The Impact of U.S. Tariffs and Export Controls on China’s Trade: China’s Ambassador Blames Trade Decline on U.S. Policies

China’s Ambassador Blames U.S. Tariffs for Drop in Trade

China’s ambassador to the U.S., Xie Feng, has attributed the decline in trade between the two countries to U.S. tariffs and export controls. In a speech given at Forbes’ U.S.-China Business Forum, Xie pointed out that China-U.S. trade fell by 14.5% in the first half of the year compared to the previous year. He stated that this drop was a direct result of U.S. actions, including Section 301 tariffs on Chinese imports and unilateral sanctions.

Xie emphasized the negative impact on both families and businesses in both countries, stating that “livelihoods of many families have been affected, and businesses from both countries have borne the brunt.”

China’s Trade Partners

China’s largest trading partner on a single country basis is the United States. However, year-to-date trade between the two countries has seen a further decline, with a 15.4% drop in July compared to the same period in 2022, according to China customs data.

“To shut out China is to close the door on opportunities, cooperation, stability and development.”

Xie Feng

China’s ambassador to the U.S.

Xie expressed concern about the risks of decoupling between China and the United States, stating that any confrontation between the two countries would have a detrimental effect on opportunities, cooperation, stability, and development. While exports remain an important part of China’s economy, their share has decreased in recent years.

The U.S. government recently revised down second-quarter domestic product to a 2.1% annualized pace, contrary to expectations. Lower business spending on equipment was cited as a contributing factor.

Xie called for the expansion of mutually beneficial economic cooperation and trade between China and the United States. He emphasized the need for concrete steps, such as facilitating travel between the two countries and renewing agreements on science and technology cooperation.

On a regional basis, the European Union and Association of Southeast Asian Nations are China’s largest trading partners. However, trade flows with these regions have also declined this year, albeit at a slower pace, due to a decrease in global demand.

Xie highlighted China’s global dominance in trade and industries like electric vehicles. He noted increased foreign investment from France, the U.K., and Japan in the first half of the year. He pledged to protect foreign investment and ensure national treatment for foreign-invested enterprises.

U.S. Commerce Secretary visits China

Xie mentioned the visit of U.S. Commerce Secretary Gina Raimondo to China. Following her meetings with Chinese government officials, the U.S. and China agreed to establish regular communication channels on commerce, export controls, and protecting trade secrets. Raimondo emphasized that matters of national security would not be subject to negotiation.

“Instead of containing China, it will only curtail the right of American businesses to develop in China.”

Xie Feng

China’s ambassador to the U.S.

The U.S. government has imposed restrictions on Chinese companies’ purchases of advanced semiconductors from U.S. businesses, citing national security concerns. Xie highlighted the discrepancy in average tariffs, with U.S. tariffs on Chinese products being 19% compared to Chinese tariffs on U.S. goods averaging 7.3%. He questioned the fairness of this situation and its alignment with U.S. interests.

Xie assumed his role as ambassador in May, after a period of about six months without a Chinese ambassador to the U.S. In August, President Joe Biden signed an executive order aimed at restricting U.S. investments in Chinese semiconductor, quantum computing, and artificial intelligence companies. Xie criticized this order as a violation of the principle of free trade.

Xie argued that instead of containing China, such restrictions would hinder American businesses’ ability to develop in China. During Raimondo’s trip to China, she heard from over 100 businesses that China has become too risky for investment. Raimondo emphasized the need for predictability, due process, and a level playing field in business relations with China.

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