Xinhua News Agency, Beijing, January 16th Title: An important step in reshaping economic and trade relations between China and the United States — — Interpretation of the first-stage economic and trade agreement between China and the United States
Xinhua news agency reporter
This is a moment of global concern — —
At about 13: 00 local time on January 15th, the Political Bureau of the Communist Party of China (CPC) Central Committee, Vice Premier the State Council, Liu He, the Chinese leader of the China-US Comprehensive Economic Dialogue, and Trump, the US President, signed the first-stage Sino-US economic and trade agreement at the White House, marking an important step for China and the United States to solve the problem.
In the past two years, after 13 rounds of high-level consultations and more than 20 telephone consultations between leaders, this Sino-US economic and trade agreement has not come easily. The agreement is written in Chinese and English, both texts being equally authentic. The agreement includes preface, Chapter I Intellectual Property, Chapter II Technology Transfer, Chapter III Trade in Food and Agricultural Products, Chapter IV Financial Services, Chapter V Macroeconomic Policy, Exchange Rate Issues and Transparency, Chapter VI Trade Expansion, Chapter VII Bilateral Evaluation and Dispute Settlement, and Chapter VIII Final Clauses.
What is the significance of the formal signing of the first-stage economic and trade agreement? What are the important points of the agreement text? Both sides are concerned about how to respond in the text. What is the future direction of Sino-US economic and trade cooperation? Xinhua News Agency reporters interviewed authoritative sources for the first time to comprehensively interpret the text of the agreement.
Mutual benefit and win-win — — This is an agreement based on equality and mutual respect.
Cooperation is the best choice for both China and the United States. When we look at the Chinese version of the agreement, the words "both parties should" appearing in almost every chapter tell us that it is an agreement that strives for balance on the basis of equality and mutual respect.
"Many chapters of the agreement not only reflect the interests of the United States, but also reflect the interests of China. It is a balanced agreement that conforms to the interests of both China and the United States." Zhang Yuexiao, former chairman of the Appellate Body of the WTO Dispute Settlement Mechanism, told reporters that the signing of the first-stage economic and trade agreement between China and the United States has injected a "stabilizer" into China and the United States and the world economy, which has become a starting point for the two countries to rebuild their economic and trade relations.
Before the signing of the agreement, there were many concerns that China had made great concessions.
From the content of the agreement, it mainly covers three aspects: deepening two-way trade cooperation, further relaxing market access and continuously optimizing the business environment. At the same time, the two sides will establish bilateral evaluation and dispute settlement arrangements to resolve economic and trade differences in a timely and effective manner. On the issue of tariff retrogression, the United States promised to cancel some tariffs on Chinese products. It can be said that this agreement is beneficial to China, the United States and the whole world, which shows the mutual benefit and win-win nature of Sino-US economic and trade cooperation.
Gao Lingyun, a researcher at the Institute of World Economics and Politics of China Academy of Social Sciences, said that the agreement fully caters to the legitimate concerns of both sides and is generally equal and mutually beneficial. Judging from China’s commitments, whether it is to strengthen intellectual property protection, increase imports of agricultural products and energy products, or expand financial opening up, many provisions are reform and opening-up measures that China has introduced, which are in line with the established direction of China’s reform and opening up.
"The signing of the agreement is just the right time, which will help provide a relatively stable external environment for China to maintain sustained and healthy economic development and realize the great cause of national rejuvenation." Gao Lingyun said that the agreement also pushed the United States to realize the turning point of increasing tariffs on China from rising to falling, including suspending the tariffs originally scheduled to be increased on December 15th last year, and reducing the tariff rate on China, which came into effect on September 1st last year, from 15% to 7.5%. This is also the first time that the current US administration has reduced the tariffs already imposed by a country, which is conducive to gradually returning Sino-US economic and trade relations to the right track.
