Full text published | "China's Position on Certain Issues in China-US Economic and Trade Relations"

Xinhua News Agency, Beijing, April 9

The State Council Information Office released a white paper on "China's Position on Certain Issues in China-US Economic and Trade Relations" on the 9th. The full text is as follows:

China's Position on Certain Issues in China-US Economic and Trade Relations

(April 2025)

People's Republic of China

State Council Information Office

Table of contents

Preface

1. The essence of China-US economic and trade relations is mutual benefit and win-win

1. China and the United States are important trading partners in goods

2. China-U.S. trade in services maintained rapid growth

3. China never deliberately pursues a trade surplus

4. China and the United States are important bilateral investment partners

(V) Both China and the United States benefit from bilateral economic and trade cooperation

2. China conscientiously implements the first phase of the China-US economic and trade agreement

1. Continuously improving intellectual property protection

2. Prohibition of forced technology transfer

3. Expanding market access for food and agricultural products

4. Expanding market access to the financial services industry

(V) Maintaining the RMB exchange rate at a basically stable and reasonable equilibrium level

(VI) Actively expand trade scale

(VII) Maintaining pragmatic communication with the US on the agreed matters

III. The United States violated relevant obligations in the Phase One China-U.S. economic and trade agreement

1. Failure to implement the commitments in the technology transfer chapter of the agreement

2. Failure to fully implement the commitments under the Agreement on Food and Agricultural Products Trade Chapter

(III) Failure to fully implement the financial services and exchange rate commitments under the Agreement

(IV) Failure to provide reasonable convenience for China to expand purchases and imports

IV. China practices the concept of free trade and conscientiously abides by the rules of the World Trade Organization

1. Comprehensively strengthen trade policy compliance

2. Effectively fulfilling the tariff reduction commitments made upon joining the World Trade Organization

3. Providing subsidies in a compliant and reasonable manner within the scope of World Trade Organization rules

(IV) Continuously optimize the business environment

V. Unilateralism and protectionism undermine the development of bilateral economic and trade relations

1. Canceling China’s permanent normal trade relations status undermines the foundation of China-US economic and trade relations

2. The US's generalization of the concept of national security has hindered normal economic and trade cooperation between the two countries

3. The US abuses export controls to undermine the stability of the global supply chain

4. The US Section 301 tariff measures are a typical unilateral approach

(V) The US Section 232 investigation violates multilateral economic and trade rules

(VI) The US's illegal and abuse of trade remedy measures increases trade uncertainty

(VII) The US's use of fentanyl as an excuse to impose trade restrictions on China will not help resolve the issue

(VIII) The US’s imposition of so-called “reciprocal tariffs” harms both itself and others

6. China and the United States can resolve economic and trade differences through equal dialogue and mutually beneficial cooperation

1. Equal dialogue should be the basic attitude for solving problems among major countries

2. Mutually beneficial cooperation is conducive to China and the United States achieving their respective development goals

3. The world expects China-U.S. cooperation to bring more development opportunities

Conclusion

Preface

China is the world's largest developing country and the country with the highest average annual contribution to world economic growth. The United States is the world's largest developed country and has the largest economy in the world. Sino-US economic and trade relations are of great significance to both countries and have an important impact on global economic stability and development.

Since the establishment of diplomatic relations between China and the United States 46 years ago, bilateral economic and trade relations have continued to develop. The trade volume between China and the United States has jumped from less than US$2.5 billion in 1979 to nearly US$688.3 billion in 2024. The scope of China-US economic and trade cooperation has been continuously expanded and the level has been continuously improved, making important contributions to the economic and social development of the two countries and the improvement of people's well-being.

However, in recent years, the rise of unilateralism and protectionism in the United States has seriously interfered with the normal economic and trade cooperation between China and the United States. Since the Sino-US economic and trade frictions in 2018, the United States has imposed high tariffs on more than 500 billion US dollars of Chinese products exported to the United States, and has continued to introduce policies to contain and suppress China. China has no choice but to take strong countermeasures to resolutely defend its national interests. At the same time, China has always adhered to the basic position of resolving disputes through dialogue and consultation, and has conducted multiple rounds of economic and trade consultations with the United States to strive to stabilize bilateral economic and trade relations.

On January 15, 2020, China and the United States signed the Economic and Trade Agreement between the Government of the People's Republic of China and the Government of the United States of America (i.e., the first phase of the China-US economic and trade agreement). After the agreement came into effect, China, adhering to the spirit of the contract, worked hard to overcome the impact of the sudden epidemic and the subsequent supply chain obstruction, global economic recession and other multiple unfavorable factors, and promoted the implementation of the agreement. The United States has issued statements many times, affirming China's effectiveness in implementing the agreement. On the other hand, the United States has continued to tighten export controls and increase sanctions on Chinese companies, violating its obligations under the agreement several times.

The United States has recently released the "America First" trade and investment policy memorandum and the executive summary of the "America First" trade policy report, and has imposed additional tariffs on Chinese products across the board, including imposing tariffs on China on the grounds of fentanyl and other issues, imposing "reciprocal tariffs" and further imposing 50% tariffs, and also proposed 301 investigation restrictions such as port fees for China's maritime, logistics and shipbuilding industries. These restrictive measures, which use tariffs as threats and coercion, are a mistake on top of a mistake, and once again expose the typical unilateralism and bullying nature of the United States. They not only violate the laws of the market economy, but also run counter to multilateralism, and will have a serious impact on China-US economic and trade relations. China has taken necessary countermeasures in accordance with the basic principles of international law and laws and regulations.

The tariffs and other economic and trade restrictive measures taken by the United States against its trading partners have artificially cut off the previously mature global supply chain and industrial chain, broken the market-oriented free trade rules, seriously disrupted the economic development of various countries, harmed the well-being of people in various countries including the United States, and hurt economic globalization.

China has always believed that the essence of China-US economic and trade relations is mutual benefit and win-win results. As two major countries with different development stages and economic systems, it is normal for China and the US to have differences and frictions in economic and trade cooperation. The key is to respect each other's core interests and major concerns and find a proper solution to the problem through dialogue and consultation.

In order to clarify the facts about China-US economic and trade relations and illustrate China's policy stance on relevant issues, the Chinese government has issued this white paper.

1. The essence of China-US economic and trade relations is mutual benefit and win-win

Since the establishment of diplomatic relations between China and the United States, bilateral trade and investment cooperation has achieved fruitful results, achieving complementary advantages, mutual benefit and win-win results. China and the United States have extensive common interests and broad space for cooperation. Maintaining the stable development of Sino-US economic and trade relations is in the fundamental interests of the two countries and their peoples, and is also conducive to global economic development. Facts have proved that China and the United States will benefit from cooperation and lose from confrontation. Sino-US economic and trade cooperation is an inevitable choice for mutual benefit and win-win results.

