Question:

China and the U.S. agreed to substantially cut current tariffs and establish a China-U.S. economic and trade consultation mechanism. How should we view these signs of returning to rational dialogue?

Zheng Yongnian:

The joint statement is overall very positive news—not only for China and the U.S. but for the entire world.

This is why we observed that, even before the statement was issued, the Director-General of the WTO welcomed it. From China’s perspective, negotiating with the U.S. involves not only China-U.S. issues but also bearing international and global responsibilities. Although further negotiations are necessary, returning to rational consultation is always a very good starting point.

The world is concerned not only about what China and the U.S. specifically discussed but also about how, through rational negotiations, China and the U.S. can create new strategies for global economic governance.

Global economic governance cannot be achieved by a single country; it requires an open attitude and large-country responsibility, without excluding other countries, especially developing countries, to provide new solutions for future global development. In this context, this phased achievement is very good.

The high-level China-U.S. economic and trade talks were held in Geneva, Switzerland, from May 10th to 11th. The Chinese delegation, led by Chinese Vice Premier He Lifeng, attended a press conference (Image source: Xinhua News Agency) the evening of May 11, local time.

Question:

Compared to the previous arbitrary tariffs by the U.S. and China’s resolute counteraction, the joint statement shows a significant degree of mitigation. How has the power struggle between the two sides impacted this?

Zheng Yongnian:

We have previously said that the China-U.S. trade war’s start made both sides measure economic resilience.

To be honest, China’s economic resilience is stronger than that of the U.S. China will be affected, but the impact on the U.S. is broader.

Previously, as Chinese exports to the U.S. dropped, many Americans, especially those in the middle and lower class, quickly felt the impact of high inflation. The MAGA movement claims to protect labor interests, but arbitrary tariffs hurt labor interests. The economic downturn quickly occurs, and recovery takes a long time, and with the mid-term elections approaching, these pressures are mounting on the White House. We saw that, even before the negotiations began, the White House had been spreading various rumors through different channels, many of which were false.

I think an excellent point this time is that China and the U.S. negotiated a path that could construct a new global economic order in the future. In the 1980s, the U.S. and Japan made the “Plaza Accord,” where Japan surrendered, was beaten to the ground instantly; even if the U.S. won, such agreements that only consider unilateral interests are unsustainable, and the issues faced by the U.S. remained, without reaching a more reasonable solution. China will absolutely never surrender, and while the next phase of negotiations will be very tough, everyone recognizes China’s strength.

Global economic imbalance is reflected in the internal economic imbalances of major countries.

I’ve always been thinking about the realistic backdrop of the White House’s arbitrary tariffs that are still in place. What will the future global economy look like? Most likely, major countries will need to rebalance their internal economies, for example, with 60%-70% of economic growth coming from domestic efforts, and 30%-40% from trade and other factors. We must consider these issues now from the perspective of national prospects and global economic prospects. Constructing a foundation for future order through these negotiations is critical.

Question:

Previously, the counter-tariff measures were justified, reasonable, and measured; now, reaching a statement on the basis of equal dialogue and negotiation. What does this mean?

Zheng Yongnian:

It means our first step counteraction was absolutely correct.

To borrow the Americans’ phrase: “If you’re not at the table, you’re on the menu. Surrender means you will definitely be on the menu.”

Now, we’re not just at the table; quite a few are standing with us. If everyone surrenders to unilateral bullying, the world will have no reason whatsoever. Someone has to stand up and say that hegemony is unreasonable; that’s why China’s approach has won so much support from other countries. This phase has been fought beautifully.

Of course, China is not just doing this for itself. Our negotiations are also for global justice.

This must be recognized.

The China-U.S. agreement will affect the two countries and also affect future negotiations of China and the United States with other countries, and its significance is very profound.

We’ve said before that U.S. tariffs are a tool, not a goal, because such high tariffs are essentially an embargo that makes business impossible. Returning to rationality is a major opportunity for China. History has shown that neither the trade system of divided camps nor the neoliberal globalization works. So what about the future? How do we reformulate the WTO rules? How should China participate in rule-making?

Question:

How might future negotiations develop?

Zheng Yongnian:

Last year, China’s export to the U.S. was over $520 billion, with a 4.9% growth. Despite the White House’s various barriers and decoupling efforts over the past 8 years, the trade volume is still massive, indicating the extent of economic ties between the two countries and also showing that their reindustrialization, nearshoring/friend-shoring relocations didn’t succeed as well as expected.

U.S. corporate sectors and business communities still have significant interests in China. When tariffs didn’t affect them, they remained onlookers; when they were truly affected, they had to speak up.

So you see people like Google, Apple, and Jensen Huang lobbying themselves. Many forces are pushing for a rational return.

There will be many factors favorable to China, but the achievements won’t just fall from the sky naturally. Besides trade, there are geopolitical factors; although the statement is about trade, the geopolitical implications behind it are profound.

Suppression and containment will continue for a long term. In U.S. politics, the hardliners have their “War Party” emphasizing “Now or Never,” thinking now is the last chance to defeat China; if not seized, there will be no future opportunity. Yet, there is also the “Realist Party,” which acknowledges China’s rise, faces competition with China, but aims to keep competing through means like technological bottlenecking.

China and the U.S. still need further negotiations. China is not the party that initiated the trade war and has always advocated for equal negotiations; therefore, whether it’s fentanyl control or rare earth exports, discussion must be rooted in equal consultation.

The U.S. can’t see China as an “enemy” on one hand and expect collaboration on many issues on the other; this simply won’t work.

Editor: Zhongxiaowen