Ex-MOFCOM official and senior Chinese scholar on the tariff war

Ma Jianchuan and Cui Fan on U.S. tariffs at the latest CCG luncheon with ambassadors, diplomats, and foreign business representatives in Beijing.

On Wednesday, April 16, the Center for China and Globalization (CCG) held its 12th CCG VIP Luncheon, and the 2nd of its 2025 series, at the Beijing International Club, featuring keynote speeches and live Q&A from

• Ma Jianchun, President of the China World Trade Organisation Research Association; former Director-General of the Department of Foreign Affairs at the Ministry of Commerce

• Cui Fan, Professor at the School of International Trade and Economics at the University of International Business and Economics; Deputy Secretary-General and Director of Research at the CWTO

13 ambassadors, various Deputy Heads of Missions, and various representatives from business chambers and international organizations were guests at the luncheon. Some of them asked questions, as you will read later. Chinese government officials from the Ministry of Commerce, the Ministry of Foreign Affairs, and the State Council Information Office were also present.

The video recording of the luncheon, moderated by CCG Secretary-General Mable Lu MIAO, is available on the official CCG WeChat blog. It will soon be uploaded to CCG’s YouTube channel. Please note that this transcript has been edited.

Henry Huiyao Wang, Founder & President of CCG

Distinguished ambassadors, Your Excellencies, representatives from different embassies, counsellors, and Deputy Heads of Missions, representatives from multinational organisations, think tanks, and chambers of commerce attending this 12th edition of the CCG VIP Luncheon:

We launched this CCG Luncheon series about a year ago, and this is the 12th edition. We know we are now in a very critical time, and a very challenging and stimulating time. So this is really an occasion where we hope this segment of our luncheon will be a good opportunity to share ideas, to stir discussions, and to hear the opinions of experts.

And of course, we want to get feedback from our participants at this very interesting luncheon, and hear your views on how we can work together during this difficult and challenging time. So today, we have invited two very senior experts to talk about these issues.

We know that we are facing huge tariffs—almost a trade war—around the world right now, and how we cope with that, how we meet the challenges of this very big uncertainty, not only for China but for the world as well, is a very, very important issue. So, how we can gain a better understanding of that, and how we, the U.S., China, and all the other major economies, can work together, promote common understanding, and minimise differences, is the purpose of this luncheon as well.

So we are very honoured to have two experts join us to kick off this event. First, I would like to invite President Ma Jianchun to come on stage and take a seat here. Mr. Ma Jianchun is the President of the China World Trade Organisation Research Association (CWTO) under the Ministry of Commerce. After graduating from university, he has worked at MOFCOM for over four decades. He also served in the Policy Research Office, the Policy System Department, the Development Department, and the Department of E-Commerce. He was also Director-General of the Department of Foreign Affairs at MOFCOM and participated in extensive research on China’s foreign trade and opening-up policies.

He has a wealth of experience. In fact, in the 1990s, his book Towards an Open Economy received the prestigious “An Zijie International Trade Book Award.” His recent publications include China-Africa Economic and Trade Cooperation after the 20th National Congress of the Communist Party of China: Situation and Suggestions. Following that, he published yet another book. He also served as the Chinese Ambassador to Gambia. Ambassador Ma has rich experience both within the Ministry of Commerce and in engaging with countries around the world. He has also held diplomatic positions in Jordan and Egypt.

Now, he has been the President of the CWTO since earlier this year. So it’s truly an honour to welcome Ambassador Ma.

The next speaker I would like to introduce is another well-known expert, Professor Cui Fan. Like Ambassador Ma, he is also a CCG Non-Resident Senior Fellow. And of course, you may also sit in the middle.

Professor Cui is a well-known international trade expert. He is Professor at the School of International Trade and Economics at the University of International Business and Economics. He also serves as the Deputy Secretary-General and Director of Research at the CWTO. He has conducted research, published, and taught extensively on topics related to China. He also served as a visiting fellow at the London School of Economics. He holds a BA and an MA from UIBE, and of course, also has a PhD.

So, I would now like to invite Professor Cui to come up and join us, so we can begin our discussion today. But first, I would like to invite Ambassador Ma to share his views on the current situation. After that, we will hear Professor Cui’s analysis. Following both presentations, we will open the floor to our participants.

MA Jianchun, Chairman of the CWTO, Former Director-General of the Department of Foreign Affairs of the Ministry of Commerce, CCG Non-resident Senior Fellow

Excellencies, dear guests, ladies and gentlemen, good afternoon. It’s my great pleasure to be here to share with you some information and some ideas regarding the current situation in world trade. Before I talk about my view, I would like to introduce something about the society I’m working for: the China Society for World Trade Organisation Studies is a think tank affiliated with the Ministry of Commerce. Our society is formed by some retired government officials, some scholars, and some experts. We have this platform to provide a chance for our friends to have a discussion. Also, we provide suggestions to the government and enterprises. So, this is some basic information about our society, the China Society for World Trade Organisation Studies.