1. China and the United States are important trading partners in goods

Bilateral trade in goods is growing rapidly. According to United Nations statistics, the bilateral trade in goods between China and the United States reached US$688.28 billion in 2024, 275 times the level when diplomatic relations were established in 1979 and more than eight times the level when China joined the World Trade Organization in 2001. Currently, the United States is China's largest export destination and second largest import source. In 2024, China's exports to the United States and imports from the United States accounted for 14.7% and 6.3% of China's total exports and imports respectively; China is the third largest export destination and second largest import source of the United States. In 2024, the United States' exports to China and imports from China accounted for 7.0% and 13.8% of its total exports and imports respectively.

The growth rate of US exports to China is significantly faster than its exports to the world. Since China joined the World Trade Organization, US exports to China have grown rapidly, and China has become an important export market for the United States. According to UN statistics, the US exports to China in 2024 will be US$143.55 billion, an increase of 648.4% from US$19.18 billion in 2001, far higher than the 183.1% increase in US exports to the world during the same period (Figure 1).

China is an important export market for US agricultural products, integrated circuits, coal, LPG, medicines, and automobiles. China is the largest export market for US soybeans and cotton, the second largest export market for integrated circuits and coal, and the third largest export market for medical devices, LPG, and automobiles. According to UN data, in 2024, 51.7% of US soybeans, 29.7% of cotton, 17.2% of integrated circuits, 10.7% of coal, 10.0% of LPG, 9.4% of medical devices, and 8.3% of passenger vehicles will be exported to China.

China-US bilateral trade is highly complementary. The two countries give full play to their respective comparative advantages, and bilateral trade is complementary (Table 1). According to Chinese customs data, the top five categories of goods exported by China to the United States in 2024 are electrical and mechanical equipment and their parts and accessories, machinery and equipment and parts, furniture, toys and plastic products, etc., accounting for a total of 57.2%. The top five categories of goods imported by China from the United States are mineral fuels, machinery and equipment and parts, electrical and mechanical equipment and their parts and accessories, optical instruments and soybeans and other oil-containing kernels, accounting for a total of 52.8%. Mechanical and electrical products are relatively important in China-US bilateral trade, and the characteristics of intra-industry trade are more obvious.

2. China-U.S. trade in services maintained rapid growth

The US service industry has a complete range of industries and strong international competitiveness. Overall, with the continuous development of the economy and the improvement of people's living standards, China's demand for services has increased significantly, and the service trade between China and the United States has grown rapidly. According to statistics from the US Department of Commerce, from 2001 to 2023, the service trade volume between China and the United States expanded from US$8.95 billion to US$66.86 billion, a six-fold increase (Figure 2). According to Chinese statistics, in 2023, the United States will be China's second largest service trade partner; according to US statistics, China is the fifth largest service export destination for the United States.

The United States is the largest source of China's service trade deficit, and the scale of the deficit is generally expanding. According to statistics from the U.S. Department of Commerce, from 2001 to 2023, the U.S. service exports to China increased from US$5.63 billion to US$46.71 billion, a 7.3-fold increase; the U.S. annual service trade surplus with China increased 11.5 times to US$26.57 billion (Figure 2), and reached as high as US$39.7 billion in 2019. In 2023, China will still be the largest source of the U.S. service trade surplus, accounting for about 9.5% of the total U.S. service trade surplus. China's service trade deficit with the United States is mainly concentrated in three areas: travel (including education), intellectual property royalties, and transportation services (Table 2).

China's trade deficit in travel services with the United States continues to expand. According to data from the U.S. Department of Commerce, there will be about 1.1 million Chinese tourists to the United States in 2023, and their consumption in the United States will account for 14% of the total U.S. service exports to China. Tourism, medical treatment, and studying abroad are still the main items of service trade consumption in the United States. According to statistics from the U.S. Department of Commerce, U.S. exports of travel services (including education) to China have increased from US$2.31 billion in 2001 to US$20.23 billion in 2023, an increase of 7.8 times.

China's payment of intellectual property royalties to the United States continues to grow. In 2023, intellectual property royalties will still be the main source of income for the United States' service trade (accounting for 13.1%). According to statistics, the intellectual property royalties the United States receives from China account for one-fifth of the total intellectual property royalties it receives from the Asia-Pacific region and 5% of the total intellectual property royalties the United States receives from the world.

3. China never deliberately pursues a trade surplus

The trade deficit between China and the United States is not only the inevitable result of the structural problems of the U.S. economy, but also determined by the comparative advantages of the two countries and the international division of labor. China does not deliberately pursue a trade surplus. In fact, the ratio of China's current account surplus to GDP has dropped from 9.9% in 2007 to 2.2% in 2024.

The benefits of Sino-US economic and trade exchanges are roughly balanced. To objectively understand and evaluate whether Sino-US bilateral trade is balanced, we need to conduct a comprehensive and in-depth investigation, and we cannot just look at the difference in goods trade. Today, as economic globalization develops in depth and international production is prevalent, the connotation of bilateral economic and trade relations has long exceeded the scope of goods trade. Service trade and local sales of domestic enterprises in branches in the other country (i.e. local sales in two-way investment) should also be included. Taking into account the three factors of goods trade, service trade and local sales of domestic enterprises in branches in the other country, the benefits of Sino-US economic and trade exchanges are roughly balanced (Figure 3).

According to data from the U.S. Department of Commerce, the U.S. service trade surplus with China was U.S. $26.57 billion in 2023, and the United States has a significant advantage in service trade; in 2022, U.S. companies' sales in China reached $490.52 billion, far higher than the sales of Chinese companies in the United States of $78.64 billion, with a difference of up to $411.88 billion, and the advantages of U.S. companies in cross-border operations are more prominent.

The US trade deficit with China has decreased, while the global trade deficit has increased. According to the Bureau of Economic Analysis of the US Department of Commerce, China's share of the total US trade deficit in goods has decreased for six consecutive years, from 47.5% in 2018 to 24.6% in 2024. During the same period, the US trade deficit with other countries and regions has increased significantly. In 2024, the total US trade deficit in goods reached 1.2 trillion US dollars, an increase of 13% year-on-year, and exceeded 1 trillion US dollars for four consecutive years.

China's foreign trade is characterized by large imports and exports, and the same is true for Sino-US trade. The added value obtained by China in the export of many processed and manufactured products only accounts for a small part of the total value of the goods, while the current trade statistics method is to calculate China's exports based on the total value (the full amount of goods exported by China to the United States). If the trade value-added method is used for calculation, the US trade deficit with China will drop significantly.

China has taken multiple measures to actively expand imports. Actively expanding imports is China's proactive responsibility as a responsible major country and an important contribution to the development of the world economy. Since November 2018, the China International Import Expo has been held in Shanghai every year. The number of participating countries and the intended transaction amount have increased year by year, with the cumulative intended transaction amount exceeding US$500 billion. In 2024, China's total imports will be 18.4 trillion yuan, a year-on-year increase of 2.3%. The import scale has reached a record high, and it has been the world's second largest import market for 16 consecutive years.

