BEIJING: China and the United States have substantial room to expand cooperation in services, capital flows and artificial intelligence, building on their intertwined high-tech manufacturing supply chains, said a senior economist and executives of multinational corporations.
As the exchange of visits between the two heads of state within six months marks a historic milestone, Zhu Min, former deputy managing director of the International Monetary Fund, told China Daily that understanding the composition of Sino-US bilateral trade is essential for assessing its prospects.
China’s exports to the US are concentrated in high-tech manufactured products, equipment, heavy-duty machinery and capital-intensive goods, he said, highlighting their role as inputs in further production.
US exports to China also focus on high-tech manufactured products — including intermediate goods — alongside energy, said Zhu, who is also a former deputy governor of the People’s Bank of China, the country’s central bank.
This means that many Chinese exports to the US are assembled in the US before being exported to markets worldwide, including China, he said, adding that similarly, US products enter production processes in China before being exported to other markets, including the US.
“I think that is the nature of China-US trade,” Zhu said, emphasizing that when high-tech manufacturing supply chains are closely linked, raising the cost of imports and exports could hurt companies and economic activities in both countries.
“In that context, high tariffs don’t make any sense. I think US companies clearly see that, and more and more US politicians are also seeing it that way,” he said.
Beyond goods trade, China’s demand for imported services — alongside its opening-up policies in sectors such as healthcare, education, biotechnology and telecommunications — offers a large market for US companies, given the strength of the US service economy, Zhu said.
China’s outbound capital flows, including direct investment, could also create opportunities for the US, he said. “There are a lot of ways we can work together. So I’m very much looking forward to seeing the two leaders meeting and talking,” Zhu added. –The Daily Mail-China Daily news exchange item
