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Global economy faces two challenges

By Huo Jianguo | China Daily | Updated: 2018-01-02 07:57

The world economy's performance in 2017 was significantly better than the previous year. According to the World Bank forecast, global economic growth is likely to reach 3.6 percent in 2017, as the economies of the European Union, the United States and Japan all showed clear signs of improvement in the third quarter with a growth rate of 2.5 percent, over 2 percent and nearly 2 percent, respectively.

Driven by the economic recovery of the developed countries, global trade and investment have entered a new active phase, and the World Trade Organization expects the growth rate of global trade to reach 3.2 percent in 2017. Based on the current situation, global trade growth will approach or exceed global economic growth, changing the five-year trend of trade growth lagging behind economic growth.

But even as the global economy shows all the signs of a full recovery, anti-globalization and trade protectionism remain the two major threats causing widespread concern and have the potential of damaging the development of the world economy and trade.

US President Donald Trump's "America First" policy has caused turmoil across the world. For example, the US suddenly announced its withdrawal from the 2015 Paris Agreement and the United Nations Educational, Scientific and Cultural Organization, adding new uncertainties for the cooperation among the major powers to resolve global issues.

The US has also repeatedly challenged the world's multilateral trade system and threatened to leave the WTO. On Dec 1, the Office of the US Trade Representative submitted a written document to the WTO opposing the granting of market economy status to China while continuing to conduct anti-dumping investigations against China, which is akin to a public declaration by the US that it refuses to recognize Article 15 of China's Protocol Accession to the WTO.

Besides, by misusing the tools of resolving trade disputes with China, the US administration has seriously hurt bilateral trade in 2017. The Trump administration's investigation under Section 301 of the US Trade Act of 1974 in August and "self-initiated" anti-dumping probe in November against China-the first such moves in more than 20 years-both run counter to the WTO rules. The US as a key member of the WTO has created controversy by showing blatant disregard for multilateral rules.

The Trump administration is trying to use trade protectionist measures as remedial tools for trade disputes. But instead of helping reduce the US' trade deficit with China, they will seriously damage the two countries' normal trade relations.

Healthy trade ties between the world's two largest trading powers can greatly promote global economic growth and improve their peoples' livelihoods. If the US takes a rational look at the real reason for the imbalance in Sino-US trade, it would realize the answer lies in cooperation, not a trade war. The US should not forget that the two sides signed economic deals worth more than $250 billion in early November during Trump's state visit to China. And since it was the US that promoted the multilateral trade regime, it should play a more active role to safeguard the multilateral trade rules.

The US will ultimately realize that trade protectionism is not helpful for its domestic economic development, because only through enhanced communication and cooperation can it meet its domestic as well as global trade challenges. China and the US both have the responsibility to jointly fight trade protectionism to build a more prosperous world economy. We sincerely hope that in 2018, Sino-US bilateral trade will be back on track to facilitate stable bilateral and global development.

The author is a senior researcher at the Center for China and Globalization and former director of the Chinese Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce.

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