After the signing of the agreement, will the US unilaterally send personnel to China to supervise the implementation? Zhang Yuexiao said that one of the highlights of the agreement in dispute settlement is that the word "supervision" is not used throughout, and the word "arrangement" is used instead. The US will not send personnel to China to supervise the implementation, and both sides promise to establish bilateral evaluation and dispute settlement arrangements. "In fact, outside the WTO, the two sides have built a platform to resolve differences and frictions. Through the bottom-up communication and dialogue mechanism from the bureau level to the ministerial level, differences can be managed and discussed, and the trade rights and interests of both sides can be better protected."
According to the agreement, China and the United States should resume macroeconomic meetings to discuss comprehensive economic issues. This makes the outside world have more expectations for China and the United States to manage their differences more effectively through dialogue and consultation and promote the development of Sino-US economic and trade relations under the new historical conditions.
Complementary advantages — — There is room and principle for China to expand imports from the United States.
Deepening two-way trade cooperation is a major attraction of the agreement. The two sides promised to expand the scale of trade in manufactured goods, agricultural products, energy products and services.
"The economies of China and the United States are highly complementary. From the perspective of the super-large-scale economy and market of the two countries, Sino-US trade potential is huge." Dong Yan, director of the International Trade Research Office of the Institute of World Economics and Politics of China Academy of Social Sciences, said.
Deepening trade cooperation is conducive to the optimal allocation of resources and the adjustment of economic structure between the two countries, to further giving play to the complementary characteristics of the two economies, to achieve mutual benefit and win-win results, to deepen global economic and trade cooperation, to effectively boost confidence in the global market and to maintain the stability of the global industrial chain and supply chain.
"The two sides responded to China and the United States with tangible actions ‘ Decoupling ’ Speech is conducive to consolidating the foundation of Sino-US relations and enhancing the certainty for the stable development of the global economy. " Zhang Yansheng, chief researcher of China International Economic Exchange Center, said.
China, with a population of nearly 1.4 billion, has the largest and most growing middle-income group in the world, with great market potential and great room for expanding imports. Importing high-quality goods and services from the United States is conducive to meeting China’s expanding market demand. In 2019, the import scale of China’s goods trade exceeded US$ 2 trillion, and the import scale of services was around US$ 500 billion. The huge market scale attracted worldwide attention.
There are also rules to follow in expanding imports from the United States. According to the agreement, the United States should take appropriate measures to ensure that there are enough American goods and services for China to purchase and import, and China will conduct procurement activities based on market prices and commercial considerations.
Zhang Yansheng emphasized that enterprises are the main body of procurement activities, and the most important responsibility of the Chinese and American governments is to create conditions for normal and legal economic and trade exchanges between enterprises. China has repeatedly expressed its willingness to encourage domestic enterprises to abide by WTO rules, negotiate import agreements with American enterprises according to the principle of marketization, and ensure that they will not discriminate against goods and services from other countries and regions.
Experts emphasized that expanding imports will naturally bring certain market competition, structural products and interest adjustment. However, China has accumulated successful experience since the reform and opening up and nearly 20 years of WTO accession, and the majority of market players have sufficient competition tolerance, which will also help to effectively achieve transformation and upgrading through competition.
One side wants to buy more, and the other side has to sell more. Wang Honggang, director of the American Institute of China Institute of Contemporary International Relations, stressed that expanding trade requires the joint efforts of both sides. He hoped that the US side would follow China’s lead, expand the production capacity of various products and services, improve product quality and price competitiveness, and meet the relevant regulatory requirements of China. If China’s imports from the United States are affected by the relevant actions of the United States and other circumstances, China has the right to propose consultations with the United States, which is conducive to promoting the realization of procurement commitments.
Two-way benefit — — Agricultural products trade will not affect China’s food security.
Sino-US agricultural cooperation is an important pillar of bilateral relations. The chapter on trade in food and agricultural products in the agreement covers key areas of bilateral agricultural cooperation such as dairy products, poultry meat, beef, pork, processed meat, aquatic products, rice, fruits, feed and pet food.
