China News Agency, Beijing, February 6. Question: Why is participating in the international economic cycle not a "zero-sum game"?
——Interview with Wang Dongdong, former vice president of the Central Party School of the Communist Party of China
Author Liu Wenwen
According to foreign media reports, recently, the U.S. government is considering cutting off all ties between U.S. suppliers and China’s Huawei, and prohibiting U.S. suppliers, including Intel and Qualcomm, from supplying Huawei with any products.
This incitement to "build walls and fortifications" and "decoupling and breaking chains" has once again aroused concern from the international community.
In recent years, the global economy has been in a downturn, and anti-globalization thoughts are surging.
Wang Dongdong, former vice president of the Central Party School of the Communist Party of China, pointed out in his new book "China's Economic Breakthrough" that Western countries have intensified their trade controls, and some of these countries are specifically targeting high-tech fields to "stuck necks" against other countries.
In today's world of industrial division and globalization, why does this phenomenon occur?
How do you view the game between countries in the international economic cycle?
China News Agency "Dongxiwen" recently interviewed Wang Dongdong on this issue.
The guests visited the domestic chip exhibition area at the Jinyang Lake Digital Economy Development Summit.
Photo by Wu Junjie
The interview transcript is summarized as follows:
China News Service reporter: You mentioned in your new book that Western countries have intensified their trade controls, and some of them specifically target high-tech fields to "stuck the neck" of other countries. May I ask why this phenomenon occurs in today's globalized world?
Wang Dongdong:
In my opinion, the most direct reason is the international division of labor.
Adam Smith's "The Wealth of Nations" pointed out that the division of labor improves production efficiency, and thus draws an important conclusion: a country's participation in the international division of labor according to its "absolute advantage" can improve human welfare.
Later, David Ricardo further expanded, pointing out that even if a country does not have an absolute advantage, it can be win-win by dividing labor according to their respective "comparative advantages".
The division of labor theory of Smith and Ricardo is undoubtedly correct, but both have a common premise, that is, free trade.
Therefore, under the conditions of international division of labor, once trade is restricted, it may be "stuck".
In the Integrated Circuit Zone of the 4th CIIE, Qualcomm, AMD, ASML, TI and other global "chip groups" made a concentrated appearance.
The picture shows the automatic driving assistance system (ADAS) technology displayed by Texas Instruments.
Photo by Zhang Hengwei
Nowadays, the industrial division of labor has been globalized, and the phenomenon of "stuck neck" is related to the global supply and demand of products.
Some commodities in the international market are in excess supply, while others are in short supply.
If a country has a demand for commodities with excess supply, it will naturally not be controlled by others, but if it has demand for commodities with a shortage of supply, it is easy to be "stuck".
International division of labor is a double-edged sword.
Participating in the international division of labor can be a win-win situation, but if a product is in short supply in the international market and there is a strong domestic demand for it, the production of such products cannot be given up.
Therefore, if a country does not produce commodities that are in short supply in the international market, it will be "stuck" sooner or later.
Since the Ukrainian crisis, Europe has been choked by the lack of energy independence, leading to an intensified energy crisis.
The West imposed severe sanctions in response to Russia's military action against Ukraine, and the "Beixi-2" natural gas pipeline project was urgently suspended by Germany before it was put into operation.
Photo courtesy of Beixi No. 2 Company
China News Agency reporter: At present, some Western countries are agitating for "decoupling and breaking chains". What impact will this have on the international division of labor and trade cycles? How to view the game among countries in the international economic cycle?
Wang Dongdong:
Adam Smith's "The Wealth of Nations" started from the division of labor, and then expanded from the division of labor within the enterprise to the industrial division of labor, and then to the international division of labor.
The reason why he explored the division of labor so intensively is that in his view, the division of labor is the source of national wealth growth.
In other words, only through the division of labor and free exchange can a country become rich.
In 1817, Ricardo published "Principles of Political Economy and Taxation", explaining the theory of division of labor through theoretical models, and proposed that all participants in the international division of labor are winners and there are no losers.
In the past, developing countries believed that they were being exploited by trade with developed countries, but today, developed countries believe that trade with developing countries is a "disadvantage" for them and developing countries "take advantage".
If you understand Ricardo's theory of division of labor, you can see that both of these statements are wrong.
In summary, first, if a country wants to become rich, it should participate in the international division of labor according to its comparative cost advantages; second, cost is the highest price for giving up choices, and countries should weigh their own comparative advantages from the perspective of opportunity cost; third, freedom Trade is the premise of the international division of labor. Countries participating in the international division of labor should jointly resist trade protectionism and safeguard trade freedom.
The container truck drove out of the Fuzhou area of the Fujian Free Trade Zone.
Photo by Zhang Bin
Today, with the development of globalization, the world will not return to a state of mutual closure and separation. No country can close its doors to engage in construction. It is not a "zero-sum game" for countries to participate in the international economic cycle.