Today, my talk is mainly on this topic: I think the interests of all economies in the world can only be protected by the preservation of the multilateral trading system. We’ve seen many things in the first quarter of this year. Especially since the Trump administration in the United States took office, it has frequently used the tariff tools under the banner of “America First,” emphasising the need to reshape the international trade pattern through unilateralism and trade protectionism. In particular, the so-called reciprocal tariff policy was recently introduced by the United States. The U.S. has imposed tariffs on varying degrees on 185 trading partners. This unilateralist behaviour has undermined the authority of the WTO multilateral trading system, impacted the multilateral trading system with the WTO at its core, and seriously affected the normal development of international trade.

We all know the theory of comparative advantage in international trade. I don’t want to explain this theory here, because all of us know this kind of trade theory. I remember when I participated in the work of the economic system reform in 1980. At that time, I worked in the Ministry of Foreign Trade, in the System Reform Office. So at that time, we started to learn this theory, and according to this theory, China continued to deepen the system reform, moved closer and closer to the requirements of the General Agreement on Tariffs and Trade (GATT), and later the WTO. So, we tried to move ourselves closer to this standard, to this requirement, and finally, China acceded to the World Trade Organisation.

Now we have found the countries that had told us those theories and proposals in the past have changed. They have changed their approach. Contrary to the theory of comparative advantage, their policy is now oriented to anti-globalisation. What should we do in this case? Of course, many economists have to be involved in unilateral negotiations with the United States. They have to negotiate with the United States. Some people also suggest: China, please go and do something. Some friends talk to me—maybe most of the economies and countries now would like to see the play between the two majors.

But I think this is not something that just happens between our two countries. This is a question of whether we want to uphold multilateralism or not. If we just become involved in individual discussions, individual negotiations, then how about the WTO, multilateralism, the principles and rules for world trade?

So, we should firmly uphold this multilateral trading system with the WTO at its core as the global organisation of international trade governance. The core objective of the WTO is to form a unified set of rules and trade systems in the world, and reducing tariffs and trade barriers is one of its important missions.

At present, the world’s major economies have joined the WTO. The WTO has 166 members, and 20 countries are applying to join the WTO. The trade volume between WTO members accounts for 98% of the global trade volume. So, at present, the commodity tariff rates formed among the various WTO parties were reached by all the parties in accordance with their respective levels of economic development, industrial competitiveness, and market openness. According to this, they negotiated their tariff rates when they joined the WTO. Those tariff rates are reciprocal adjustments and concessions made by all parties in accordance with their own development needs and international responsibilities in order to achieve mutual benefits and win-win results. Therefore, if we say reciprocity, this is a kind of reciprocity because it basically reflects the interests and demands of all parties.

If a trade conflict arises between members, it should be resolved under the WTO dispute settlement mechanism. However, the role of the WTO is being challenged. Some people say that the era of the WTO may be over, because the United States, the world’s largest economy, is no longer essentially bound by the WTO. So, what will be the consequences of the United States no longer being bound by the WTO? Such unilateral policy and practice of the United States will seriously affect the confidence of all countries and all economies in the multilateral system, and will lead to more violations of WTO rules in the future.

When our society studied and had discussions, we were worried that world trade could slide into the law of the jungle. At present, some of the WTO members, when facing the Trump administration’s tariffs, have admitted defeat in response to Trump’s tariff policies, because their economic volumes are relatively small and they are unable to resist. Some WTO members have been cautious in dealing with the situation, and have expressed a tough attitude in words, but they have been more cautious or prudent in their actual actions. It can be seen that among the WTO members, there is a feeling of fear of Trump’s tariffs.

So, most of the WTO members do not agree with the U.S. approach, but they do not dare to act against the United States because the United States is relatively powerful. China’s economy is large and resilient, with a strong manufacturing sector and a domestic market that has the ability to absorb. China could respond to the challenge of external economic bullying.

China is in a relatively strong position compared to some other small and medium-sized economies. This is why we saw that the Chinese government could make a tough fight when the United States imposed tariffs and so-called reciprocal tariffs on China.

But how will those small and medium-sized economies respond if they don't have the strength to resist the tariff pressures? In Trump’s words, “You don't have a card.” Then you are forced to accept Trump's tariff demands, or whatever else conditions he wants. Maybe he also wants other conditions following the tariffs. If this model is replicated, what will the rules of international trade look like in the future? It is likely to slide into a law of the jungle. This is what we are worried about. This time, it’s not just a trade conflict between China and the United States. We are now facing another problem: how about our multilateralism?

History has shown that the preservation of the multilateral trading system is more important for small and medium-sized economies. China resolutely opposes the unilateral tariff policy. Of course, this is to protect China’s own interests, but also for the sake of upholding the multilateral trading rules with the WTO at its core. Through the WTO rules, it will form a kind of protection for all WTO members, especially those developing economies. Because if a major country applies the law of the jungle and practices unilateralism, the world’s small and medium-sized economies will suffer even more danger.

