The US-China Business Council called on the US government to cut tariffs on China

The report emphasizes that the United States benefits from trade with China

Author: Wu Lejun 2021-01-18 07:25:41 Source: People's Daily

The US-China Business Council and Oxford Economics have jointly released a report stressing that the US benefits from trade and investment with China and that economic and trade frictions between China and the US are damaging to the US economy.

The report calls on the US government to cut tariffs on China for the benefit of the two countries and the global economy.

In 2019, the United States exported about $106 billion in goods and $57 billion in services to China, supporting about 1.2 million jobs in the United States in sectors including manufacturing, tourism, business and financial services, according to the report titled "US-China Economic Relations."

The United States imports about $452 billion worth of goods from China, benefiting American businesses and families.

In the same year, US companies invested US $105 billion in China, reaping huge profits and enhancing their competitiveness.

China's stock of direct investment in the United States stands at $59 billion, and Chinese companies directly employ about 197,000 Americans.

According to the report, from 2018 to 2019, trade frictions between China and the US have hurt the US economy in many ways, such as rising consumer prices, postponing and cancelling investment, shrinking household wealth, declining competitiveness of enterprises, and supply chain disruptions.

Among them, agriculture, manufacturing and energy sectors are the most obvious hit in the United States.

Alex Markle, senior economist at Oxford Economics, said the US tariff increases on China are hurting the US economy through multiple channels, and there is multiple evidence that these costs are falling on US consumers.

"What we've seen over the past few years is that raising tariffs will only increase costs and reduce opportunities for American families," said Craig Allen, president of the U.S.-China Business Council.

The report estimates that trade frictions between China and the US have cost the US 245,000 jobs since 2018.

The report also assumes two scenarios for future U.S.-China economic relations.

If China and the US cut their average tariffs to about 12%, US real GDP would be increased by $160 billion and 145,000 jobs created over the next five years.

"With China expected to contribute about one-third of global economic growth over the next decade, maintaining US market access to China is increasingly important to the global success of US companies," the report said.

If the economic and trade frictions between the two countries continue to escalate, or if the US seeks a significant "decoupling" from China, it will further impact the supply chain and productivity of US companies and cause long-term damage to the growth and competitiveness of the US economy.

Under this scenario, it is estimated that US real GDP could lose $1,600bn over the next five years.

"Decoupling from China would have huge implications for the United States."

Allen said the importance of the U.S.-China economic and trade relationship is clear, and many U.S. investors want to be a part of China's economic growth.

The United States will continue to suffer if it fails to resolve its economic and trade differences with China.

He called on the US government to develop a more effective, principled and pragmatic trade policy towards China.

Editor in charge: Ge Yan