China has orderly expanded its own and unilateral opening-up, and the potential of its super-large-scale market has continued to be released, providing more opportunities for countries around the world. In 2024, China's imports from countries participating in the Belt and Road Initiative will reach RMB 9.86 trillion, up 2.7%, accounting for 53.6% of the total import value. On December 1, 2024, China granted zero tariff treatment to 100% of the tariff items of all the least developed countries with which it has established diplomatic relations, driving imports from relevant countries to grow by 18.1% that month. At present and in the future, China has huge room for import growth. It is expected that by 2030, the cumulative imports from developing countries alone will exceed US$8 trillion.

Actively expanding imports is also an important part of China's promotion of high-level opening up. China will orderly expand the opening up of its commodity market, implement zero tariff treatment for 100% of tariff items of all least developed countries with which it has established diplomatic relations, continue to play the role of important exhibition platforms such as the China International Import Expo, the Canton Fair, the China International Fair for Trade in Services, and the China International Consumer Products Expo, promote the cultivation of national import trade promotion innovation demonstration zones, continuously improve the level of import trade facilitation, tap import potential, and build China's super-large-scale market into a large market shared by the world, injecting new impetus into global economic development.

4. China and the United States are important bilateral investment partners

The United States is an important source of foreign investment for China. According to data from the Ministry of Commerce of China, by the end of 2023, the actual investment amount of the United States in China was US$98.23 billion. In 2023, the United States established 1,920 new investment enterprises in China, with an actual investment amount of US$3.36 billion, an increase of 52.0% over the previous year.

The United States is an important investment destination for China, and Chinese companies' direct investment in the United States has grown rapidly and significantly. According to data from the Ministry of Commerce of China, by 2023, China's direct investment in the United States will be about 83.69 billion US dollars, covering 18 industries of the national economy. China has established more than 5,100 overseas enterprises in the United States, employing more than 85,000 foreign employees. China has also made a large number of financial investments in the United States. According to data from the US Treasury Department, by December 2024, China holds US$759 billion in US Treasury bonds, making it the second largest foreign holder of US Treasury bonds.

(V) Both China and the United States benefit from bilateral economic and trade cooperation

In international trade relations, countries realize their own values, meet each other's needs and achieve common development through the exchange of goods based on comparative advantages. As the two largest economies in the world, China-US economic and trade cooperation has brought huge economic benefits to both sides. Enterprises and consumers of both countries have gained tangible benefits through two-way trade and investment.

Sino-US economic and trade cooperation has created a large number of jobs in the United States. According to a report released by the US-China Business Council in April 2024, China is the main market for US exports of goods and services. In terms of total exports of goods and services in 2022, China is the largest export market for three US states, the top three export markets for 32 states, and the top five export markets for 43 states. According to estimates by the US-China Business Council, in 2022, US exports to China created 931,000 US jobs in the United States, ranking third, second only to Canada and Mexico, and exceeding the total number of US jobs supported by the two Asian markets of Japan and South Korea.

Sino-US economic and trade cooperation has created a lot of business opportunities and profits for American companies (Table 3). China has a huge market and constantly upgraded consumer demand. For example, Tesla's sales in China continue to grow, with sales exceeding 657,000 vehicles in 2024, an increase of 8.8% year-on-year, setting a record high. More than a dozen US insurance companies have branches in China. As strategic investors of Chinese financial institutions, US financial institutions such as Goldman Sachs, American Express, Bank of America, and MetLife have all achieved considerable investment returns. According to statistics from the US Department of Commerce in August 2024, there were 1,961 US companies in China (with majority equity and assets, sales or net income of more than US$25 million) in 2022, with total sales of US$490.52 billion, a year-on-year increase of 4.3%.

Sino-US economic and trade cooperation has promoted the upgrading of American industries. In the economic and trade cooperation with China, American multinational companies have improved their international competitiveness by integrating the advantages of factors of the two countries. Apple designs and develops mobile phones in the United States, assembles and produces them in China, and sells them in the global market. Tesla has established a wholly-owned super factory in China to expand its production capacity and export to the global market. China has taken over some of the production links of American companies, allowing the United States to invest capital and other factor resources in innovation and management links, concentrate on developing high-end manufacturing and modern service industries, drive the industry to upgrade to high value-added and high-tech fields, and reduce the pressure on domestic energy resource consumption and environmental protection in the United States.

China-U.S. economic and trade cooperation has brought tangible benefits to American consumers. The United States imports a large number of consumer goods, intermediate goods and capital goods from China, which supports the development of the U.S. manufacturing supply chain and industrial chain, enriches the choices of American consumers, reduces the cost of living, and increases the actual purchasing power of the American people, especially the middle and low-income groups.

Sino-US economic and trade cooperation has also created a lot of business opportunities and profits for Chinese companies. The United States is the world's largest consumer market and the most mature capital market. Chinese companies can expand sales channels, enhance the international influence of their brands, attract global customers and partners, and obtain financing more conveniently to support the rapid development of their companies by investing in the United States.

American companies in China have provided Chinese companies with experience in technological innovation, market management, institutional innovation, etc., which has promoted Chinese companies to accelerate transformation and upgrading and improved industry efficiency and product quality.

2. China conscientiously implements the first phase of the China-US economic and trade agreement

As a responsible major country, China has conscientiously fulfilled its obligations under the agreement, protected intellectual property rights, increased imports, and expanded market access, creating a good business environment for investors from all countries, including American companies, to participate in sharing the dividends of China's economic development.

1. Continuously improving intellectual property protection

Innovation is the primary driving force for development, and protecting intellectual property rights is protecting innovation. China has taken multiple measures to protect trade secrets, protect pharmaceutical intellectual property rights, combat network infringements, and tighten intellectual property law enforcement, and has conscientiously implemented the relevant commitments in the intellectual property chapter of the agreement.

Strengthen the protection of trade secrets. In September 2020, the Supreme People's Court issued the "Regulations on Several Issues Concerning the Application of Law in the Trial of Civil Cases of Infringement of Trade Secrets", the Supreme People's Court and the Supreme People's Procuratorate issued the "Interpretation on Several Issues Concerning the Specific Application of Laws in Handling Criminal Cases of Infringement of Intellectual Property Rights (III)", and the Supreme People's Procuratorate and the Ministry of Public Security issued the "Decision on Amending the Regulations on the Standards for Filing and Prosecuting Criminal Cases under the Jurisdiction of Public Security Organs". In December 2020, the National People's Congress passed the Criminal Law Amendment. The above regulations cover the definition of the scope of prohibited acts that constitute infringement of trade secrets, the definition of criminal acts of theft of trade secrets, the application for temporary injunctions in cases of theft of trade secrets, and the adjustment of the threshold for initiating criminal investigations.