We remember the conclusion of the Uruguay Round, the establishment of the World Trade Organisation. The greatest achievement of this was the creation of a set of rules that would enable all members to participate equally in global trade. Under the current circumstances, we believe that it is very important for China and other members of the WTO to unite more closely, explore more effective ways of cooperation, and make every effort to safeguard the rule-based multilateral trading system and jointly safeguard the authority and stable operation of the multilateral trading system so that all economies in the world can benefit from economic globalisation.

China is not only protecting its own interests. China is also playing an active role in protecting multilateralism, the WTO, and the development of the global economy. Recently, the China Society for World Trade Organisation Studies invited some experts and scholars to discuss how to strengthen cooperation among WTO members in the face of today’s situation. We also have some other chances to exchange our ideas with our dear friends. Just before yesterday, I had a very nice talk with His Excellency the Ambassador. This week, we had a good talk. Yeah, we exchanged our views. So we also learn from our friends, from your opinions. Some of the experts suggested that the World Trade Organisation members work together to uphold the rules and the procedures of the WTO.

Just as the Director-General of the WTO, Madam Ngozi Okonjo-Iweala, said, the WTO is an important platform for dialogue, and it is essential to solve problems within the framework of cooperation. We should make use of this platform provided by the WTO. We use the platform. We use the expertise and legitimacy provided by the WTO to conduct dialogues, consultations, and negotiations as much as possible, and strive to bring trade disputes into this framework of the WTO, to try to find a settlement, not just individual talks from this country to that country. We have this platform already—the dispute settlement mechanism.

Recently, China turned to the WTO when it was imposed some tariffs by the United States. Also, on April 10th, at a very important meeting—the first Goods Trade Committee meeting—China raised a suggestion, and we got some support from other WTO members. There were also some other members who expressed their dissatisfaction and sued the United States in the World Trade Organisation. For example, Canada. I think this is very good. We should work together. We should work hard to bring these trade disputes into the dispute settlement mechanism of the WTO, which is the best effort to maintain the status of the WTO.

Of course, because of the new development, the WTO also needs to be reformed. We can work together and try to find another good way to push the WTO forward. If we don’t use this kind of platform, if we don’t support the WTO, we will lose the best platform and the best way for global economic development. This is my opinion. Thank you very much.

Henry Huiyao Wang

Thank you, President Ma. I think you have outlined the importance of the WTO and the multilateral system. It poses a challenge for all of us if, after the establishment of the Bretton Woods system and later the WTO, we now begin to move away from it. Abandoning such a system would indeed create a very difficult situation for everyone.

So I think it's important for China, the largest trading nation, the EU and many others to find a way to sustain this system. It’s a question that needs to be addressed, sooner or later.

Given the time, I’d now like to invite Professor Cui to share his comments. Perhaps you could speak for about 8 to 10 minutes, and then we will open the floor to participants from the audience.

CUI Fan, Professor at the School of International Trade and Economics, University of International Business; CCG Non-resident Senior Fellow

Thank you very much, Huiyao, for inviting me here. And thank you all, Excellencies, ambassadors, and respected diplomats. It’s a great honour for me to be able to present here.

What I’m going to talk about is totally on behalf of myself. I’m a professor affiliated with the University of International Business and Economics, but what I’m going to say has nothing to do with the university I’m working for or any other organisation I’m affiliated with. It’s entirely my personal point of view.

I totally agree with Ambassador Ma on the point that the retaliatory tariffs used by China are not only to protect the development interests of China, but also to protect the basic principles and rules of the multilateral trading system. What we are expecting is order—the order of international trade. I think most countries would like to have this order in the world market.

Currently, the world market is totally unpredictable. We don’t know what will happen tomorrow, and all the businessmen are very worried about that. So, we want to restore the order of international trade. We are working towards that goal.

If we look at the three rounds of retaliatory tariffs imposed by China, you can see that the main point of China is to try to say no to the American administration and to protect the order of international trade. When China imposed the first round of retaliatory tariffs, a 34% tariff rate on all American goods, I think most people, including the American administration, were a little surprised by how tough China was at this moment. We just wanted to show all other countries that, as the largest trading state in the world, if China cannot say no, all the other countries will be in a weaker position in their bilateral negotiations.

In the second round of retaliation, we increased the tariff rate from 34% to 84%. I found that President Trump was maybe a little angry about that—how could China be so tough? But then we saw that the U.S. increased the so-called reciprocal tariff rate from 84% to 125%, but in the meantime, reduced the tariff rate for many other countries to a level of 10%. Actually, China’s retaliation disrupted the whole plan of this so-called reciprocal tariff.

Before April 2, the only country suffering from discriminatory tariffs from the United States was China. After April 2, a lot of countries suffered from these discriminatory tariffs from the United States. But after this retaliation process, many countries are now facing a low tax rate at a uniform level of 10%. But this is not the end of the story, because there will be many more negotiations. Some countries’ tariffs may go up and some countries’ tariffs may go down.

