Encouraging Chinese companies to set up joint ventures abroad may be Beijing’s only way out of its trade imbalances with Western countries, according to Chinese foreign trade expert Huo Jianguo, former head of a think tank under China’s Ministry of Commerce (MOFCOM). He told representatives of foreign embassies and international organizations that he was “worried about China’s trade surplus”, and one way to mitigate the problem would be to set up more joint ventures abroad. “If there are more joint ventures or more investment into these countries, on the whole, they will feel better because they will think that although we have a deficit, we have new investment, so that will make a little bit of balance,” said Huo, former President of the Chinese Academy of International Trade and Economic Cooperation. While China must maintain “friendly dialogue” with its trading partners about the trade balance, China should also open up more and “stimulate companies to invest abroad”, Huo said. “That’s the only way to solve this problem,” he said at the round table hosted by the Beijing-based Center for China and Globalization, a non-governmental think tank.
The round table came as Western countries continued to blame China for trade imbalances, accusing it of exporting its industrial capacity amid weak domestic demand since 2021, especially in the electric vehicle sector. Trade tensions are growing, with China announcing that it will start collecting anti-dumping duties on European brandy just days after the EU voted to impose tariffs on Chinese-made EVs.
The EU's trade deficit with China reached a record €396 billion in 2022. The figure fell to €292 billion last year, but according to the EU there were “imbalances that remain significant” and “a matter of great concern”. The European Union has also raised concerns about foreign direct investment (FDI) in its member states. In January, the bloc proposed plans to review its vetting mechanism for foreign investment and impose tighter controls on technology outflows. But Huo said the EU market was “so big” that China could not give up on it, even though its trade relations with the emerging economies of the Global South were growing. “If we want China’s foreign trade to be stable, we need to continue to explore or stabilize the shares of the American and EU markets,” he said, adding that it was important as “domestic investment and consumption is weak”.
Yi Xiaozhun, former Deputy Director of the World Trade Organization (WTO) and another speaker at the event, said Beijing should do more to increase consumption in China. He added that Chinese exports were strong not because of subsidies or protectionist policies but because of the country’s integration into the global value chain. “I think it’s definitely not China’s goal to pursue a high trade surplus,” Yi said. “It’s high time for China and its trading partners to talk about it. As long as it’s a trade issue, we have WTO rules, we have a common interest to address this kind of imbalance. So we need to have this kind of discussion instead of waging a trade war or geopolitical struggle,” he said, as reported by the South China Morning Post.
