars produced in other countries, and tariffs on auto parts will be 6%. In the delicate period of the Sino-US trade war "ceasefire", this news at least conveyed a new signal to the outside world: the Sino-US trade war is now further easing!

In the field of foreign trade and economics, automobile tariffs have always been one of the concerns of the US. The Trump administration believes that unlike other industries, the automotive industry can drive the development of upstream and downstream industries such as steel, tires, glass, and textiles; at the same time, automobiles are also one of the pillar industries of China's national economy. Earlier, in order to counter the trade frictions provoked by the United States, China increased taxes on American cars, and the tariffs were as high as 40%. GM had to close five factories in North America, four of which were in the US; Tesla's sales in China fell 37% in the third quarter, and it fell 70% in October. Only 211 vehicles were sold in October. Another US-based car, Ford, is also preparing an $11 billion restructuring plan. 25,000 employees will lose their jobs, surpassing GM's 15,000 job cuts. Therefore, the news that China’s suspension of tariffs on US cars is undoubtedly a great advantage for American automakers. Reducing automobile tariffs is also conducive to creating a good atmosphere for Sino-US economic and trade negotiations, helping the two countries to further ease trade frictions, and then taking concrete actions to promote the final resolution of the issue. On the occasion of the 40th anniversary of the establishment of diplomatic relations between China and the United States, it adds positive factors to bilateral relations.

In addition, drastically reducing the tariff barriers of automobiles will also stimulate the sense of crisis and crisis awareness of China's auto industry and related industries, prompting them to improve product quality and competitiveness, and ultimately benefit the development of China's industry. For Chinese consumers, the move will provide Chinese consumers with more choices and access to affordable products and services.

At present, at the 40th anniversary of China's reform and opening up, opening up has become a distinctive symbol of contemporary China, and China's pace of promoting a higher level of openness will not stagnate. Reducing automobile tariffs is a positive signal and substantive measures released by the Chinese side after the China-US summit meeting of the G20 summit. It can be seen as a manifestation of China's pledge to all countries in the world to unswervingly promote reform and opening-up and implement its commitments into concrete actions. The term of the consultation is defined as 90 days, so the future Sino-US work team will face very intense and high-intensity consultation tasks. In the next 90 days, China and the United States will focus on building a certain trust relationship and creating a compromise pattern that can be mutually acceptable. Although the economic strength of the United States is very strong, China's core interests are inviolable. While the White House is pursuing the maximization of national interests, Trump also needs to take more measures against China and other economies.
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