The U.S. has justified starting a trade war with China by arguing that they have a massive trade deficit with China, and as a result have suffered losses.

But China's Vice Minister of Commerce Fu Ziying dismissed that justification, saying that the U.S. instead enjoys a "surplus of interest", as evidenced by the far higher profits of American companies compared with Chinese companies.

China and the U.S are in different positions in the global industrial and value chains. Chinese companies are more likely to earn processing fees, while American companies, benefit from product design, parts supply and marketing. Apple's iPhone provides an example. According to Goldman Sachs research released this year, if Apple transferred its production and assembly to the U.S., its production costs would rise by 37 percent.

For American consumers, Chinese goods have provided their households with more choices, reducing their cost of living. A U.S.-China Business Council study found that in 2015, China-U.S. trade saved each American household an average of 850 U.S. dollars.

China's market has also provided great opportunities for Americans. According to a report by the U.S.-China Business Council, American farmers exported an average of more than 10,000 U.S. dollars’ worth of goods to China in 2017. Moreover, Chinese Commerce Ministry data shows that General Motors has 10 joint venture projects in China, where its production accounts for 40 percent of its global total. And Qualcomm's chip sales and patent license fees from the Chinese market accounted for 57 percent of its total revenue.

The U.S. has somehow ignored trade in services in the dispute as in 2017 it had a surplus of over 54 billion dollars with China. The U.S. Commerce Department reported that in 2016 Chinese tourists visiting the U.S. increased 13 consecutive years. Chinese students studying in the U.S. contributed around 18 billion dollars to the U.S. economy in 2017. And China’s payments for the use of American intellectual property increased from 3.46 billion to 7.2 billion U.S. dollars from 2011 to 2017.

The U.S. could narrow the trade imbalance in terms of goods by relaxing its restrictions on high-tech exports which could, according to analysis done in the U.S., reduce the trade deficit by about 35 percent.

Thus, the U.S. claim that it is losing out on trade with China doesn’t hold water.


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