At present, some Western countries are agitating for "decoupling and breaking chains", resulting in unfree trade among countries, which will profoundly affect the international division of labor and the smooth flow of international trade cycles.
China News Agency reporter: The United States has stood at the highest end of the global industrial chain and is the biggest beneficiary of the international division of labor. Why has there been a trend of trade protectionism in recent years?
Wang Dongdong:
There used to be a popular view in American society that the US-China trade imbalance, the US’s long-term deficit, and China’s surplus, and the imposition of punitive tariffs on Chinese goods is to reduce the US’s trade deficit with China.
In fact, the U.S. trade deficit shows that the U.S. buys the goods it needs from China, while China buys less of the goods it needs from the U.S., and only exchanges the goods back for dollars.
China's trade surplus does not mean that China is "taking advantage", and the US's trade deficit does not mean that the United States is "suffering".
Furthermore, the U.S. dollar has been the international central currency since World War II. As long as the U.S. prints U.S. dollars, it can purchase goods around the world. However, if China wants to import U.S. goods, it must first export the goods in exchange for U.S. dollars.
In this way, the United States will inevitably have a trade deficit.
In fact, the United States today has deficits not only with China, but also with more than 100 countries and regions around the world.
Currency pictures such as RMB and US dollar.
Photo by Song Chenglin
The so-called "trade balance" is just a cover for the United States.
The drunkard's intention is not to drink, but the real purpose is to maintain the hegemony of the dollar.
In the 1970s, Japan’s economy rose and the yen challenged the dollar. In 1985, the United States defeated the yen with a piece of "Plaza Accord." In 1999, 19 EU countries launched the euro, which was officially circulated in 2002. As a result, the European sovereign debt crisis occurred in 2009. , so far the euro has slumped.
In 2010, China became the second largest economy in the world, and the internationalization of the RMB accelerated, so the United States targeted China.
The United States has gone to war to maintain the hegemony of the dollar precisely because it lacks confidence in the dollar.
China News Agency reporter: A few days ago, German Chancellor Scholz wrote an article in the US magazine Foreign Affairs, saying that China's rise is not a reason to isolate China, nor is it an excuse to restrict cooperation with China. How do you view deglobalization?
Wang Dongdong:
Regarding anti-globalization, not only are the attitudes of Eastern and Western countries different, but Western countries are not monolithic.
In the final analysis, different countries have different interests, and interests determine attitudes.
The United States is inclined to decoupling because it is worried that China's rise will shake its hegemony. Knowing that decoupling will pay a heavy price, it still insists on going its own way. The purpose is to contain China's economy and "stuck the neck" in China.
Scholz clearly opposes decoupling from China, which is wise.
China is by far Germany's most important trading partner, ahead of the Netherlands and the US.
According to the calculations of German economists, if Germany decouples from China, Germany will lose China's huge market, and the losses it will suffer will be six times the losses caused by Brexit.
Scholz at a press conference in Berlin.
Photo by Peng Dawei
China News Agency reporter: At present, the undercurrent of anti-globalization is surging. How should China break through the barriers? How to avoid being "stuck in the neck"?
Wang Dongdong:
If a country has demand for commodities that are in short supply, it is easy to be "stuck".
Key core technologies cannot be obtained, bought, or negotiated. If you do not pay attention to the independent research and development of key core technologies and rely heavily on imports, it is inevitable to be "stuck".
How to avoid being "stuck in the neck"?
First, the "stuck" products are often products that are in short supply in the international market. Therefore, while actively participating in the international division of labor, we must not give up the production of such products.
Second, the key core technology is a monopoly technology with price seeking power.
In order to avoid being controlled by others, we must insist on self-reliance and self-improvement in science and technology.
Key core technologies include basic technologies, killer technologies, and disruptive technologies, all of which are equally important.
Especially in the field of disruptive technology, advanced deployment and key breakthroughs should be made.
Only by giving full play to the advantages of China's new national system and taking the lead in a certain disruptive technology can the situation of being "stuck" be reversed.
(over)
At the Changxing Base of Geely Automobile in Huzhou, Zhejiang, fully automatic robots are running at high speed to produce the latest models.
Photo by Tan Yunfeng
Respondent profile:
Wang Dongdong, former vice president of the Central Party School of the Communist Party of China
Wang Dongdong, an economist, has successively served as the director of the Economics Department, the director of the Educational Affairs Department, the dean of education, and the vice-principal of the Central Party School.
Served as the lecturer of the provincial and ministerial cadre class of the Central Party School for a long time, and has been well received by the students.
The "Talking with Officials" series of books has aroused strong repercussions among leading cadres and business managers.
He has published dozens of papers in academic journals such as "Economic Research", "Management World", "Finance and Trade Economics", and "Reform", and has written nearly a thousand column articles in newspapers and periodicals such as "Economic Daily", "Study Times", and "21st Century Business Herald".
The main representative works include: "Wang Dongjing's Lecture Notes on Economics", "British Notes on Economics", "Reflections on Economics", "Economic Analysis", etc.