Experts said that the implementation of the agreement will greatly increase China’s imports of agricultural products from the United States, which to some extent responds to the concerns of the United States, but it will not have an impact on domestic agriculture, let alone affect national food security, and can ensure that China’s rice bowl is firmly in its own hands. At the same time, the import of agricultural products from the United States should also meet the requirements of China’s import supervision standards.
China is the world’s largest importer of agricultural products, accounting for 1/10 of the global agricultural trade. Among them, about 85% of China’s soybean consumption depends on imports, and the annual soybean imports are about 90 million tons.
"China’s population is 1 billion more than that of the United States, and its arable land is 1 billion mu less. The two countries have broad space for agricultural cooperation, and expanding imports is conducive to filling the gap between domestic supply and demand." Zhang Yansheng said.
Gao Lingyun analyzed that on the one hand, domestic demand is growing, and China has full market capacity to import agricultural products; On the other hand, importing agricultural products can enrich people’s choices and reduce consumption cost.
An equal and mutually beneficial agreement is not only bought by one party in buy buy. One of the highlights of this agreement is to open the door for expanding China’s agricultural products exports to the United States, which is an important substantive achievement.
In the process of economic and trade consultation, the US announced the final rules for allowing China’s cooked poultry meat to be exported to the US, and China became the country qualified to export its own cooked poultry meat to the US after Canada, Mexico, Chile and other countries. The United States also recognizes that the catfish supervision system in China is equivalent to that in the United States, and allows pears, oranges and fresh dates from China to be exported to the United States.
The data shows that in 2018, China’s agricultural exports reached nearly 80 billion US dollars, including 7.7 billion US dollars to the United States, accounting for about 1/10 of the total agricultural exports. With the substantial achievements in the export of agricultural products to the United States and the resolution of some export obstacles that have been deadlocked for more than 10 years, Chinese farmers and industries will also benefit.
According to the agreement, China will import some wheat, corn and rice from the United States, but the quantity will be strictly controlled within the tariff quota. It is reported that the self-sufficiency rate of wheat, corn and rice in China has never fallen below 98%, which means that the expansion of grain imports from international markets, including the United States, is only for variety adjustment and will not exceed the quota limit.
"We will adhere to the basic self-sufficiency of grain and the absolute safety of rations, and the bottom line of national food security will not be broken." The relevant person in charge of the Ministry of Agriculture and Rural Affairs stressed.
Helping innovation — — Intellectual property protection and technology transfer reflect the wishes of both parties and meet the inherent needs of China’s development.
Intellectual property protection and technology transfer have always been the focus of Sino-US economic and trade negotiations. The agreement covers patents, trademarks, copyrights, trade secrets, geographical indications, intellectual property protection of drugs and networks, and makes specific provisions on technology transfer in special chapters.
There are many aspects of the agreement, such as the protection of drug intellectual property rights, the stipulation of supplementary data for drug patent application and the effective mechanism for early settlement of patent disputes, which will help to better protect drug research and development; In the aspect of combating network infringement, it stipulates the responsibility of taking off the notice of e-commerce platform to better protect consumers’ rights and interests; The agreement also regulates malicious complaints, cracks down on malicious trademark registration, and strengthens the protection of trade secrets.
"The content of intellectual property rights reflects the common will of China and the United States to provide high-level intellectual property protection for enterprises and people in both countries." Zhang Yuexiao said that in recent years, the level of intellectual property protection in China has been continuously improved, and many solid and effective measures have been introduced. "If you look closely at the agreement, you will find that many terms are consistent with the policies and regulations that China has already introduced."
According to the agreement, in the chapter on technology transfer, the two sides agreed not to use administrative management and administrative licensing requirements to force technology transfer, which is conducive to creating an environment that respects knowledge value and encourages innovation, and pushing the government to shift from R&D management to innovative services.
