Chinese legislators downplay 'trade war' with US

Gao Hucheng, the former trade minister and a member of the country's top political advisory body, the Chinese People's Political Consultative Conference (CPPCC). [Photo / Xinhua]

Chinese legislators and political advisors are downplaying the possibility of a "trade war" between China and the United States during the country's ongoing annual legislative meeting.

Gao Hucheng, the former trade minister and a member of the country's top political advisory body, the Chinese People's Political Consultative Conference (CPPCC), was asked by reporters on March 4 about the possible impact of the Trump administration on Chinese foreign trade. He said that "a trade war is not a wise option for China and the United States."

During his campaign trail, Donald Trump vowed to slap a 45 percent tariff on China and label China as a "currency manipulator" on his first day in office; but that has yet to materialize after he's been in the White House for more than 40 days. While some believe that Trump has eased his stance on China, many are still watching the two sides closely.

Gao noted that trade between China and the U.S. registered a gigantic US$520 billion last year, indicating that the two sides would not afford to launch a trade war. The investment is also rapidly increasing, with U.S. investment in China reaching US$87 billion and Chinese investment in the U.S. surging over US$50 billion.

"China does not want to be involved in a trade war. And I also hope that the American government, the corporate sector and any person of fair insight will take a careful look at the nearly four decades of diplomatic relationships between the two countries," Gao said.

Zong Qinghou, CEO of Hangzhou Wahaha Group and a deputy to the National People's Congress, told reporters on March 3 that "the U.S. would be hurt if it launched a trade war with China." The veteran entrepreneur said that, as China contributes more than one third of the global economic growth, the world economy's revival relies on the Chinese economy rather than the other way around.

"Chinese exports are good and inexpensive and are hence competitive in the global market. Americans have long enjoyed the benefits brought by Chinese goods, and if they don't import our goods, their inflation will grow and have a greater impact (on its own economy)," he argued.

During his presidential campaign, Trump frequently accused China of keeping the RMB artificially low to boost its exports. But Yi Gang, the deputy governor of China's central bank and a member of the CPPCC, said that China's exchange rate is based on the market and has remained stable and fairly strong in the past 10 years or so. "We would never try to boost export by depreciating [the yuan], nor launch a currency war, because China is a responsible country. In general, our policy going forward is to keep the RMB basically stable in a reasonable range."

The Chinese yuan appreciated 26 percent against the dollar in 10 years from 2005 when it began forex reform by abandoning a decade-old peg to the dollar and allowing the yuan to fluctuate against a basket of currencies.