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"Initiating a trade war will weaken the competitiveness of American enterprises"
——Interview with Du Dawei, Senior Researcher of Brookings Institution
Our reporter in the United States Zhang Mengxu
"The tariff policy of the U.S. government cannot solve its own trade imbalance problem. Initiating a trade war will weaken the competitiveness of American enterprises, harm the interests of American consumers, and bring negative effects to the U.S. economy." Du Dawei, senior researcher of the John Thornton China Center and the Global Economic Development Project of the Brookings Institution, told our reporter in an interview recently.
Du Dawei believes that the US government has announced the imposition of tariffs on US $200 billion of goods imported from China, many of which are intermediate products necessary for the US industrial chain. The imposition of tariffs will impose a heavy burden on American enterprises. "Despite the opposition of many enterprises, the U.S. government still insists on promoting the policy of levying tariffs. The increase in costs will weaken the competitiveness of U.S. enterprises, leading to a decline in U.S. exports. If, according to the plan announced by the U.S. government, the tariff rate will be increased to 25% by the beginning of next year, the U.S. economy will pay a high price for this, and consumers will clearly feel the impact." Du Dawei said that taking the automobile industry as an example, many American automobile enterprises use parts made in China, and the imposition of tariffs will lead to an increase in automobile prices, which will ultimately be paid by American consumers.
"It is very difficult to understand the full impact of the trade war, but there is no doubt that many industries in the United States will be impacted." Du Dawei said that the imposition of tariffs has increased the operating costs of the United States economy, and consumers and enterprises have to pay higher prices for the same products, which will inevitably reduce other expenditures. "When people's wallets shrink, they will reduce other consumption such as watching movies."
Du Dawei further analyzed that the trade war would not reduce the US trade deficit. "Whether a country's current account is surplus or deficit depends on the relationship between its savings and investment. If you want to reduce the current account deficit, you must increase savings. The most direct way to achieve this goal is to increase taxes, while the current practice of the U.S. government is just the opposite." He said that due to the tax reduction policy of the U.S. government, the pressure on the U.S. trade deficit is increasing this year.
"Similarly, I don't think whether the current account is surplus or deficit is a big problem for the United States and China." Du Dawei said that China's economy has greatly reduced its dependence on foreign trade, and domestic demand has become the main driving force for China's economic growth. As the two largest economies in the world, the trade friction between the United States and China may affect the world economic growth rate this year.
As a well-known American scholar in the field of China's economy and Sino US economic relations, Du Dawei has a deep relationship with China. He first set foot on China's land in 1986. From 2004 to 2013, as the Director of the Bureau of China and Mongolia of the World Bank and the Special Economic and Financial Envoy of the US Ministry of Finance in China, he stayed in China for nine years and witnessed the process of China's reform and opening up. Du Dawei said that China has made great changes in the past 40 years of reform and opening up. Many export output values are created by private enterprises. China's development and changes have proved that reform and opening up are extremely successful.
Du Dawei believed that the US government provoked a trade war for domestic political reasons, but the frictions and demands in the economic and trade field should be resolved through dialogue and negotiation. "The trade war is not in line with the common interests of the two countries. They, including the allies of the United States, do not support the United States government's unilateral provocation of a trade war. The United States government's actions have left it isolated internationally."
(Washington, D.C., October 25)
Editor in charge: Li Feng
