Author: Chen Na
Posted: November 22. 2016
(Beijing) — Economists have urged the Chinese and U.S. governments to explore the feasibility of establishing a bilateral free-trade agreement, as U.S. President-elect Donald Trump vows that his administration will back out of the Trans-Pacific Partnership (TPP) trade deal.
Chen Wenling, chief economist of the China Center for International Economic Exchanges, said during a televised panel discussion on Monday that the two countries should enhance their collaboration on trade.
While Trump vowed on the campaign trail to impose 45% tariffs on Chinese imports and called China a currency manipulator, Chen said Trump’s rhetoric is unlikely to translate into action.
Rather, the two countries, which together account for one-third of the world’s economy, should start exploring the possibility of a bilateral free-trade agreement (FTA), the economist said.
The China Center for International Economic Exchanges is a think tank affiliated with the National Development and Reform Commission, the country’s top economic planner.
Estimates from the Peterson Institute for International Economics suggest that an FTA would double current Sino-U.S. trade to 1 trillion yuan ($145 billion), Chen said.
The proposal came just before Trump announced that he will withdraw the U.S. from the TPP deal — which has 12 Pacific Rim signatories but not China — on his first day in the White House, which is Jan. 20. The U.S. Congress must ratify the agreement, but that appears unlikely without Trump’s support. To date, none of the signatories has ratified the pact.
In a televised video released on Tuesday, Trump said that under his administration, the U.S. will negotiate “fair bilateral trade deals that bring jobs and industries back to U.S. shores.”
“Trump is a businessman. Since he has decided to terminate the TPP, I think he has calculated which trade pacts — one excludes China and the other will double the current trading volume — will bring more benefits to the U.S.,” Chen said.
A bilateral investment treaty between China and the United States has been in the works for eight years. If successfully concluded, the investment treaty could substantially increase investments in both markets.
China is currently the U.S.’ largest trade partner. Trade between the two countries was $598 billion in 2015, and the U.S. trade deficit with China was $336.2 billion in that year, according to official data from the U.S. government. During his campaign, Trump proposed increasing tariffs on imports from China, saying this would protect American jobs and promote American business.
“Trump has made some provocative remarks regarding China, but he is not the first one to raise these topics,” said Ruan Zongze, vice president of the China Institute of International Studies, who was one of the panelists. “China should pay attention to those opinions, but what a candidate says on the campaign trail won’t necessarily translate into action.”