Interview: Proper management of trade frictions will set much better tone for China-U.S. ties -- U.S. expert

China and the United States will set "a much better tone" for bilateral relations in the next few decades if they properly handle trade frictions, a U.S. expert said in a recent interview with Xinhua.

While U.S. President Donald Trump had repeatedly criticized China's currency and trade policies and threatened to impose high tariffs on Chinese imports during the campaign, Henry Levine, senior advisor at leading U.S. consulting firm Albright Stonebridge Group, believed the two countries could well manage their trade frictions through bilateral dialogues and the dispute settlement mechanism within the World Trade Organization (WTO).

PROPER MANAGEMENT OF TRADE

"I am hoping, and I tend to think, that the United States is not going to go down the road of (imposing) WTO-illegal unilateral tariffs on Chinese products because the United States is one of the biggest trading countries in the world," Levine said.

"If the United States is simply going to ignore WTO rules, that will encourage many other countries around the world to ignore WTO rules, and eventually we end up in chaos as far as international trade is concerned," he said.

Levine, who used to work at the U.S. Department of State and Department of Commerce, also believed a trade war between the world's two largest economies is very unlikely because of their growing economic interdependence.

"Our two economies are highly interdependent, and therefore if either country seeks to harm the other economically through whatever means, then it'll hurt that country as well," he said.

With regard to U.S.-China economic relations, "I think we have not seen any of the dramatic steps that Trump had talked about in the campaign" since he took office in January, Levine noted, adding the new administration has gradually gained a better understanding of the reality of the world and the complexity of U.S.-China relations.

Trump on Wednesday said his administration would not label China a currency manipulator, the latest move distancing him from one of the biggest economic promises he made on the campaign trail.

As China is trying to keep its currency from falling further, "I think virtually all objective observers agree that it would be ridiculous for the United States now to determine that China is a currency manipulator," Levine said.

NEW DIALOGUE MECHANISM

He added that the meeting between Trump and Chinese President Xi Jinping last week would also help the Trump administration understand the importance of keeping the world's most important bilateral relationship stable.

The outcome of the first meeting between the two leaders "was somewhat more positive than many people had expected," Levine said, noting the most important outcome was "the chance for the two leaders to get to know each other and increase their mutual understanding."

"You can see that, to the extent that the United States and China are cooperating to the maximum amount on these issues, the entire world will be much better off, and those problems are easier to solve," he said.

At the meeting, the two leaders agreed to create a four-pronged high-level dialogue mechanism to deal with major issues on security, economic relations, cybersecurity and law enforcement, and people-to-people exchanges, in a bid to expand mutually beneficial cooperation while managing their differences.

Compared to the annual Strategic and Economic Dialogue (S&ED) mechanism held under the Obama administration, Levine said the new mechanism "makes a lot of sense" as it lets both the Secretary of the Treasury Department and Secretary of the Commerce Department lead the U.S. side, as market access, industrial overcapacity and many other economic issues fall under the Commerce Department, not the Treasury Department.

Yet he adopted a wait-and-see approach for this new high-level dialogue mechanism. "What we need to watch and see is whether there can be some concrete achievements that come out of this mechanism," Levine said.

Based on his experience as a chief U.S. negotiator for the annual U.S.-China Joint Commission on Commerce and Trade, Levine believed Beijing and Washington could reach a deal in 100 days to address trade concerns.

"When you're involved in negotiations like that, you know there are a lot of ways to come up with positive outcomes. Sometimes they're more significant and substantial, sometimes they're a little less significant and substantial, but it's almost always possible to put together a package of items that both sides can announce as steps forward."

CHINA'S ECONOMIC REFORM

However, unlike in the past, China has to understand that there are two sets of economic agendas on the U.S. side to deal with, he added.

On the one hand, the Trump administration has been focusing on the trade deficit with China; on the other hand, the U.S. business community, especially major multinational companies, emphasizes increasing access to the Chinese market and greater use of market forces in the Chinese economy.

Levine suggested that a full implementation of the economic reform agenda laid out in the third plenary session of 18th Communist Party of China Central Committee will greatly contribute to "stabilizing and even improving U.S.-China relations overall for decades to come." Endi