Commentary
BEIJING – The United States using tariffs to limit imports from China, specifically targeting tech-intensive products, is a strategic misstep that will not only fail to halt China’s innovation, but also inflict harm on its own economy.
The tariff hikes on tech-intensive products and other imports from China, including a 100 percent duty on Chinese electric vehicles (EVs), 50 percent on solar cells and 25 percent on steel, aluminum, EV batteries and key minerals, are set to take effect on Sept. 27, according to the Office of the USTrade Representative (USTR).
American politicians often use tariff hikes and other protectionist measures, like the ban recently proposed by the US Commerce Department on Chinese-developed software and hardware in connected and autonomous vehicles, as a weapon against China. Such practices are based on a fundamental misunderstanding of China’s innovation capability and the global economic landscape.
China has cultivated a robust innovation ecosystem, whose capacity relies on the country’s vast talent pool, abundant sci-tech resources and advanced infrastructure, rather than any “favor” from certain countries.
According to the World Intellectual Property Organization’s preliminary report on the “Global Innovation Index (GII) 2024,” China is home to 26 of the world’s top 100 science and technology innovation clusters, maintaining its position as the global leader for two consecutive years.
Moreover, with a complete system of manufacturing industries, a vast and dynamic domestic market, and an extensive cooperation network with the world, China is well-positioned to continue its sci-tech innovation cycle regardless of external pressures.
As an example of China’s innovative technologies, Chinese EVs are gaining foothold in markets of Southeast Asia, South America and Europe. With advanced technology, good quality and reasonable prices, Chinese EVs are very popular worldwide.
In addition, China’s EV technologies also attract foreign partners. With comprehensive industrial categories and a well-rounded manufacturing system, China has attracted global firms to strengthen their investment in the country. Volkswagen Group in April announced an investment of 2.5 billion euros (US$2.8 billion) in expanding its production and innovation hub in Hefei.
According to Reuters report, General Motors is also in talks to buy EV batteries relying on technology from China’s major battery maker CATL, which will be assembled at a new plant to be built in the United States.
Imposing high tariffs on Chinese products is bound to backfire as the move increases costs for American consumers and businesses. According to Moody’s Investors Service’s report in 2021, US importers absorbed more than 90 percent of the additional costs caused by the increased US tariffs on Chinese goods.
Jason Oxman, president of Washington-based Information Technology Industries Council, said the tariffs have cumulatively cost US businesses and consumers US$221 billion, blaming USTR for relying on “the blunt and ineffective tool of tariffs with no support for their effectiveness,” according to a Reuters report.
Protectionist measures can’t solve the core issues that the United States faces regarding its industrial competitiveness. By shifting the blame to China, the United States diverts attention away from the much-needed reforms that could bolster its economic strength. It is time for the country to reevaluate its strategy and focus on internal reform and development, rather than protectionism and confrontation.
– Xinhua