The United States has totally destroyed the non-discriminatory principle of the World Trade Organisation. But after this retaliation, we can see that the whole plan of reciprocal tariffs has already been disrupted. Their original plan was to charge about $600 billion in tariff revenue every year, but now, I think at most, they can have $300 billion. They have lost a lot of negotiation bargaining chips.

For example, Vietnam first faced a 46% tariff rate, but now it’s 10%. If they had the 46% tariff rate, the United States had planned to push other countries to increase their tariff rates against China. This had significant bargaining chips to pressure other countries to impose discriminatory tariffs against each other. But now, a lot of these bargaining chips are gone. Vietnam's negotiation position, for example, started at 46%, but now it’s at 10%, giving them a better negotiation position. I think this applies to a lot of other countries, too. They now face less pressure. And the factories invested by China in Southeast Asian countries are in a better situation now.

So, I think the retaliation from the Chinese government has, in a way, helped us face a somewhat better situation. When the U.S. increased the tariff rate against China from 84% to 125%, the actual applied tariff rate changed from 126% to 167% because of other Section 301 tariff rates and fentanyl tariff rates. This difference didn’t have much influence on China, but the decrease in the tariff rates for other countries has had a positive influence on China.

So, I think China has firmly said no to the United States. For other countries, if you don’t say no, then in the next stage of bilateral negotiations, you will face more pressure. We know that the United States has asked other countries to increase tax rates against China. For example, the so-called “Fortress North America.” But unfortunately, since the start of the new administration of the United States, I’ve found that not one country has imposed new discriminatory tariffs against China.

Yes, the world trading system is weak, but except for the United States, all other countries still apply the Most Favoured Nation (MFN) tariff with each other. The world trading system is still there. The WTO is still alive.

So, I think the next step will involve many bilateral negotiations between the United States and other countries. In these negotiations, the U.S. may ask for a lot of requirements that are difficult to accept. For China, we’re watching all these negotiations, and I think it’s totally the right of each country to choose retaliation or negotiation. Every country has its own situation and choices.

But my suggestion is that in all these bilateral negotiations, we need to take care of WTO rules. We need to remember that if we give up the WTO’s basic principles, such as the Most Favoured Nation (MFN) article, the non-discrimination principle, and its rules, then in the future, if the United States imposes unreasonable tariffs on you, you will have no WTO to resort to.

We need to keep these principles and rules, and keep the WTO alive in the interests of all of us. So, in negotiations, when the United States asks us to take discriminatory actions, we should say no.

For China, I think we have some kind of mechanism, for example, an anti-discrimination investigation mechanism. For all countries, including the United States, if we face discriminatory tariffs, we will firmly say no. We will retaliate immediately or launch this anti-discrimination investigation mechanism immediately.

I think my point is totally the same as that of Ambassador Ma: we need to safeguard the WTO to help ourselves. Thank you very much.

…

Henry Huiyao Wang

Thank you, Professor Cui, for your very concise but vivid explanation of the pros and cons of this trade war, which is unfriendly to the majority of countries. I understand that U.S. trade accounts for about 13% of global trade. So what about the remaining 87%—all of us? What should we do? Should we allow this 13% to totally disrupt the rest of the world? I think it's a great question.

As Professor Cui rightly pointed out, and as Ambassador Ma also emphasised, how can we, representing 87% of global trade, protect ourselves? And can we sustain the momentum of the WTO and free trade, which is the bedrock of prosperity and stability we have today?

I think with the new Trump administration, it will take time for policies to take shape. For example, one thing I’ve noticed is that the U.S. seems to be somewhat overly focused on goods trade. They emphasise their large deficit in goods trade. But in the area of services trade, the U.S. actually has one trillion dollars in total trade volume and runs a 300 billion dollar surplus, which is often overlooked. In fact, the U.S. has a big surplus with China in services trade.

Another thing is the U.S. has the biggest investment draw in the world. Everybody invests in the US, and that’s why the stock market is hitting an all-time high. Also, 95% of international trade is settled in U.S. dollars, which gives the U.S. a significant premium.

Furthermore, the U.S. is harvesting global talent. It has a huge talent surplus. The country is home to 50 of the world’s top universities, and all the global talent goes to the United States. 30% of AI talent in the U.S. comes from China. So you see, you just can’t to be dominant in every area.

Many years ago, the U.S. deliberately moved away from heavy industries, viewing them as labour-intensive, polluting, environmentally unfriendly, and not worthwhile, because few people wanted to do hard physical labour. The U.S. shifted its focus to high-tech industries, digital economy, AI, crypto, and other high-end sectors. So, in many ways, the U.S. is winning on almost every front, except in goods trade.

So, I think we should probably start thinking differently about how we can truly get out of the current predicament and dilemma . First of all, I believe China and the United States have a lot of things to talk about. We now have a Chinese ambassador in Washington, but we still don’t have a U.S. ambassador in Beijing. Ambassador Perdue has not yet arrived. We hope that it can happen as soon as possible. And let's engage in dialogues in Beijing.

