'Understanding deficit’ looms larger than trade deficit

As the world is talking about the impact of, and solutions to, a possible trade war between China and the US -- triggered seemingly by trade deficits -- a senior Chinese diplomat cautioned that an "understanding deficit" risks souring relations between the two countries for a far longer period.

Cui Tiankai, China's top envoy to Washington, has on many occasions said that the large trade deficit between the world's top two economies is attributed to many factors, including America's economic structure, low savings rates and high-tech export restrictions. They are factors that have been echoed by many specialists in China and the US.

He now highlights another deficit. In a speech at Harvard University's Fairbank Center for Chinese Studies on April 17, Cui said that although some people want to make trade deficit a big issue, the understanding deficit is more significant, more difficult to balance, and "may have negative impact that lasts longer if we don't make our best efforts to reduce it".

"Understanding deficit" was a term used by Fairbank Center Director Michael Szonyi in his introduction to a new book, The China Questions, in which the professor of Chinese history said, "We might even say that just as the United States has a trade deficit with China, it also has an understanding deficit."

Cui, China's longest-serving ambassador to the US, traveled to Pennsylvania, Harvard and Chicago last week to address campus faculty and business executives, seeking to clarify what he views as misperceptions about China's true economic and political goals.

One of his foremost concerns is about the "new era", a term that has caught global attention in the discussion of China's goals and strategy in its new phase of development.

This new era is domestically focused, rather than a geopolitical or geo-strategic plan. It prefers the quality of development to quantity, while highlighting a multiple-faceted development strategy featuring political, cultural, social and ecological aspects, not only the very narrowly-defined economic growth.

The new era also has some outward-facing aspects because China's development has to keep abreast with global trends, Cui said, but he added, "This is certainly not a plan for securing world dominance, it is certainly not a Chinese new era to replace the old American era."

Another "gross misinterpretation of China's intention" lies in Washington's recent labeling of China as a "revisionist power" attempting to overturn the existing international order, according to Cui.

China has a very strong track record in observing the principles set forth in the United Nations Charter, values ranging from honoring sovereign equality of member states, peacefully settling disputes to not interfering in member state's domestic matters.

By contrast, cases of violating these principles are far from rare in the world, Cui said. He gave examples such as the frequent threat or use of force to violate the sovereignty of member states; wars started without the UN Security Council authorization; or even in defiance of clear opposition from Security Council members; and chaos and bloodshed done in the name of "humanitarian intervention" or "responsibility to protect".

"The very people who are responsible for all this are now pointing the finger at others as a revisionist country. Honestly, people should have a better sense of shame," he said. "I think it is high time for us to review and reaffirm these basic principles so that we could have a better and more effective international order."

Cui also refuted a claim by US President Donald Trump who railed against China allegedly stealing American jobs.

"Chinese workers are not seeking jobs here in the United States. It is the result of global resource allocation of US companies, who seek the best for their interests," Cui said in a speech at the Wharton China Summit in Philadelphia on April 15.

Between 2001 and 2017, US GDP doubled, meaning that the US's overall social benefits have vastly increased, Cui said. But even so the living standards of many Americans have dropped.

"This is obviously a domestic problem, an issue caused by management. And now, somebody who is unwilling and unable to solve this problem wants to find a foe overseas," he said.

Cui also rebutted accusations that Chinese academics studying and working in the US in "basically every discipline" might be covertly gathering intelligence for the Chinese government, calling the charges "baseless".

"I wonder as to why some fear the influence of Chinese students in the US while China is not worried that these students may be subject to the impact of the US society," said Cui. "This kind of thinking is disrespectful not only to Chinese students, but also to American schools and teachers."

Perhaps it is safe to argue that what needs more urgently to be addressed is the US's understanding deficit with China rather than its trade deficit. Promoting better, deeper, and more realistic mutual understanding between our two countries is in their mutual interests as well as those of the world.