"At the beginning of China’s accession to the WTO, China made a commitment. So far, there is no mandatory technology transfer provision in any law. The foreign investment law implemented on January 1 this year also explicitly prohibits mandatory technology transfer, which shows the international image of China’s commitment." Gao Lingyun said.
It is worth noting that, whether in the chapter on intellectual property or technology transfer, the relevant requirements and obligations are equal and balanced for both China and the United States, and both sides need to abide by them.
Gao Lingyun said that China’s efforts to strengthen intellectual property protection are aimed at providing a better business environment for all enterprises, including US-funded enterprises, and safeguarding the legitimate rights and interests of various market players. Similarly, the United States should provide the same level of protection for the intellectual property rights of China enterprises and better safeguard the legitimate rights and interests of Chinese-funded enterprises in the United States.
Cheng Dawei, a professor at the School of Economics of Renmin University of China, said that this is in line with China’s own needs to promote the construction of an innovative country, and it is also a concrete manifestation of the new development concept. I believe that after the agreement is reached, China will further stimulate the innovation and development vitality of the whole society in accordance with the established rhythm and better achieve high-quality development.
Stabilize the market — — Financial services are open, autonomous and orderly, and exchange rate policy is by no means a replica of some square agreement.
China and the United States are highly complementary in the financial field and have great room for cooperation. According to the agreement, China and the United States promised to provide fair and effective non-discriminatory market access treatment in the fields of banking, securities, insurance, electronic payment and financial asset management. China promises to treat all opening measures equally and accept applications from various financial institutions in compliance with the law; The United States actively promotes the resolution of practical obstacles encountered by Chinese-funded institutions in doing business in the United States.
"China’s commitment to financial services is consistent with China’s independent and orderly opening up of the financial industry in recent years. Many terms have been announced and many measures are being implemented." Cheng Dawei said.
In recent years, the opening-up of China’s financial industry has been steady and steady. At present, most measures have been put in place, and many foreign-funded financial institutions have entered China to actually carry out business.
Zhang Yansheng emphasized that the opening up of China’s financial industry is not a matter of letting go and letting itself drift. The opening up and supervision of China’s financial industry are always in parallel to ensure that no risks occur.
Both China and the United States are basket countries of special drawing rights (SDR), and the consensus reached by the two countries on the exchange rate issue is crucial to the orderly operation of the global market.
Many people in the industry have found that more than ten clauses on exchange rate policy in the agreement all start from the promises of "both sides", showing strong reciprocity. The two sides promised to respect each other’s monetary policy autonomy, treat the exchange rate issue equally, let the market decide the exchange rate system, avoid competitive devaluation, and enhance the transparency of exchange rate policy.
Ding Zhijie, director of the Foreign Exchange Research Center of the State Administration of Foreign Exchange, said that there have been concerns that the Sino-US exchange rate agreement is a replica of some kind of plaza agreement. The agreement signed this time proves that it is by no means a mutual respect and consultation agreement, which embodies multilateral consensus and can be said to be a model for coordinating exchange rate policies among big countries.
The agreement also made a clear definition of "large-scale, sustained and one-way intervention" on exchange rate manipulation. Cheng Dawei said that according to this definition, it is obviously not in line with the spirit of the agreement that the United States listed China as a "currency manipulator" before. Before the signing of the agreement, the United States cancelled its previous mistaken identification of China as a "currency manipulator", thus clearing the way for the signing of the agreement.
Whether the agreement is good or not is up to the market. Experts believe that since the two sides announced an agreement on the text of the first phase agreement on December 13, 2019, the global economic and financial markets have responded positively in the past month, and the US stock market has reached a new high. It is believed that after this mutually beneficial and win-win agreement is formally signed, it will help to manage differences and solve problems, help to restore market expectations and confidence, and promote the stability of the financial markets of the two countries and the world. (Reporter Zhang Xudong, Han Jie, An Bei, Dong Jun, Chen Weiwei, Wu Yu)
