Cooperation is the future of ties with US

Premier Li Keqiang speaks to reporters at the conclusion of a news conference after the closing session of the National People's Congress at the Great Hall of the People in Beijing on Wednesday. Xu Jingxing / China Daily

Premier Li Keqiang reiterated in his news conference on Wednesday the vital importance of healthy and sustainable Sino-US ties for both countries, especially emphasizing that the two countries should avoid a trade war.

The premier's confirmation that both countries are working closely on a possible meeting between President Xi Jinping and his US counterpart Donald Trump, showed it's a big concern for both countries to put bilateral ties on the right track after Trump was sworn in.

US President Donald Trump's aggressive stance against China during the election campaign and immediately after he was sworn in raised concerns over the future of Beijing-Washington trade relations. Trade imbalance and disputes are not new for the United States and China. But they have established some effective mechanisms, such as the Strategic and Economic Dialogue and the Sino-US Joint Commission on Commerce and Trade, to resolve them.

A tipping point, however, was reached last year when the anti-globalization tide compounded the trade imbalance problem, and it was used as a campaign card by Trump to win the election.

But Trump's address to the US Congress on March 1 allowed the world to see a different leader, a leader with the merits of some previous US presidents. His tone on China indicated he was realizing the importance of China. And there is reason to expect Trump's attitude toward China to be more reasonable in the future.

Officials from both countries maintain regular, intense communications at the official working level. But a meeting between the two heads of state will help further ease tensions and prompt officials from both sides to work more closely together for the benefit of not only the United States and China, but also the rest of the world.

First, both sides should work together to find a truly scientific method to measure the real state of bilateral trade. Since the current method cannot separate exports from re-exports, the US' trade deficit with China is exaggerated. Also, the current account doesn't give a complete picture of the US' international transactions, and excludes a large number of financial flows, which could be viewed as "adjustment items". When the US has a trade deficit with China, it actually means it has a financial surplus with China.

Second, further opening up their services sectors, especially the financial service market, should be on the policy radar of China and the US both. Trump seems inclined to loosen government regulations on Wall Street. And China plans to make its financial sector more efficient and provide high-quality financial services to the public. Therefore, by further opening up their financial service markets, the two sides will not only expand domestic demand but also create more mutual profitable opportunities for Chinese and US companies.

Third, Trump is planning to revive the US energy sector, and China has a huge demand for oil and gas. So the two sides should enhance cooperation in the oil industry. China has to import about 60 percent of its oil, mainly from Organization of the Petroleum Exporting Countries members, to meet the domestic demand. This means there is room for the US oil companies to fill. Besides, the US government should allow more US companies to sell oilfield technologies to China and relax some regulations on Chinese investment limits in US oil refineries.

Fourth, Trump has an ambitious infrastructure investment plan, which China can help fulfill because of its expertise in infrastructure construction.

And fifth, both sides should make efforts to complete the China-US Bilateral Investment Treaty negotiation now that it has reached a decisive state. Making bilateral trade and investment easier will make made-in-US products more easily exportable to China, and allow Chinese companies to execute merger and acquisition deals in US oil assets and take over some bankrupt companies, which will alleviate the unemployment problem in the US.

Considering China and the US are now so deeply interconnected that the actions of one can have a huge impact on the other, and vice-versa, neither can afford the cost of bad relations. This means Chinese and US leaders will not intentionally undermine the most important bilateral relationship in the world. As such, if both sides deepen their cooperation, and enhance mutual understanding, China-US relations will be less discordant.

The author is a research fellow at and director of the Division of American Economic Studies at the Institute of American Studies, China Institutes of Contemporary International Relations.