Improve the pharmaceutical intellectual property protection system. In October 2020, the Standing Committee of the National People's Congress reviewed and adopted the decision to amend the Patent Law, adding relevant provisions on the early resolution mechanism for pharmaceutical patent disputes and the patent term compensation system. In July 2021, the National Medical Products Administration and the National Intellectual Property Administration jointly issued the "Implementation Measures for the Early Resolution Mechanism for Pharmaceutical Patent Disputes (Trial)", the National Intellectual Property Administration issued the "Administrative Adjudication Measures for the Early Resolution Mechanism for Pharmaceutical Patent Disputes", and the Supreme People's Court issued the "Regulations on Several Issues Concerning the Application of Law in Civil Cases of Patent Disputes Related to Drugs Applied for Registration", establishing an early resolution mechanism for pharmaceutical patent disputes to ensure the effective implementation of the system. In December 2023, the State Council announced the decision to amend the Implementing Rules of the Patent Law, and the National Intellectual Property Administration simultaneously completed the revision of the patent examination guidelines and made detailed provisions on the patent term compensation system. In addition, in the revision of the patent examination guidelines completed by the National Intellectual Property Administration in 2021, the relevant content of supplementary experimental data was further improved.

Improve the trademark and geographical indication protection system. In April 2019, the Standing Committee of the National People's Congress reviewed and adopted the decision to amend the Trademark Law, adding relevant content to regulate malicious trademark registration, increasing the penalties for infringement of trademark exclusive rights, and significantly increasing the illegal costs of counterfeiters of registered trademarks. Since then, the National Intellectual Property Administration has successively formulated and issued the "Several Provisions on Regulating Trademark Application and Registration Behaviors", "Trademark Infringement Judgment Standards", "Trademark General Violation Judgment Standards" and other regulations to continue to crack down on malicious trademark registration applications. In December 2023, the National Intellectual Property Administration formulated and issued the "Geographical Indication Product Protection Measures" and "Collective Trademark and Certification Trademark Registration and Management Regulations", further improving the legal rules for the protection of geographical indications.

Actively promote Sino-US intellectual property exchanges and cooperation. Through consultations on work plans and signing of memorandums of understanding on cooperation with the US intellectual property authorities, deepen mutually beneficial and pragmatic cooperation in various technical fields such as intellectual property review, expert exchanges, and awareness raising. Maintain good communication and exchanges with US-funded enterprises with a positive and open attitude, listen to opinions and suggestions on China's intellectual property system, and coordinate to resolve the reasonable intellectual property demands of enterprises in China.

Step up efforts to combat online infringement. In September 2020, the Supreme People's Court issued the "Guiding Opinions on the Trial of Civil Cases Involving Intellectual Property Rights on E-commerce Platforms" and the "Reply on Several Legal Application Issues in Disputes Involving Internet Intellectual Property Infringement", which involved issues such as rapid removal, the effectiveness of notifications and counter-notifications. In November 2020, the Standing Committee of the National People's Congress passed amendments to the Copyright Law, including the addition of civil remedies for copyright infringement. In August 2021, the State Administration for Market Regulation issued the "Decision on Amending the E-commerce Law of the People's Republic of China (Draft for Comments)", which amended the procedures and penalty provisions of the notification and removal system.

Strengthening intellectual property law enforcement. In August 2020, the State Administration for Market Regulation and other departments issued the "Opinions on Strengthening the Destruction of Infringing and Counterfeit Goods", and the State Council amended the "Regulations on the Referral of Suspected Criminal Cases by Administrative Law Enforcement Agencies", requiring that cases involving intellectual property crimes be referred to public security agencies by administrative law enforcement agencies. China has also continuously strengthened infringement and counterfeiting law enforcement actions. In 2024, market supervision departments organized special actions such as intellectual property law enforcement to further strengthen the governance of key areas, key commodities, and key markets. Various special actions investigated and dealt with nearly 675,000 cases, including 43,900 trademark infringement and counterfeit patent cases, and carried out about 88,000 law enforcement actions against key physical markets with high incidence of infringement and counterfeiting. The General Administration of Customs further strengthened the enforcement of intellectual property protection, taking special actions as a starting point, and maintained a high-pressure situation to combat infringement in the import and export links. 41,600 batches and 81.6051 million pieces of suspected infringing goods were detained throughout the year.

2. Prohibition of forced technology transfer

China firmly opposes any form of forced technology transfer, always takes mutual benefit and win-win as the basic value orientation in conducting international technology cooperation, encourages and respects Chinese and foreign companies to voluntarily conduct technology transfer and licensing in accordance with market principles, provides a good market environment for Chinese and foreign technology holders to obtain benefits through technology transfer and licensing, and also provides support for promoting global scientific and technological progress and international economic and trade development. The US calls the voluntary contractual behavior of foreign-invested enterprises and Chinese companies to conduct technical cooperation and jointly obtain commercial returns in the Chinese market "forced technology transfer", which is inconsistent with the facts.

Forced technology transfer is clearly prohibited from a legal perspective. The Foreign Investment Law, issued in March 2019, stipulates that “administrative organs and their staff shall not use administrative means to force technology transfer”. The Administrative Licensing Law, revised and issued in April 2019, stipulates that “administrative organs and their staff shall not directly or indirectly require technology transfer in the process of implementing administrative licensing”. The Regulations for the Implementation of the Foreign Investment Law, issued in December 2019, further refine the above provisions and prohibit any form of forced technology transfer.

Comprehensively strengthen the confidentiality responsibility of administrative agencies and staff. Chinese law clearly stipulates that administrative agencies and their staff shall keep confidential the commercial secrets of foreign investors and foreign-invested enterprises that they learn about in the course of performing their duties. The Foreign Investment Law stipulates that "administrative agencies and their staff shall keep confidential the commercial secrets of foreign investors and foreign-invested enterprises that they learn about in the course of performing their duties, and shall not disclose or illegally provide them to others"; administrative agency staff "who disclose or illegally provide to others commercial secrets learned in the course of performing their duties shall be punished in accordance with the law; if a crime is constituted, criminal liability shall be pursued in accordance with the law." The Administrative Licensing Law also makes similar provisions in this regard.

Continuously expand market opening and investment access. China insists on optimizing the market environment, expanding foreign investment access, increasing the choice and freedom of foreign companies to invest in China, and creating good conditions for foreign companies to voluntarily carry out technical cooperation with Chinese companies in accordance with market principles. China has established a national treatment plus negative list management system for foreign investment access, replacing the "case-by-case approval" system for the establishment and change of foreign-invested enterprises with a convenient and fast information reporting system. China has also launched a series of measures to encourage foreign investment and continuously improve the foreign investment environment. In 2024, the General Office of the CPC Central Committee and the General Office of the State Council issued the "Opinions on Improving the Market Access System", requiring "strengthening the coordination of domestic and foreign investment access policy adjustments, and adhering to the principle of national treatment without reducing the access opportunities of existing business entities", and further improving the construction of the market access system, optimizing the access environment, and improving market access efficiency at the central level.