Also, President Trump has mentioned fentanyl as a topic of discussion. President Trump has mentioned fentanyl as a topic of discussion. In fact, China has already has done a lot of things on fentanyl. A former Assistant Secretary of State under the Biden Administration recently wrote an op-ed in The New York Times, noting that all the discussions with China during Biden’s term were very smooth. Of course, more can always be done, but a lot of progress has already been achieved. Officials from the U.S. Department of Homeland Security and China’s Ministry of Public Security have talked many times, and the fentanyl-related death rate in the U.S. dropped by 27% in 2024—a significant decrease—largely thanks to China’s contribution.

So, I think things can be done. And if we can reach a meaningful agreement on this issue, the 20% tariff could be lifted immediately.

Another point I think President Trump has realised is that when he talks about imposing tariffs of 125%, he ultimately exempted older Apple phones and computers. 70% of the world’s computers and 90% of Apple phones are manufactured in China. So when you talk about adding tariffs, it’s essentially hurting American companies themselves.

Take Tesla, for example. Half of Tesla’s global production comes from China. Today, we hear that President Trump is also considering relaxing tariffs on auto parts. After running the numbers, they’ve come to realise that these measures are going to hurt themselves too.

Walmart, which used to source 80% of its supplies from China, now sources 60%. As a result, prices in supermarkets are rising. So, these tariffs simply don’t make sense.

That’s why we are having this discussion. We truly hope both sides can come together, sit down, and talk. And I also believe, echoing Professor Cui’s point, that the rest of the world should recognise that China is fighting for the world. President Trump may have said, “Let’s forget the rest of the world and focus on China,” but in reality, China’s probably saving the world from a higher tariff. Therefore, other countries should also support China for these justified efforts…

Dan-Horia Maxim, Ambassador of Romania to China

Thank you very much, Henry. Also, thank you very much to all the speakers and guests for these presentations. You know, I followed WTO developments in the last 20 years. I share your assessment and your conclusions about the importance of the multilateral trading system anchored in the WTO. You mentioned that there will be no rule-based international trade order without a multilateral trading system and without the WTO. That's most likely sure.

We can see today that we are facing an acute crisis, a deep crisis, of the multilateral trading system. So my question is, indeed, we have to do something to revive, to somehow reform the WTO. And let's be honest here, because we know very well the WTO has been facing some problems for a long time. It is not only now. We are now indeed in a very deep crisis, but we know very well that the last probably five, six or even more ministerial conferences have not delivered results.

So, we have two issues here. First of all, we have to, as we say in the EU, update the rulebook of the WTO. Also, I think we have to come up with new disciplines because the technological progress we saw and we're achieving in different areas were not initially covered by the WTO. They should be addressed properly today.

Also, I think in the reform of the WTO, the enforceability of the system is extremely important. I think this is the key issue. I think Ambassador Ma mentioned that this is the key issue of the multilateral trading system anchored in the WTO. Because without the enforceability, without an Appellate Body, there is no possibility to keep the system in place and to keep it relevant.

So, we have to move somehow from this ancient paradigm about agricultural development, which was basically 80% of the discussions in the WTO in the last 10, maybe 15, 20 years. We have to move to address the new areas. That means we need a comprehensive and new approach to the WTO and its disciplines. And that means not only the functions, but also the areas. And when I say areas, I’m talking about the new disciplines or the new areas like e-commerce and environment, but also we need to address properly the subsidies and the industrial subsidies, transparency, and notifications. These are key to organising, or at least, giving a chance to the WTO to be relevant. Thank you.

Vebjørn Dysvik, Ambassador of Norway to China

I’m Vebjørn Dysvik, Ambassador of Norway to China. Thank you very much for the invitation. You see the title, and if we had gone back 12 months, we would have thought, is that really interesting? But we look at it now, unfortunately, it's extremely relevant and extremely interesting. And of course, for a small open economy like Norway, it is very clear that tariffs and the economic measures that are being taken now are not good for us. We don't think it’s good for the world economy. And counter-tariffs produce inefficiencies and externalities to our economies that we don't need.

Then the answer to that is, of course, partially what Dan talks about: the reform of the WTO. But as we who have worked with the WTO questions all know, that's an extremely long-term process. It takes a few decades every time you try to reform the structures. That work has to continue, but I think it's also important for all the people who want to support global production chains today to do what we can do right now and do it better. Because the question is, of course, coming from the US, but also from smaller countries as well.

And then, as Dan talked about these things as well, we can all be more transparent currently when it comes to our industrial policies, subsidies, and the role of state-owned enterprises in the economy. We can also be more transparent and honest when it comes to different kinds of risk reduction activities—things we do for security—be clear about what is actually security and what is more and more protectionist, and do it better.

And then I have a question for the professor and the ambassador, whom I had the pleasure of meeting earlier this week as well. Could it be that part of the response from China's side would be an opening up, not just the opening up of China as an investment destination, but also as an import destination? Because if you do a large-scale stimulus of the internal economy, you could also open up new market opportunities for many other countries that are being affected by tariffs around the world, and not least, in your region.

