Author: Fran Wang
Posted on: Caixin Global, March 15th, 2017
Premier Li Keqiang said China and the U.S. would both be losers in any trade war, calling for stronger ties as the two countries work on plans for President Xi Jinping and his U.S. counterpart, Donald Trump, to meet in April.
China and the U.S. maintain “differences” over jobs, exchange rates, security and other issues, Li said at a news conference on Wednesday after the closing of the National People’s Congress, China’s top legislature.
“But I believe it’s important for both countries to uphold strategic interests, sit down to talk to each other so as to enhance mutual understanding and trust,” he said. Beijing is “optimistic” about the future of Sino-U.S. relations because the two nations “share extensive common interests,” he added.
Chinese and American diplomats are negotiating a “face-to-face meeting between the top leaders of the two countries,” Li said. Earlier this week, CNN quoted an unnamed U.S. official as saying that Trump plans to host Xi at a summit next month at Trump’s Mar-a-Lago estate in southeast Florida.
“This relationship is crucial for not just China and the U.S. but also for regional and global peace, security, and stability. Hence, we must work together to continuously take it forward,” Li said.
As a presidential candidate, Trump accused China of manipulating its currency and stealing American jobs, and threatened to impose a 45% tariff on Chinese imports. He has softened his tone on China since assuming office.
The U.S. is China’s top export market. The U.S. has so far invested about $87 billion in China, according to Chinese official data. Nonfinancial-sector investment by Chinese companies in the U.S. was nearly $50 billion by the end of 2016 and created almost 100,000 jobs in the country, the data showed.
Meanwhile, China is the fastest-growing export market outside North America for the U.S., and U.S. shipments to the Asian country increased by an average of 11% per year over the past decade.
“We do not want to see any trade war breaking out between the two countries,” Li said. “That wouldn’t make our trade fairer. Rather, it would cause losses to both sides.”
Amid concerns about the yuan, Li also said the government will keep it “generally stable.” The yuan lost about 6.5% against the dollar last year amid massive capital outflows.
He also said China has “ample” ammunition in its foreign exchange reserve to ensure and fulfill “reasonable” domestic corporate and individual requests for the use of foreign currencies. Recent official restrictions over the transactions had sparked complaints by Chinese businesses and consumers.
“The reasonable needs of companies to use foreign exchange and residents’ reasonable needs to use foreign exchange to pay for overseas tours and study will be ensured,” he said. “The yuan has a solid presence in the international currency system, and its exchange rate will be generally stable.”
Li spoke positively of regional free trade agreements. A Chinese delegation is attending a meeting in Chile that also brings together representatives from 12 countries that formed the once-U.S.-led Trans-Pacific Partnership (TPP).
“Regarding regional free trade arrangements, we are open to and are willing to push forward those that involve China, and (we) have the option” to participate, Li said.
“But we will not take the work of others into our own hands and meddle with arrangements that go beyond the region and should not be handled by China.”
The TPP effectively collapsed after Trump in January signed an executive order to officially withdraw the U.S. from the deal. The U.S. Congress had not ratified the pact.
Li added that political uncertainties in the world are a “significant external risk” for the Chinese economy this year.
Domestically, the country is facing an arduous task to create more jobs. The number of college graduates is set to hit a new high of 7.95 million this year, and another 5 million vocational school graduates will need employment, he said.
Moreover, the number of laid-off workers due to a government drive to reduce excess industrial capacity could rise to “nearly 1 million” this year because some workers laid off last year have remained jobless, and the government has included thermal-power plants as a new target for excess-capacity reduction, Li said.
The overcapacity cuts last year focused on the steel and coal industries and saw 720,000 people being “transferred” to other posts after their old employers were shut down, trimmed operations, or merged with other companies, he said.
China has announced that it aims to create 11 million new urban jobs this year.