3. Expanding market access for food and agricultural products

Agricultural products are an important part of China-US bilateral trade, and they affect many market players in both countries. China has overcome the difficulties caused by the epidemic and kept its promise to expand its purchase of agricultural products. In November 2020, the US government released a report stating that US agricultural exports to China have returned to normal. The US Department of Agriculture and the Office of the Trade Representative released an assessment report in 2020, stating that the first phase of the China-US economic and trade agreement is bringing historic results to US agriculture.

According to the agreement, China will release a ban on some U.S. agricultural products from February 2020, and conditionally resume trade in U.S. beef, poultry, dairy products, etc. Specifically, it will lift the ban on U.S. beef and beef products aged 30 months and above, allowing more than 600 U.S. companies to export beef products to China; lift import restrictions on U.S. pet food, poultry and poultry products containing ruminant ingredients, and allow the import of U.S. pet food and poultry products containing ruminant ingredients that meet the requirements of Chinese laws and regulations; allow more than 300 U.S. companies to export infant formula milk powder, pasteurized milk and other dairy products to China; complete the approval of U.S. edible milk permeate powder, and allow the import of U.S. edible milk permeate powder; and sign a quarantine access agreement to allow the export of eight products to China, including potatoes for processing, avocados, nectarines, blueberries, barley, alfalfa pellets and hay, almond shell pellets and timothy hay.

4. Expanding market access to the financial services industry

China's independent opening-up policy has benefited financial institutions in various countries, including the United States. Many American financial institutions have successfully entered the market and started operations. JPMorgan Chase and Goldman Sachs have established wholly foreign-owned securities companies in China, and Morgan Stanley has obtained controlling rights (94% of its shares) in its joint venture securities companies in China. JPMorgan Chase Futures and Morgan Stanley Futures have become wholly foreign-owned futures companies. BlackRock, Fidelity, Neuberger Berman, JPMorgan Chase, Morgan Stanley, AllianceBernstein and others have been approved to establish wholly foreign-owned fund management companies. International rating companies such as S&P and Fitch have entered the Chinese market to carry out rating business. American Express and MasterCard's joint venture subsidiaries in China, Connect and MasterCard, have been approved for bank card clearing business licenses and have opened for business smoothly.

China has successively introduced more than 50 independent opening-up measures for the financial industry, significantly relaxing market access restrictions for foreign capital in the financial services industry.

——Completely remove restrictions on foreign shareholding ratios. In 2018, restrictions on foreign shareholding ratios in Chinese banks and financial asset management companies were removed, and the same equity investment ratio rules for domestic and foreign investors were implemented. The "Administrative Measures for Foreign-Invested Securities Companies", "Administrative Measures for Foreign-Invested Futures Companies", "Detailed Rules for the Implementation of the Regulations on the Administration of Foreign-Invested Insurance Companies" and other laws have been revised successively, relaxing the upper limit of foreign shareholding ratios in securities, fund management, futures, and life insurance to 51%, and there will be no limit from 2020. It is clearly allowed for foreign investment in credit reporting, rating, payment and other fields, and national treatment is given.

-- Significantly expand the scope of foreign investment business. Foreign banks are allowed to conduct RMB business as soon as they open for business. No more separate restrictions are set on the business scope of foreign-funded securities companies and insurance brokerage companies, and domestic and foreign investment are made consistent. Foreign investment is allowed to operate insurance agency business and insurance appraisal business. The requirements for foreign-funded institutions to obtain specific business qualifications such as lead underwriters of non-financial corporate debt financing instruments and fund custody are relaxed.

- Relaxation of qualification requirements for foreign shareholders. The requirement of US$10 billion in total assets for foreign banks to set up corporate banks in China and the requirement of US$20 billion in total assets for foreign banks to set up branches in China will be cancelled. The requirement that foreign insurance institutions must have opened a representative office for two years and operated for 30 years will be cancelled. It is no longer required that at least one of the domestic shareholders of a joint venture securities company be a securities company.

(V) Maintaining the RMB exchange rate at a basically stable and reasonable equilibrium level

China upholds multilateralism, respects multilateral consensus, has always abided by multilateral commitments, does not engage in competitive devaluation, implements a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies, and has fulfilled the agreement.

Adhere to the direction of market-oriented exchange rate reform. Continuously improve the market-oriented formation mechanism of the RMB exchange rate. Adhere to the exchange rate being mainly determined by market supply and demand, and withdraw from normal foreign exchange intervention. Orderly expand the exchange rate floating range, enhance the RMB exchange rate flexibility, and gradually expand the daily floating range of the RMB against the US dollar transaction price in the interbank spot foreign exchange market from 0.3% in 2007 to the current 0.2%. Improve the regularity and marketization level of the exchange rate midpoint quotation, and let the main participating banks in the foreign exchange market serve as the quotation bank, refer to the closing exchange rate of the interbank foreign exchange market on the previous day, and make quotations based on the foreign exchange supply and demand and the changes in the exchange rates of major international currencies.

Continue to deepen the development of the foreign exchange market. A number of measures have been introduced to facilitate cross-border trade investment and financing for foreign-related enterprises and individuals, enrich the foreign exchange market product system, expand the participants in the foreign exchange market, promote the opening up of the foreign exchange market, and improve the infrastructure of the foreign exchange market. A multi-level foreign exchange market system with complete functions has gradually been formed, and the diversified foreign exchange needs of market entities have been better met. At present, China's interbank foreign exchange market can trade more than 40 currencies, and the trading products cover the mainstream product system of the international foreign exchange market such as forwards, foreign exchange swaps, currency swaps and options. In 2024, the transaction volume of the interbank foreign exchange market will reach 41.14 trillion US dollars. The resilience of the foreign exchange market has been significantly enhanced, and the ability of market participants to adapt to the two-way fluctuations of the RMB exchange rate has been continuously improved. In 2024, the proportion of foreign exchange hedging by enterprises using foreign exchange derivatives such as forwards and options to manage exchange rate risks will reach 27%.

The exchange rate policy stance is clear and transparent. China's monetary policy stance is clearly stated through various channels, such as press conferences, minutes of regular meetings of the Monetary Policy Committee, and monetary policy implementation reports. In accordance with international practice, the central bank's balance sheet, foreign exchange reserves, balance of payments, international investment position and other data are regularly published to improve the transparency of the exchange rate policy.

The market-oriented reform of the RMB exchange rate has achieved remarkable results. The market-oriented level of the RMB exchange rate has been continuously improved, the exchange rate elasticity has been continuously enhanced, and two-way fluctuations have become the norm. The RMB exchange rate has remained basically stable at a reasonable equilibrium level, and China's balance of payments has become more balanced. Since 2020, the RMB exchange rate index of the China Foreign Exchange Trading Center, which measures the RMB exchange rate against a basket of currencies, has generally been running around 100, remaining relatively strong among major international currencies, and there is no competitive devaluation. The annualized volatility of the RMB exchange rate remains at around 3%-4%, which is basically equivalent to the volatility of major international currencies, and has played a good role as an automatic stabilizer of the macroeconomy and balance of payments. In 2024, China's current account surplus will account for 2.2% of GDP, which is within the internationally recognized reasonable range.