Jorge Toledo, Ambassador of the European Union to China

Thank you, Henry, and thank you to Professor Cui and Ambassador Ma. I perfectly agree with the important centrality of the rule-based WTO trading order. You know that the European Union supports and will support this rule-based order. I also agree with both the Ambassador of Romania and the Ambassador of Norway that there are issues that have to be fixed. It has been a long time since the last reform.

The problem is that, well, it seems that at least for the time being, the United States has, for all practical purposes, also abandoned the WTO. I say “also” because they’re withdrawing from so many things. So this reform will have to be about 87% of global trade, and we probably will not count on the U.S. for the next years.

I have two questions. One is for Professor Cui. How do you link Chinese retaliation to the U.S. retaliation, etc., to the fact that President Trump cancelled the reciprocal tariffs except for the 10% tariff on everyone else? What is the cause-and-effect mechanism of that? Because I think that the markets forced him to do that. He was getting calls from his friends, and he was watching the market dunk. It was more of a face-saving device that he had to do for everyone except for China, because, let’s say, there is a consensus in the U.S. about China. And this would not be unpopular, although I believe it is unsustainable. I just read today that China has banned the import of Boeing planes and parts for Boeing planes. I mean, what is going to happen? Is it going to ground all Boeing planes flying in China? I mean, this is unsustainable.

My next question is for Ambassador Ma, but also to Professor Cui. Because this is unsustainable. But at the same time, apart from the trade war, there is a face-saving war: who blinks first? President Xi and the Chinese government say we are ready to take a call, but we are not going to call. And the Trump administration says we are not interested, we are not calling; if they want to call, we’ll see. So, I mean, day after day, until somebody calls, of course. Do you think the Chinese government should call, or that the pride should prevail? Because we are all affected by that. Imagine the European companies that are manufacturing in China but importing components or materials from the U.S. I mean, this is very bad for everyone. Thank you.

MA Jianchun

Thank you for your questions. I learned the first question is about the reform of the WTO. In the past decades, and especially in the last several years, we have had many discussions on WTO reform, mainly on the efficiency of its decision-making processes and the dispute settlement mechanism. We need to talk about these problems because of the fast development of the world economy. Many aspects—not just trade and not just tariffs—are related to trade issues. So, for this, we should have some consensus. But because economic development levels vary between the members of the WTO, people have different ideas and opinions. That's reasonable. We accept this reality. So we always talk about this as: that we should have more consensus to push forward the reform of the WTO.

Now, the point is, if some of the WTO members want to abandon this system, then the question is not reforming the WTO. So, first, we should uphold the principle of multilateralism to safeguard the WTO's functions. Then we try to find a way to solve the problem. I think this is the basic ground for the WTO's reform. Thank you.

CUI Fan

We have very good questions. The first is about WTO reform. Yes, we should reform. I think the Chinese government has shown the position that it would like to be actively involved in the reform of the WTO. For example, the e-commerce issue. China has been actively involved in the e-commerce negotiations. China is part of the ongoing negotiations on the plurilateral agreement on e-commerce. China, I think, is totally open to other issues, for example, the environment. China is also a very active member of the negotiations on the plastic issue. We are also open to other topics, just like subsidies, industrial policy, and all these issues.

One point I would like to remind all of us is that China is trying to get into the CPTPP. WTO has no rules on, for example, state-owned enterprises. In the CPTPP, there’s a single chapter for state-owned enterprises (SOEs), that is, disciplines on SOEs. China is trying to join and accept that kind of discipline. Also, there are some more restrictive rules on subsidies in the CPTPP, and China wants to get into that. As long as the rules are written clearly, there’s no problem. We can negotiate. Maybe we will need some negotiations on exceptions or something like that, but we can stick to any rules that are on paper. There’s no problem for us to negotiate on subsidies. We have our position on subsidies as well. For example, non-actionable subsidies—the green subsidies. We want there to be some rules on green subsidies because we are facing the global issue of climate change. Subsidies, sometimes, can do good things.

There are also a lot of things in the Comprehensive Agreement on Investment (CAI) between China and the EU. We have accepted a lot of things there. Actually, many rules in the CPTPP and CAI, at the moment in China, we have already started to try all these rules in Shanghai, Shenzhen, and all these cities, because we think that those kinds of rules are reasonable. So there’s no problem for China to join the reform of the WTO. We are happy to reform the WTO to make it better.

In the meantime, I think that even if we have a new world trading system, even if the existing WTO is gone and we have a new system, in this new system, some rules should still be there, for example, non-discrimination and committed tariff rates. Any bilateral trade agreement should have those kinds of rules. If you cannot treat each other on the basis of non-discrimination, how can this agreement be a friendly agreement? Now, when we say we safeguard the basic principles and rules of the WTO, we mainly point to the rules of non-discrimination and the committed tariff rates.

And in the meantime, for China—yes, we are opening. We are doing more opening because when we are doing more opening, we will have more bargaining chips with the United States. We are expanding our opening areas, for example, the recent expansion of the opening in the trading services, in the value-added telecommunication, in the area of education, and in the area of hospitals.

