China-US economic dialogue lack of progress due to excessive US demands: Sputnik

BEIJING — The first China-US Comprehensive Economic Dialogue (CED) concluded in Washington on Wednesday with a certain consensus reached, yet little progress has been made due to the excessive demands from the US side, according to a Sputnik analysis on Thursday.

Jin Canrong, a professor in the School of International Studies of Renmin University in Beijing, told Sputnik that the unsatisfactory result of the CED stemmed from the high price proposed by the US side.

"The results of the economic dialogue failed to meet expectations. Personally, I think the main reason is that the asking price from the American side was too high. China has already made promises on a number of concessions on increasing imports from the United States and improving market access for American companies," Jin said.

The Trump administration may have proposed very high and specific targets on reducing the US trade deficit with China, which Beijing found impossible to fulfill, Jin added.

"It seems there is a target to cut the US trade deficit with China by 50 percent in one year's time. This is only achievable by reducing Chinese exports to the United States, which could cause serious unemployment problems in China. Chinese authorities would never allow that," Sputnik quoted Jin as saying.

The Trump administration has also demanded a better market access to China in the internet and financial sectors, where American companies are highly competitive. Jin said China would view the market dominance in these sectors by US companies a severe national security threat.

"If China truly opens its internet and financial markets, American companies are highly competitive. But no country would agree to completely open its domestic market in those key sectors as it could become a national security threat," Jin said.

The Russian news agency piece also analyzed the main reason of China's big trade surplus with the United States. "One of the biggest reasons behind the massive US trade deficit with China is the shift of global manufacturing to Asia where labor costs are much cheaper."

"But US companies continued to generate colossal profits in the globalized economy," it reminded.

Sputnik took Apple's iPhone as an example. According to market research firm IHS Markit, all of the components of a 32 GB base model iPhone 7 cost about $219.8, and the assembly of those components into an iPhone, which takes place in China, costs about $5, bringing its total manufacturing cost to about $224.8.

Among the manufacturing cost, Chinese companies only make the battery, Bluetooth and WiFi components, which together cost less than $10. More expensive components of the iPhone such as the display and processor are made in South Korea, Japan and Taiwan, and China has to import those parts from the above countries and regions to assembly them into an iPhone.

However, the tricky part is, when an iPhone 7 is shipped from China to the United States, its manufacturing cost of $224.8 is fully counted as a Chinese export to the United States, resulting in China's big trade surplus with the United States.

"But Chinese companies, including Foxconn which assembles the smartphone in its factories in central and southern China, make about only 15 dollars in profits. In comparison, Apple sells the base model iPhone 7 at a retail price of $649, earning about $424.2 of profit for each unit," the Sputnik analysis stated.