(VI) Actively expand trade scale

In light of domestic market needs, based on market-oriented, commercial principles and World Trade Organization rules, China has actively promoted the resolution of issues in the implementation of the agreement and supported relevant companies to expand imports from the United States. The procurement obligations under the relevant agreement expired naturally at the end of 2021.

Exclusion of market-based purchases of goods subject to additional tariffs on the United States. Based on applications from domestic enterprises, China will no longer impose additional tariffs on imports from the United States under Section 301 for a certain period of time on qualified goods purchased from the United States in accordance with market-based and commercial principles, creating convenient conditions for relevant enterprises to import from the United States. For example, oil, gas, coal, etc. are included in the scope of goods that can be applied for exclusion, supporting relevant enterprises to import related energy products from the United States. In 2020 and 2021, China's imports of energy products from the United States denominated in US dollars increased by 144.5% and 114.7% respectively over the previous year.

China has achieved positive results in expanding imports from the United States. According to Chinese statistics, in 2020, China's overall commodity imports denominated in US dollars fell by 0.6% over the previous year, while imports from the United States increased by 10.1%; in 2021, imports from the United States increased by 31.9% over the previous year, which was also higher than the overall import growth rate of 30%; the proportion of imports from the United States in China's total imports of goods increased from 5.9% in 2019 to 6.7% in 2021. According to US statistics, in 2020, while the overall US exports of goods fell by 13.4% over the previous year, exports of goods to China increased by 15.9%; in 2021, exports of goods to China also achieved a high growth of 21.9%; the proportion of exports to China in the total US exports of goods increased from 6.5% in 2019 to 8.6% in 2021.

In the process of fulfilling the contract, China faces multiple obstacles caused by the United States. The production capacity of related products in the United States is limited, and the export capacity to China is insufficient. In 2020, the aircraft production of Boeing in the United States was only about 40% of that in 2019, which had a great impact on China's delivery. In 2019, the United States wheat encountered adverse weather during the growth and harvest period, and there were serious problems of excessive ergot and vomitoxin. The amount of wheat that met China's food hygiene and quarantine standards was limited, which affected the wheat export to China in 2020.

Inadequate infrastructure in the United States has led to increased transportation costs. For example, most ports in the Gulf of Mexico cannot directly berth very large crude oil tankers (300,000 tons VLCC), requiring medium-sized tankers (100,000-200,000 tons) for transshipment and refueling, resulting in the cost of transporting U.S. crude oil to China being twice as high as that in the Middle East, and the international price competitiveness is relatively weak.

Some U.S. products are not very competitive in terms of price and safety, which affects the willingness of Chinese companies to import products in a market-oriented manner. Compared with U.S. soybeans, South American soybeans have a more obvious price advantage; the price of U.S. beef is about 50% higher than that of South America; U.S. rice is not very competitive compared with rice from relevant Southeast Asian countries in terms of quality, appearance, taste, and price. In February 2020, the import price of U.S. rice was about 3,000 yuan and 3,500 yuan higher per ton than that of Thai rice and Vietnamese rice, respectively. For example, in 2018 and 2019, Boeing's main model B737MAX suffered a series of serious accidents such as crashes. Most countries in the world, including China and the United States, have taken measures to ground this model, which has had a significant impact on aircraft trade.

The US side has caused the impact on Sino-US international logistics. Infrastructure such as US ports is in a tight balance. Affected by the epidemic, many links in the supply chain such as railways, ports, and container trucks are difficult to adapt. Major US ports are seriously congested, and the inland collection and distribution system is blocked, resulting in a large backlog of goods. According to the operating data of major global container ports released by the Shanghai Shipping Exchange, in 2021, the average port time of container ships at the Port of Los Angeles and the Port of Long Beach in the United States (including anchorage waiting and terminal operation time) was 11.1 days and 10.6 days respectively (4.3 days and 4.7 days before the epidemic). During the same period, the average port time of ships at the Port of Shanghai and the Port of Shenzhen in China was only 2.96 days and 2.33 days respectively.

(VII) Maintaining pragmatic communication with the US on the agreed matters

From 2020 to 2021, China maintained close communication with the United States at all levels on bilateral economic and trade relations and specific issues concerning the implementation of the agreement, and efficiently promoted relevant work, which fully demonstrated China's sincerity in fulfilling its obligations. The two sides did not initiate the dispute settlement mechanism during the above period. According to the agreement, in terms of high-level communication, China and the United States have held 6 phone calls to exchange views on topics such as the macroeconomic situation, bilateral economic and trade relations, and multilateral and bilateral cooperation, and to grasp the overall situation of the agreement. In terms of daily work, China and the United States held 5 vice-ministerial quarterly meetings and 14 department-level monthly meetings and consultations, focusing on expanding trade, food and agricultural product trade, intellectual property rights, financial services and other matters. They also maintained regular contact through working-level talks and e-mails to specifically promote the resolution of issues of concern to both sides.

According to the agreement, the agreement officially came into effect on February 15, 2020. At the same time, China has provided a public comment period of no less than 45 days for all the proposed measures to implement the agreement, fully absorbing opinions and suggestions from home and abroad, and properly responding to the reasonable demands and concerns of all sectors.

III. The United States violated relevant obligations in the Phase One China-U.S. economic and trade agreement

After the signing of the first phase of the China-US economic and trade agreement, the US continued to escalate its containment of China in economic, trade and other fields, and introduced a series of suppressive and restrictive measures against China, such as export controls and investment restrictions, which violated the spirit of the agreement. At the same time, the US continued to hype up issues such as human rights, Hong Kong, Taiwan, Xinjiang, and the epidemic, which severely impacted China-US relations and China-US economic and trade relations, hindered normal bilateral trade and investment activities, and undermined the atmosphere and conditions for the implementation of the agreement.

1. Failure to implement the commitments in the technology transfer chapter of the agreement

The technology transfer chapter of the agreement stipulates that "for acquisitions, joint ventures, or other investment transactions, neither party may require or pressure the other party to transfer technology to its own individuals." The United States has introduced the "Protecting Americans from the Influence of Foreign Adversaries Controlled Applications Act", using the so-called "protecting US national security" as an excuse to force TikTok to sell and divest, interfering with the normal operation of the company and threatening the technological security and commercial interests of investors. The US has violated the basic principles of a market economy, disrespected and damaged the legitimate interests of companies.

