Tough retaliation, domestic demand best strategies for China in trade row with US: experts

By Li Xuanmin in Qingdao Source:Global Times Published: 2018/7/7 20:38:24

China should continue to strike back against US trade aggression in a tit-for-tat manner, expand domestic demand and cooperate with other nations in response to its heightened trade rows with the US, experts suggested Saturday at the ongoing China Wealth Forum (CWF).

In the short-term, China should commit to the multilateral trading system and take corresponding counter-measures against the US, Renzo Isler, an Italy-based economist, told the Global Times at the forum in Qingdao, East China's Shandong Province. 

"The move sends a clear message to US President Donald Trump that you're not going to bully [China]. If you fight, China will fight back to the end," Isler added. 

The US' scheduled tariffs on $34 billion in Chinese products took effect at 12:01 pm (Beijing Time) Friday. In response, China's additional tariffs on some US imports took effect at 12:01 am (Beijing Time) Friday, the Xinhua News Agency reported. 

In the long-term, the country could join hands with partners in Japan and the EU who are also angered by the US' punitive tariffs, Christoph Loch, director of Cambridge Judge Business School, stressed at the forum. "China is not alone in [trade disputes with the US]. And there are also multiple alternative suppliers who are willing to replace the sort of US exports to China," he said.

Isler agreed, noting that China has already oriented itself toward Africa and maintained [trade relations] with Russia. He also suggested that China increase domestic demand and "explore solutions inside."

For example, the Chinese government could reduce various taxation items like added-value tax and consumption tax to mitigate the effects of raised tariffs on domestic consumers and spur consumption, said Peng Wensheng, global chief economist at CITIC Securities. 

Experts at the forum also reiterated that while the impact of US tariffs on the Chinese economy will be limited, the US may end up suffering most.

Zhang Yansheng, a research fellow with the China Center for International Economic Exchange, said that imposing 25 percent tariffs on Chinese imports worth $50 billion amounts to only 0.12 percent of China's GDP. "The Chinese economy is innovation-driven and therefore has the potential and resilience to cope with global economic uncertainty," he added.

Some US government officials think that imposing tariffs on Chinese imports is a good way to block [the development of] China, said Alan Greenspan, former chairman of the US Federal Reserve at the forum. But actually, when you are imposing tariffs, the US residents are paying for it, which would lead to a massive tax burden. And this [in] turn will sacrifice the US' advantage in development accumulated over the last few decades and push the economy close to a recession.

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