The US Trade Representative’s office announced on July 10 that it will levy an additional 10 percent tariff on $200 billion worth of Chinese exports. The US had previously announced a 25 percent tariff on $50 billion worth of Chinese goods and Trump threatened to impose higher tariffs on another $300 billion.

The trade dispute stirred up by Trump seems illogical but makes its own sense: As the country with the biggest trade deficit in the world, the US will definitely earn but not lose profit through higher tariffs. The ideas of Trump and his advisors did not come out of thin air. They result from a combination of various historical currents of ideology with today’s social trends: American exceptionalism, isolationism, unilateralism, trade protectionism and economic nationalism. The trump administration’s “America first” policy can be seen as the aggregate of these ideas.

For China, the dispute will comesooner or later and it will probably be lasting. To counter the trade friction for a more prosperous and stable China, the following five mentalities are important.

The first is strategic mentality. To tackle the dilemma, vision must not be blocked by the floating clouds. In face of the Trump government and the complex, changing international landscape, China should continue to make full use of its socialist system with Chinese characteristics, which is its special advantage. Continuing to coordinate development, security and stability will endow the country strategic composure.

The second is historical mentality. China is now in the best period of development since the start of the modern era, and the world is at the critical juncture the likes of which have not been seen in the past hundred years. Internationally, conditions are favorable to China’s foreign policy. Today China has increasing means and instruments to cope with challenges posed by the United States. China will stand on the right side of history.

The third is a dialectical mentality. Each coin has its two sides. By converting crisis into opportunity, the Chinese side could transform the pressure posed by the United States into the impetus for deepening reform and expanding opening up. While Trump’s “America first” policy has alienated the United States from many other countries, China has pursued mutually beneficial cooperation, winning more partners. With the help of a global partnership network, China could correspondingly adjust the distribution of its industrial chain and value chain to create a new economic and trade environment.

The fourth mentality is about baseline. While planning for the worst but striving for the best, China will hold fast to its principle and baseline. The Trump administration tries to confuse its rivals with its unpredictability in order to gain the upper hand, but China will not be led by the nose. It will unswervingly stick to its charted route, pace of reform and opening up and not lose sight of what forms the basis for its economic development.

The last is systematic mentality. Responding to the trade dispute is a complex, systematic project that involves managing the bilateral relationship between China and the United States as well as the interests of other major world economies. It includes the friction between economy and trade along with the contest of world views, rules and notions of cooperation.

China has recently promulgated a series of measures that showed its resolve to strengthen top-level design and coordination among departments, sectors and fields to improve the nation’s capacity to deal with affairs both foreign and domestic. By dealing with the trade dispute in a systematic way, China abides by the principle of free trade and multilateralism and remains committed to the goal of fostering a new industrial chain and value chain at home and abroad.

 

Jia Xiudong is a distinguished research fellow from the China Institute of International Studies.

(edited by BAI LE)