At the same time, the US has issued foreign investment restrictions in the name of maintaining "national security", restricting the normal foreign investment of US companies, making it difficult for Chinese and US companies to smoothly carry out investment cooperation in the fields of semiconductors and microelectronics, quantum information technology, artificial intelligence, etc. In February 2025, the US also issued an "America First" investment policy memorandum, announcing that it would adjust US investment policies, focusing on further restricting two-way investment with China, which would cause serious interference to China-US investment cooperation.

2. Failure to fully implement the commitments under the Agreement on Food and Agricultural Products Trade Chapter

The agreement stipulates that "upon receipt of China's formal request for the assessment of China's poultry disease-free zone and related supporting information, the U.S. Department of Agriculture's Animal and Plant Health Inspection Service shall initiate the assessment within 30 days." However, the U.S. has always refused to recognize the disease-free status of Shandong's highly pathogenic avian influenza-free zone on the grounds that it does not meet the U.S. disease-free status recognition requirements. On November 2, 2020, China officially submitted the "Jiaodong Peninsula Highly Pathogenic Avian Influenza Free Zone Disease Certification Materials" to the U.S. According to Chapter 10.4 of the World Organization for Animal Health's Terrestrial Animal Health Code, a country or region can achieve avian influenza disease-free status through vaccination and non-vaccination. In August 2022, Shandong Province, China, built a highly pathogenic avian influenza-free zone, and its construction and management were in compliance with the relevant provisions of the Terrestrial Animal Health Code. Since its completion, China has continued to carry out various monitoring work, including etiology, to prove that it has maintained a disease-free status. China has also earnestly implemented the agreement, recognized the disease-free status of the United States, and will no longer issue a comprehensive trade ban on poultry and poultry products imported from the United States to China after the outbreak. However, the US refused to carry out the disease-free status certification on the grounds that the highly pathogenic avian influenza immunization-free areas do not belong to the disease-free areas. This move did not fulfill the agreement in a reciprocal manner and was not in line with the World Organization for Animal Health's relevant principles on avian influenza disease-free status.

The agreement stipulates that "the two sides intend to conduct technical consultations in potential areas of cooperation related to pesticides, including pesticide registration and test data, and discuss the establishment of maximum residue limits", but the US side did not respond positively to China's proposal to jointly promote cooperation in the field of pesticides. China is the largest source of pesticide imports to the United States, and the United States is China's second largest pesticide export market. The mutual recognition of pesticide registration and test data as soon as possible meets the needs of trade facilitation, can reduce unnecessary repetitive tests, and reduce the cost of pesticide registration. It is a common demand of pesticide companies in both China and the United States, which is conducive to promoting the innovation and development of pesticides in China and the United States. China continues to strengthen communication with the United States and strive to start technical consultations in the field of pesticides between China and the United States as soon as possible. Since December 2020, China has repeatedly expressed through the U.S. Embassy in China that it hopes the United States will respond as soon as possible, establish a communication mechanism with China, and jointly promote cooperation in the field of pesticides, but the United States has never made any response.

In the agreement, the US promised to complete the import supervision notification procedures for Chinese poultry, citrus, fresh dates, fragrant pears and other agricultural products as soon as possible. However, the US did not give reciprocal tariff exclusion measures to the agricultural products involved in the agreement, which hindered the substantial export of Chinese agricultural products to the US. The relevant products are not included in the US tariff exclusion list. In 2025, the US imposed a 20% tariff on all Chinese products exported to the US on the grounds of fentanyl and other issues, and also imposed a 34% so-called "reciprocal tariff", and further imposed a 50% tariff, resulting in further restrictions on the export of relevant products to the US. China's aquatic products and dairy products exported to the US were automatically detained by the US. The General Administration of Customs of China has repeatedly asked the US Food and Drug Administration to clarify the next step of cooperation between the two sides to lift the automatic detention as soon as possible, so as to promote the work as soon as possible, but the US has never clarified the next solution path.

(III) Failure to fully implement the financial services and exchange rate commitments under the Agreement

In recent years, the U.S. has generalized the concept of national security and introduced a series of restrictive measures on investment and financing in China, which has aggravated the tension in Sino-U.S. economic and trade relations, disrupted the normal economic and trade cooperation between the two countries, and seriously affected the willingness of Chinese financial institutions to invest and do business in the U.S. At the same time, some Chinese financial institutions still face discriminatory treatment in the U.S., and the U.S. practices violate the principle of fair competition.

The agreement stipulates that if the two sides have differences in resolving exchange rate issues, they will be resolved under the framework of the bilateral assessment and dispute settlement arrangement established by the People's Bank of China and the US Treasury Department during the consultations; if they cannot be resolved, the International Monetary Fund will be asked to assist in resolving them within its mandate. These clauses provide a clear route for the two sides to resolve their differences. However, after the signing of the agreement, the US Department of Commerce issued new regulations to include exchange rate undervaluation in anti-subsidy investigations and introduced the so-called "RMB exchange rate undervaluation" project in anti-subsidy cases for some products. This move by the US is neither in line with the rules of the World Trade Organization nor in line with the commitments of the agreement.

(IV) Failure to provide reasonable convenience for China to expand purchases and imports

The unreasonable measures of the United States, such as export controls, suppression and sanctions against China, have had a serious negative impact on the implementation of the agreement. Since 2020, the United States has violated the spirit of the agreement, introduced a number of unreasonable economic and trade restrictions on China, implemented a series of inappropriate export control measures against China, and frequently imposed unreasonable suppression and sanctions on a large number of Chinese companies through the entity list, which seriously damaged the atmosphere of Sino-US economic and trade cooperation and greatly affected China's imports of relevant goods and services from the United States. For example, the United States introduced measures in October 2022 to comprehensively upgrade export controls on chips and semiconductor equipment to China. That year, the amount of semiconductors and semiconductor manufacturing equipment imported by China from the United States (in US dollars) fell by 23% and 17.9% respectively. The United States fabricated the so-called "forced labor" issue and passed the "Uyghur Forced Labor Prevention Act" to slander and discredit Chinese companies and Chinese products, restrict the import of relevant Chinese cotton products, and indirectly affect the import of cotton from the United States by relevant Chinese companies.

In recent years, against the backdrop of the US's continued containment and suppression of China, and the severe impact of the COVID-19 pandemic on global economic and trade activities, China could have fully informed the US in writing and withdrawn from the agreement in accordance with the fourth paragraph of Article 7.4 of the agreement; it could have also initiated force majeure consultations with the US in accordance with the first paragraph of Article 7.6. However, from the perspective of maintaining the overall situation of China-US relations and China-US economic and trade relations and the vital interests of enterprises and people of both countries, China did not initiate relevant actions, but instead honored its promises and overcame various difficulties to implement the agreement arrangements, fully demonstrating China's sincerity. Since the signing of the agreement, the US has not yet filed a complaint against China through the dispute settlement mechanism.

