The
ambassador of China to New Zealand says China does not seek
a tariff war, but will take resolute measures to defend its
interest if such a war is imposed on it.
The United
States tariff on Chinese imports now stands at 145
percent.
China is charging an 85 percent levy on US
goods imported there.
Dr Wang Xiaolong told Morning
Report China had always had the door open for
negotiations, but they would need to take place from a
position of “mutual respect and equality”.
The
unprecedented tariff the US had imposed on China was not
reciprocal but rather “unilateral” and “protectionist”, he
said.
He rejected that the trade war had come about
because China had not played fair in trade and had large
trade surpluses to the detriment of the US.
Dr Wang
said many economists indicated it was quite clear why there
was such a large trade deficit in the US and it was simply
because there was a gap between what was produced and what
was consumed in the US.
The US was one of China’s
significant trading partners and pushing tariffs beyond 100
percent “then that’ll certainly wipe out a significant chunk
of bilateral trade between the two countries”, he
said.
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“That’ll increase the head wind for the Chinese
economy, there’s no doubt about that.”
The US now
accounted for about 13 percent of China’s overall export
market and about 3 percent of China’s overall economy, he
said.
Even if the entire US export market was wiped
out China was better prepared to withstand that, he
said.
“We have other drivers for economic growth,
we’re boosting domestic consumption, we’re taking financial
and monetary measures to maintain macro economic stability,
we’re boosting some of the long term drivers like
innovation.”
In terms of China’s ongoing relationship
with New Zealand, he said the two countries were mutually
important trading partners and China would continue to
develop this relationship.
China and New Zealand
shared common interests in terms of what was happening in
the US, he said.
“Both New Zealand and China support a
rules-based multi-lateral trading system centred on the WTO,
and both of us would hope this multi-lateral trading system
would continue to function.
“The United States,
because they took the lead in building this system up but
with the pressing of a few social media set buttons, I think
they’re tearing this system down which is against the
interests of the countries around the world, including the
United States itself.”
There was room for countries
like New Zealand and China to defend the multi-lateral
trading system, as well as developing mechanisms for global
trade and growth to continue, he said.
“Remember, the
United States is not the entire world, it represents only
about 13 percent of global trade and it’s only one
country.”
There was a lot of room for the remaining
countries to work together to make sure that trade continued
to grow, he said.
Chinese economic downturn could
impact its trading position with NZ – English
A
former trade commissioner for New Zealand in China said the
145 percent tariff the US was imposing on imports of Chinese
goods would likely see an economic downturn in both
countries, and could have some impact on New
Zealand.
Pat English said the action the US had been
taking was not good for anybody and “the firing from the hip
thing” was not working.
“The instability which is
really unhelpful – businesses, sectors, companies, markets –
they need to have a certain amount of stability and
confidence that certain things are going to
happen.”
China had a diversified trade portfolio and
was the number one trading partner for around 120-130
countries, he said.
Although the US market was
“incredibly important” to China, China did have some “strong
alternatives”, he said.
English said it had been
reported that Xi Jing Ping was already out talking to
leaders in Asia, South East Asia and the European Union, so
China was looking to diversify its markets to offset what
was happening with the US.
New Zealand was taking a
neutral position and it had a good relationship with China
which was the country’s largest trading partner, he
said.
“I don’t think that’s going to change other than
the fact that if this carries through as it’s shaping now
there is going to be a downturn in the Chinese economy and
the US economy.”
The impact of the tariffs on China’s
economy could impact its trading position with New Zealand,
he said.
So where does that leave New
Zealand?
John McKinnon is chair of the New Zealand
China Council and former Ambassador to China and he said
there were a number of ways that a trade war could hit New
Zealand.
“In terms of our own position we find it very
troubling to have two of our largest markets and two of the
biggest economies in the world engaging in this tit-for-tat
tariff war.
“What we would like to see is for those
two countries to sit down and negotiate if they have issues
which they need to address.”
McKinnon said he could
not see that happening in the short-term but it was probably
how it had to be resolved.
It could be possible to
establish a rules-based trade system within the CPTTP trade
agreement, but that would take time, he said.
“From
New Zealand’s point of view we benefited hugely from having
a multi-lateral rules based trading system and that’s what
we would like to see continue to be reinstated.”
There
is a risk that the Chinese economy would not grow as fast as
expected which would probably also reduce demand for New
Zealand goods and services, he said.
The tariffs could
also mean that some other countries decide to divert their
produce to China, rather than say North America, he
said.
“And also of course there are … New Zealand
controlled businesses in China which export to the United
States and they’re going to have obviously dealing with the
consequences of that as
well.”
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