AEI-中美经贸事实（英文）-2020.10-9页_235kb

US-China Economic and Trade Summary

Core Content

This document provides a critical analysis of the US-China economic relationship, emphasizing the United States' continued dominance over China and the need for strong policy responses to Chinese economic practices. The author, Derek Scissors, argues that China's economic model, particularly its state-owned enterprises (SOEs) and intellectual property (IP) coercion, is harmful to American interests and should be addressed with targeted measures rather than broad retaliatory tariffs.

Main Points

• US Economic Superiority: The US remains economically dominant, with significantly higher national wealth, GDP, and labor productivity compared to China. By 2019, the US had over $106 trillion in net private wealth, while China had only $63.8 trillion. The US also holds a majority share of global foreign exchange reserves and outward FDI.

• China's Economic Challenges: China is aging rapidly, has high debt levels, and faces a demographic "sledgehammer" effect. Its growth has slowed, and its economic model is unsustainable due to the lack of market openness and reliance on state control of strategic sectors.

• Subsidies and SOEs: State subsidies and monopolies granted to SOEs are a major economic threat. These practices distort global markets and prevent American firms from competing. SOEs are often not held accountable for their debt and are shielded from failure.

• IP Coercion: While IP theft is a concern, the more significant issue is the forced transfer of technology through coercive practices. The US has suffered annual losses in the range of $225 billion to $600 billion from IP theft, with China being the primary offender.

• Trade Deficit Misunderstood: The US-China trade deficit does not directly harm American jobs. It is a result of global demand for American goods and services. The real issue is the unfair trade practices and subsidies that undermine American competitiveness.

• Policy Recommendations: The US should focus on documenting the worst economic issues, such as subsidies and IP coercion, before implementing harsh retaliation. Tariffs are not effective; instead, targeted sanctions and legal actions should be taken. The US should also review its investment in China to ensure it does not support harmful economic actors.

Key Information

• Economic Indicators (Table 1):

  • GDP: US was $10.25 trillion in 2000, rising to $21.43 trillion in 2019. China's GDP grew from $1.29 trillion to $14.34 trillion.
  • Net Private Wealth: US had $42.3 trillion in 2000, compared to China's $4.7 trillion.
  • Disposable Income per Capita: US was $26,621 in 2000, while China was $760.
  • Labor Productivity: US was $100,620 in 2000, compared to China's $6,131.
  • Debt/GDP Ratio: US had a ratio of 1.86 in 2000, while China had 1.32. By 2019, both had similar ratios.
  • Global Forex Reserves: US held 56% in 2000 and 57% in 2019, while China had only 1.8%.
  • Outward FDI Share: US held 36.4% in 2000, while China had only 0.4%.
  • Global Trade Share: US held 19.9% in 2000, and China held 3.3%.

• PPP Adjustments: The author criticizes the use of PPP for comparing economies, arguing that it is flawed due to the lack of market openness in China and the distortion of economic data.

• Technology and IP Issues: The PRC's strategic use of subsidies and coercive IP acquisition is a major threat to US innovation and competitiveness. The US must address these issues through legal enforcement and targeted policies.

• Future Outlook: China is unlikely to overtake the US economically due to its aging population, high debt, and lack of market liberalization. The US should not be deterred by the fear of China surpassing it but should instead confront its predatory economic behavior.

Best Responses

• Focus on Worst Problems: The US should prioritize addressing subsidies and IP coercion, not just trade deficits.

• Document Subsidies and SOEs: Detailed documentation of Chinese subsidies and the prevalence of SOEs is necessary to justify retaliatory measures.

• Enforce Laws: The DOJ should aggressively pursue cases of economic espionage and IP theft. The Entity List should be used to restrict trade with entities benefiting from coercive practices.

• Targeted Sanctions: Antidumping duties should be applied to Chinese products that receive unfair subsidies, rather than broad tariffs.

• International Coordination: The US should coordinate with allies and partners but not treat them as China. The US must lead with a clear and firm stance.

• Investment Review: US investment in China should be reviewed to ensure it does not support harmful economic actors or human rights violations.

Conclusion

The US should not be intimidated by China's economic rise but should instead take decisive action against its predatory practices. By focusing on the root causes of Chinese economic behavior—subsidies, IP coercion, and SOE monopolies—the US can protect its economic interests and maintain its global leadership.