China says drop in trade with U.S. is direct consequence of U.S. moves

BEIJING — China’s ambassador to the U.S., Xie Feng, has blamed U.S. tariffs and export controls for a drop in trade between the two countries.

That’s according to a speech he gave via video on Tuesday at Forbes’ U.S.-China Business Forum in New York, published online by the Chinese embassy in the U.S.

China-U.S. trade fell by 14.5% in the first half of the year from a year ago, Xie pointed out.

“This is a direct consequence of U.S. moves to levy Section 301 tariffs on Chinese imports, abuse unilateral sanctions and further tighten up export controls,” he said.

“Livelihoods of many families have been affected, and businesses from both countries have born the brunt.”

The U.S. is China’s largest trading partner on a single country basis.

Year-to-date, U.S.-China trade fell further in July with a 15.4% decline from the same period in 2022, China customs data showed.

“The biggest risk is any decoupling between China and the United States, and the largest source of insecurity comes from any confrontation between the two,” he said.

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

Exports remain a major contributor to China’s economy, although their share has fallen in recent years.

The U.S. government on Wednesday revised down second-quarter domestic product to a 2.1% annualized pace, contrary to expectations there would be no revision, Reuters said. The report said lower business spending on equipment contributed to the revision.

Xie on Tuesday called for finding “a path for expanding mutually beneficial economic cooperation and trade between China and the United States.”

“Going forward, we need to continue taking concrete steps, no matter how small they may look,” he said, giving examples — such as making it easier for people to travel between the two countries, and renewing an agreement to cooperate on science and technology.

On a regional basis, the European Union and Association of Southeast Asian Nations are China’s largest trading partners. Those trade flows have also dropped this year — albeit at a more moderate pace — amid a decline in global demand.

Xie on Tuesday pointed out China’s global dominance in trade and in industries such as electric vehicles. He noted that France, the U.K. and Japan had significantly increased their foreign investment in China in the first half of the year.

“More efforts will be made to protect foreign investment and ensure national treatment for foreign-invested enterprises,” he said.

In his remarks, Xie noted U.S. Commerce Secretary Gina Raimondo’s trip to China this week. 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 told reporters said she “said no” to China’s requests to reduce export controls and “retract” the executive order on outbound investment screening.

“We don’t negotiate on matters of national security,” she said.

The U.S. government has cited national security concerns for its moves to restrict Chinese companies’ purchases of advanced semiconductors from U.S. businesses.

In 2018, the Trump administration imposed tariffs on Chinese goods, to which Beijing responded with tariffs of its own.

Xie claimed that average U.S. tariffs on Chinese products were 19%, while the Chinese tariffs on U.S. goods averaged 7.3%.

“Is this fair? Does this truly serve U.S. interests?”

The ambassador assumed his role in May after a period of about six months in which China had no ambassador to the U.S. 

In August, U.S. President Joe Biden signed an executive order aimed at restricting U.S. investments into Chinese semiconductor, quantum computing and artificial intelligence companies over national security concerns. Treasury Secretary Janet Yellen is mostly responsible for determining the details, which currently remain open to public comment. 

Xie called the executive order “a violation of the principle of free trade.”

“It is simply confusing that the United States, which repeatedly urged China to expand access for foreign investment in the past, is now imposing restrictions itself,” he said. “Instead of containing China, it will only curtail the right of American businesses to develop in China.”

As part of Raimondo’s trip to China, the U.S. commerce secretary said she spoke with more than 100 businesses and increasingly heard from them that “China is uninvestible because it’s become too risky.”

“My message was there’s a desire to do business, but we need predictability, due process and a level playing field,” Raimondo added in an exclusive interview with CNBC’s Eunice Yoon on Wednesday.