Some other questions, for example, the link between the decrease in the tariff rate and Chinese retaliation. The force of the market is an important reason, of course, but it's also linked with China's retaliation, I think. Because this action taken by Donald Trump includes two parts: one, an increased tariff rate on China, but he knows that the increase in tariff rate on China has not had much emotional impact on China. So, in the meantime, he said, okay, I’ll decrease the tariff rate to other countries; I would like to isolate you. This is his point. So I think the strong position of China has also some contribution to this decrease in his tariff rate to other countries. Maybe there are complex factors, but I think this is one of the factors that led him to change his position a little bit. Because actually, this new position is totally different from his original plan. Why do we call this reciprocal tariff? He would like to treat each country differently. So I don't think the uniform 10% tariff rate is his original plan.

Another point, what’s the next step? A similar question was raised by His Excellency Ambassador of Belgium. He asked me just now: Is China safe or not? Of course, China is safe. When it's time to talk about danger and safety, it’s not the country that can print money that is safe. It is the country with production capacity, materials, and all the solid things that is safer.

This morning, I viewed a video by the spokeswoman of the White House. She said that it’s not the United States that needs other countries; it’s other countries that need the United States because they have consumers. And in this instance, she said that China and other countries need the printed money of the United States.

Actually, the imbalance of trade is because they have the privilege to print money. In the last year, the government deficit of the United States was $1.83 trillion, and the deficit ratio was about 63% or something like that. If they can cut half of the deficit, they can save about $900 billion. And if they consume $900 billion less, they won’t have a trade deficit. But the reason that they have a deficit is that they have the privilege to print money to buy things. So, if they isolate China, they face other countries. The trading balance cannot be solved. Then you will have more surplus and they will have a similar deficit as well. And then they will push you further. Because they always criticise other people, they don’t point to themselves.

So, I think China is safe, totally safe, okay? Don’t worry too much about us. For the next step, who will blink? Actually, in China, we have an old saying: “解铃还需系铃人”—whoever creates the problems should be the first to solve the problem. I think we are waiting because it's not a good time to negotiate. The United States says that they are organising other people to isolate China. So they’re going to negotiate with other people. We will have to just wait and see.

The daily communication channel, I think, is open. We have an ambassador there, and they have some representatives here. Okay. For this official negotiation, we are open. The door is open. I think China is totally open to negotiations. I think finally, we will negotiate, but I don’t think this is a good time. We don’t need to call. We will wait and see what will happen. Maybe one month later, they don’t have things in the store market, and the prices there are going up, and, I don’t know, we will have to see what will happen. Maybe they will organise other people to increase the tariff rate against China. China will cope with that kind of situation. We are quite busy at the moment. We will wait and see. Thank you.

Henry Huiyao Wang

Just briefly to add on the issue of WTO reform. Pascal Lamy was in my office not too long ago. He actually proposed the idea of a “WTO minus one,” maybe for the time being. I was at the WTO last September for the WTO Public Forum, where I had invited the president of the Peterson Institute. Adam Posen said, Please go ahead — China, the EU, other countries like Japan and Canada — reform the WTO. Don’t wait for the U.S. Maybe in the next few years, the U.S. will come back. But in the meantime, we’ve already been paralysed for several years. Let’s continue. So that’s just one perspective on WTO reform.

Now, on the “who blinks first” question. That’s a very interesting issue. I saw the U.S. Commerce Secretary on television saying that there are some intermediary middle-person communications happening. I also noticed that former Treasury Secretary Hank Paulson was in town, meeting with Vice Premier He Lifeng. John Thornton was also in town, meeting Vice Premier He Lifeng. So yes, there are people communicating.

But we’re still really looking forward to Ambassador Perdue arriving in Beijing as soon as possible. Ambassador Xie Feng has already returned to the United States — he was back in Beijing for meetings, and then he’s already returned. So, I think the channels are open. And certainly, when things cool down, people will start talking. I’m sure there’s a lot of pressure, as I said, iPhones, Teslas, and all those $100 to $200 billion worth of products are already suffering. So, I believe we’ll see some cooling down as well.

You know, CCG is actually going to the United States next week. We’re sending a think tank delegation to explore what possibilities lie ahead. So with that, let’s take one final round of questions before we close.

Jens Hildebrandt, Vice President Government Relations Greater China, BASF

Thank you. Jens Hildebrandt from BASF…Because the US announced exemptions for electronics in the trade conflict. What about China’s position? Is there any hope that there will be exemptions for some products? I can speak for the petrochemical sector.

So, on petrochemicals, obviously, 60% of all LPG imported to China comes from the U.S., and now we have a 125% tariff on it. So the question is, is there also any leeway for exemptions?

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Rol Reiland, Ambassador of Luxembourg to China

Thank you very much for organising this event. I would like to add my voice to those of my European colleagues. I think it’s not a surprise that you have so many European ambassadors here, given the steep interest we have in this. Obviously, Luxembourg, as one of the most open economies in the world, has a very strong interest in this.

