Chen Deming retaliates against US trade protection

On March 21st, Chinese Minister of Commerce Chen Deming accepted an interview with the "Washington Post" reporter in Beijing, answering questions about how to look at the rise of US trade protectionism, the RMB exchange rate and Sino-US economic and trade relations. This is because the Chinese government has made clear the issue of the trade imbalance between China and the United States and the exchange rate of the RMB against the US dollar. It is commendable.

When Chen Deming explained the imbalance between China and the United States, he cited several reasons. One of the key points is that from the perspective of the country, China’s surplus last year was 73% from the United States, but China’s deficit with the surrounding countries was more than 120 billion U.S. dollars. The 58 least developed countries are also generally in deficit.

In the global trade chain, China in the middle reaches provides consumer goods for developed countries, and the natural resources used are insufficient, so they have to buy from foreign countries (usually underdeveloped countries) – behind the US deficit with China is the US deficit. Occupy the natural resources of the world.

Combining the statistical gaps in the trade surplus between China and the United States, and the factors such as trade patterns, corporate entities, and trade product characteristics, Chen Deming’s conclusion is that the root cause of the trade surplus between China and the United States is that in the process of globalization, industrial structure occurs. Adjust the changes. Many companies exporting to the United States have seen the advantage of China's labor costs and transferred the final assembly to China. This kind of industrial transfer has led to an increase in China's surplus to the US – exports from the United States, South Korea and other countries and regions have been added. The head of the Chinese.

Chen Deming politely told the Americans: "If the United States does not want to sell high-tech products to China, we have to work hard to develop or buy from other countries." Actually, I am saying, don't underestimate the Chinese people's research and development capabilities. Your US blockade is not only useless, but also abandoning business opportunities. He used numbers to show that the US technical blockade has caused the United States to lose $30 billion in business in the past 10 years.

Chen Deming also said: The United States has proposed that exports will be doubled in five years, and who will export products be sold to? In the past, only developing countries have demand and dollars to buy. Second, if you engage in trade protectionism, people will not buy your things.

Chen Deming’s conclusion is that in the case of trade restrictions, it is unfair to discuss the exchange rate issue, and there is no way to get the correct result.

We have seen that China has finally picked up a more powerful "theoretical weapon" - Triffin's dilemma. Robert Triffin is a Belgian and a professor at Yale University in the United States. In his book Gold and the Dollar Crisis, he expounds the design flaws of the Bretton system and points out the fatalties of the dollar: the Bretton system treats the dollar as a dollar. The currency for pricing and settlement in international trade has been made, so other countries must reserve a large amount of dollars for imports. Where did the dollars in these countries come from? The answer is to maintain a trade surplus with the United States.

The contradiction is coming. On the one hand, the United States must maintain a trade deficit for a long time, and the long-term trade deficit will inevitably lead to the depreciation of the dollar; on the other hand, the dollar must be guaranteed not to depreciate, and other countries will be willing to hold the dollar. Triffin believes that this dilemma will cause the world to continue to "the dollar crisis" until the Bretton system is disintegrated; in addition, the system will allow the US economy to obtain world goods only by issuing currency - this is called "coin" tax".

Triffin's research is to solve the drawbacks of the Bretton system. However, his research allowed the United States to see the benefits of the "coinage tax". Instead, it strengthened the status of the dollar in various ways and more arrogantly seized the "coinage tax", which made Triffin very angry. Later, the old professor resolutely resigned from Yale University and returned to his hometown of Belgium.

Why do you say this? Because this story also proves that the position of the US dollar in international trade determines that US trade must be a deficit. The trade deficit between China and the United States is naturally formed by the rules of the international monetary system.

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