A trade war between China and the United States would be devastating to global economy, and constructive approaches are needed to resolve trade frictions, according to a joint report released Saturday by Chinese and U.S. think tanks.
Outright trade war between the two largest economies would be devastating to the working people of both countries, as well as destructive to the future of the entire world economy, read the report prepared by China Finance 40 Forum and Peterson Institute for International Economics (PIIE).
The costs of conflict would far outweigh what are the current causes of dispute in the China-U.S. economic relationship, and it will hurt downstream producers and global supply chains, as well as American consumers, far more than it will achieve or cost China initially, according to the report.
"I hope President Trump...would find more constructive ways to deal with the trade issue," PIIE's president Adam Posen told Xinhua. "Some of the things he wants don't make sense."
Bilateral trade deficits are not a reasonable or useful goal for the U.S. trade policy to target, he said.
The Trump administration's unilateral approach to trade disputes is counter-productive, and the use of unilateral tariff threats as means to achieve economic ends is a mistake, read the report.
This approach is even more counter-productive when conveyed in a confrontational manner with an arrogant tone to another sovereign country, according to the report.
Economic disputes that can be addressed using the WTO and other multilateral mechanisms should be addressed using those mechanisms, it said.
There is no winner in a trade war, and efforts to forestall one should be prioritized to serve the interests of both China and the United States, Posen said.
The report also suggested expanding two-way cross-border direct investment as a means to improve China-U.S. economic relations in the long term, as the efficiency and employment gains from such economic integration would be substantial.
It also said Chinese companies have a right to compete with U.S. companies and succeed in sectors including hi-tech, as the fact of China aspiring to become a technological leader in some fields should not be considered a threat to the United States.