UPDATE:Sino-US co-op a correct choice, trade war not an option, says China’s Commerce Minister

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The cooperation between China and the United States is the only correct choice, and trade war should not be an option, said China’s Commerce Minister Gao Hucheng on Tuesday.

“We realized that cooperation will benefit both sides, while conflict will hurt both of us,“ said Gao during a press conference, adding that no matter how the US policies toward China change, the trade and economic relations between the two countries will finally return to the win-win track.

The new US President Donald Trump has made public comments several times which imply a trade war with China while also promising to increase tariffs on Chinese goods by 45 percent.

“If the US worked out a concrete plan (on the tariffs), China will assess it carefully, and respond based on the assessment,” Gao said.

However, Gao believed the recent telephone calls between two leaders and communications at various levels all prove that a stable and healthy Sino-US economic and trade relations would be of utmost significance and bring huge economic benefits to the people in the two countries.

Chinese Vice Premier Wang Yang has talked with the US Treasury Secretary Steven Mnuchin on phone last Friday night to exchange views on issues including China-US economic cooperation, according to a statement published on China central government’s  website www.gov.cn last Friday.

Mnuchin also held separate calls with Minister of the Office of the Central Leading Group on Financial and Economics Affairs Liu He, People’s Bank of China Governor Zhou Xiaochuan, and Chinese Minister of Finance Xiao Jie over phone, according to a press release from the US Treasury Department last Friday.

Gao Hucheng suggests the two countries should always maintain cooperation and dialogue to resolve frictions and divergence that may arise. “We think trade war is not an option. When the global economy is still struggling to recover, the two largest economic powers in the world should work together to achieve sustainable growth in bilateral trade and investment,” he noted.

Comments on capital outflows biased: minister

When asked about the significant fall in China’s foreign direct investment in January, which raised concerns on foreign capital flight from China, Gao said the view “is biased”. “For any country, their FDI volume would be up and down with the economic development and the upgrade of industrial structure. Some brands have been leaving China in recent years, while many others in higher-end industries are converging in the market,  he said.

Gao said it is not correct to judge the full year FDI trend with just a single month’s data, not to say January and February is usually holiday period in China. He also noted that China’s FDI in 2016 has mounted to nearly USD126 billion, or 813.2 billion yuan, with a 4.1 percent year-on-year increase, amid a considerable decline in global FDI.

According to the data released by the Ministry of Commerce Thursday, China’s  FDI dropped 9.2% year-on-year to 80.1 billion yuan in January.

Gao said China will continue to encourage foreign investment in 2017 through lowering the threshold for foreign investment, promoting the facilitation for foreign funds as well as building up a fair, transparent and an stable environment for foreign enterprises  to allow them equal treatment with local companies.

“We have reasons to believe … China will remain the world’s most competitive and attractive destination for investment,” Gao said.

Tighter supervision won’t hurt overseas investment

There were concerns that China’s overseas direct investment (ODI) could be hurt by the government’s recent tighter controls on capital outflow starting from last November. Gao said the government is only concerned about “non-core business ODI” and “irrationally big ODI” made by local companies, which is mainly in the property, hotel, cinema, entertainment and sports club sectors and may have great potential risks.

The government will guide such irrational investment actively and check their authenticity and compliance, Gao said, adding however that overall ODI will maintain a fast growth.

Commerce Ministry’s data released earlier showed that non-financial outbound investment hit 1129.92 billion yuan in 2016, increasing 44.1 percent on year, while ODI in December 2016 alone merely reached 55.86 billion yuan, registering a drop of nearly 39.4% from the same period last year.

Meanwhile, Gao said China will continue to push forward globalization in 2017, with the One Belt, One Road construction project being part of the move. In 2016, China directly invested USD 14.5 billion in the countries along the One Belt, One Road, accounting for 8.5 percent of its total ODI, Gao said. 

 


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