Maybe two questions. One…does China plan any further outreach to some of the Global South countries, perhaps in supporting them in negotiations, etc., thereby strengthening its outreach and role in the Global South? Because obviously, we are all concerned with the role that trade, as well as remittances, play in the development of the Global South, in addition to ODA. This would be my first question.

My second question is a subject of a lot of personal interest, which we've discussed last time in this room. It goes to both distinguished speakers. You mentioned that China is safe. Do you think that, nonetheless, the current trade spat between the US and China is going to further accelerate reforms? Maybe, as I said last time, some timid reforms in terms of further opening up and also in terms of relaunching internal consumption. Do you think that those reforms may be accelerated as a result of this trade dispute? Thank you very much.

Stefan Bernhart, Vice President, European Union Chamber of Commerce in China (EUCCC)

I'm speaking on behalf of the European Union Chamber of Commerce. Most of our member companies are multinational companies, just like BASF. They are, of course, hit on all fronts, from tariffs from the United States, but also from counter-tariffs from China…China, as retaliation, not only imposed counter-tariffs but also utilised other instruments like export controls.

So my question would be, because these measures are not only targeted at the U.S., do you take any proactive measures to avoid collateral damage to other trade partners and companies, such as those from the European Union?

Onodera Osamu, Chief Representative for China & Northeast Asia & Director-General of the Beijing office, the Japan External Trade Organisation (JETRO)

One question and two comments. One question, about the WTO. I totally agree, as an old WTO hand, that the WTO is very important and that the multilateral trading system is very important. But having said that, I’m somewhat sceptical about whether using the dispute settlement system in this case is going to be helpful for the WTO as a system. We need to find a way to maintain the system rather than put too much stress on the system. That’s my personal opinion. I would like to ask the commentators whether they feel the same way or whether they think that the dispute settlement system will truly be helpful in solving the problem at hand in this case.

Two comments. First, we have an upset giant in the room. Don’t you feel that you need to have a better understanding of their concerns and try to find a pragmatic solution to the issue? That’s probably one comment I may have personally.

The third one is along the lines of what the ambassador termed as a “who blinks first game.” Some people call it a “chicken game.” But maybe with a very big change in thinking, one might think of it as an “adult game.” Who is more adult in this case? …At some point in time, as people say, it might be time to wait and see what happens. But there may be a time when you might want to say this is an “adult game.” So, being the adult, we might want to start discussions first.

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CUI Fan

I think, actually, most of the questions just now are related to the relationship between China and other countries. If I missed any questions, please remind me.

For developing countries, the Global South, including African countries, China has already taken some steps to open up since last year. And I think China is going to open more to the Global South. For example, at the end of last year, China announced that it would grant 43 least developed countries a zero tariff rate for 100% of their tariff lines. Last year, China also signed a framework agreement with more than twenty African countries. That was a framework, and I believe some detailed trade and investment agreements will follow. In these agreements, China will grant more favourable treatment to African countries.

We have implemented unilateral opening, automatic opening, and some reciprocal openings. We have all kinds of plans in progress. Just several days ago, for trade in services, China announced a programme to open further. I think around ten cities are included in that program, and they will implement more opening-up policies very soon.

So, facing these challenges, I believe China will deepen its reform programme, including reforms of state-owned enterprises and the reform of fair competition rules, especially to encourage private companies to play a bigger role in the development of our economy.

For developed countries, we totally understand that you have your concerns. For example, recently, China and the EU have been negotiating the price commitment mechanism for EV cars. If we agree on this price commitment, it will improve export orders and solve some of the concerns from the EU to some degree. We can engage in such negotiations as long as they are based on equal positions. For instance, several years ago, China had some disputes with Australia, but we resolved them within the framework of the WTO, including anti-dumping cases.

If I may raise another issue, for example, we know that we have some disagreements with Canada. I believe we can resolve these issues within the WTO as well, as they have a multiparty arrangement. As long as we use the WTO mechanism, we can reach results for these disputes. Historically, Canada has altogether launched 84 anti-dumping cases against China, while China has only initiated four cases against Canada. In such practices, including anti-dumping and anti-subsidy cases, when we respond, we will respond in a reasonable way. These mechanisms are allowed by the WTO. We will look at the technical details of such investigations. If we have any issues with that, we can negotiate and discuss. However, for discriminatory tariffs without any proper investigation process, China will retaliate immediately. Thank you.

MA Jianchun

Regarding China-Global South cooperation in the WTO, I have some words. I worked in African countries for many years. I remember once a local economic minister told me that when we saw you big economic powers fight each other in the WTO, we found some disappointment with this mechanism.

So, how should developing countries, especially African countries, have more confidence in multilateralism and the WTO? What I’m thinking is, we, the big economies, as important members of the WTO, should uphold multilateralism. Also, China and the European Union have some common ground on this issue. We should work together to push forward multilateralism in the world trade rules and safeguard the WTO’s functions. Thank you.