IV. China practices the concept of free trade and conscientiously abides by the rules of the World Trade Organization

Since joining the World Trade Organization in 2001, China has started the process of in-depth participation in economic globalization, and reform and opening up have entered a new historical stage. China has actively practiced the concept of free trade, effectively improved the stability, transparency and predictability of trade policies, and significantly opened up its market, making positive contributions to maintaining the effectiveness and authority of the multilateral trading system.

1. Comprehensively strengthen trade policy compliance

Since joining the World Trade Organization, China has fully fulfilled its commitments, abided by and implemented the rules of the World Trade Organization, improved the market economy laws and regulations based on rules, and built a legal system that conforms to multilateral trade rules. After joining the World Trade Organization, China has carried out large-scale review and revision of laws and regulations. The central government has reviewed more than 2,300 laws, regulations and departmental rules, and local governments have reviewed more than 190,000 local regulations, covering all aspects of trade, investment and intellectual property protection.

In order to implement the requirements of the Third Plenary Session of the 18th CPC Central Committee on adhering to the rules of the world trade system and building a new open economic system, the General Office of the State Council issued the "Notice on Further Strengthening Trade Policy Compliance Work" in 2014, and the Ministry of Commerce issued the "Implementation Measures for Trade Policy Compliance Work (Trial)" to require governments at all levels to conduct compliance assessments in accordance with the World Trade Organization Agreement and China's accession commitments in the process of formulating trade policies. In 2024, the Third Plenary Session of the 20th CPC Central Committee proposed to establish a compliance mechanism that is connected with international common rules and optimize the open cooperation environment. In March 2025, the General Office of the State Council issued the "Opinions on Further Strengthening Trade Policy Compliance Work", proposing that compliance assessment should be a necessary pre-process before the introduction of trade policies. In the process of formulating trade policies, the departments of the State Council, the people's governments at or above the county level and their departments should conduct compliance assessments on the proposed policies and measures in accordance with the principle of "who formulates, who evaluates" to make them comply with the rules of the World Trade Organization and China's accession commitments.

2. Effectively fulfilling the tariff reduction commitments made upon joining the World Trade Organization

When China joined the World Trade Organization, it made extensive and substantial tariff reduction commitments. The Chinese government has fulfilled its commitments and by 2010, China had fulfilled all its tariff reduction commitments, reducing the overall tariff level from 15.3% in 2001 to 9.8%. In terms of the World Trade Organization's bound tariff rate, China's overall tariff level of 9.8% is already very close to the average bound tariff rate of developed members (9.4%).

China pursues a mutually beneficial and win-win opening-up strategy. In recent years, it has taken the initiative to expand imports and has significantly reduced import tariffs on its own initiative on many occasions. In July 2023, with the completion of the eighth step of tariff reduction for products covered by the Information Technology Agreement, China's overall tariff level further dropped to 7.3%. In 2024, China further announced that a preferential tariff rate of zero will be applied to 100% of tariff items originating from the least developed countries that have established diplomatic relations with China. This fully demonstrates China's efforts to firmly promote opening up and integrate into the global economy. China's lower tariff level not only provides broad market opportunities for high-quality global goods, but also provides domestic consumers with diverse choices, promotes the development of the global industrial chain and supply chain, and promotes the liberalization of global trade and investment and the process of economic globalization.

3. Providing subsidies in a compliant and reasonable manner within the scope of World Trade Organization rules

Subsidies are an important policy tool for developing members to achieve the United Nations Sustainable Development Goals and the World Trade Organization's overall goals of promoting inclusive development and improving living standards. A joint report released by the World Trade Organization Secretariat and other international organizations in April 2022 pointed out that subsidies are prevalent in all industrial sectors and countries at different stages of development are using subsidy policies.

When China joined the World Trade Organization, it promised not to maintain or provide any export subsidies for agricultural products. It also made commitments that go beyond those of general developing members in the areas of agricultural domestic support and industrial subsidies. Since joining the WTO, China has strictly abided by the subsidy disciplines of the World Trade Organization and submitted subsidy notifications to the World Trade Organization in a timely manner. In June 2023, China submitted a notification on subsidy policies for 2021-2022, involving 69 central and 385 local subsidy policies, achieving full coverage of provincial administrative regions. In July 2024, China submitted a notification on agricultural domestic support for 2022, and the notification year is basically the same as that of major developed members such as the United States (market year 2022/2023 for the United States and market year 2021/2022 for the European Union).

China is committed to establishing and improving a fiscal subsidy system that conforms to international practices, and promoting the transformation of industrial policies from differentiation and selection to inclusive and functional. The Chinese government adopts more market-oriented and guiding indirect means such as public services, technical standards, and skills training, focusing on supporting market failure areas such as technological research and innovation, small and medium-sized enterprise development, green energy conservation, and public service system construction, so as to achieve inclusive support for enterprises in the industry, stimulate the vitality of business entities, promote fair competition, and improve the socialist market economic system. For example, for qualified individual industrial and commercial households and small and micro-profit enterprises, preferential policies should be implemented in terms of personal income tax, corporate income tax, resource tax, property tax, and urban land use tax.

In order to better play the role of subsidies in promoting development, China is open to discussing industrial subsidies under the framework of the World Trade Organization. At the same time, relevant discussions need to determine the direction, goals, forms and boundaries of the discussion, avoid generalizing to macro discussions of state intervention or industrial policies, and must not touch on the economic systems and development models of members.

Some people hype up the so-called "China overcapacity theory", accusing China of "overcapacity" due to macroeconomic imbalances and "non-market economic behaviors" such as subsidies, which has impacted the international market and damaged employment and supply chain resilience in other countries. China believes that the so-called "China overcapacity theory" is contrary to common sense. From the perspective of market economy principles, supply and demand are two basic aspects of the internal relationship of the market economy. Supply and demand balance is short-term and relative, and imbalance is universal and dynamic. From the perspective of international trade, the emergence and development of international trade is that countries carry out international division of labor and cooperation based on comparative advantages, thereby effectively improving global economic efficiency and well-being. Using "overcapacity" as an excuse to set limits on Chinese product exports and investment cooperation is actually naked trade protectionism, an artificial intervention and division of the global market, and will inevitably undermine the stability of the global production and supply chain, resulting in duplicate construction and overcapacity. Imposing restrictions by "labeling" and "labeling" will only hinder cooperation and will not get the desired results in the end.

(IV) Continuously optimize the business environment

The Third Plenary Session of the 20th CPC Central Committee emphasized that the market should play a decisive role in resource allocation and the government should play a better role; ensure that all types of economic ownership can use production factors equally, participate in market competition fairly, and be protected equally by law, and promote the complementary advantages and common development of all types of economic ownership; clean up and abolish various regulations and practices that hinder the unified national market and fair competition. The Chinese government has continuously optimized the business environment through systematic reforms to align with international rules and provide a more transparent, fair and predictable business environment for global companies.

Continue to expand foreign investment access. In July 2017, the negative list management system for foreign investment access was implemented nationwide. The Foreign Investment Law was promulgated in 2019, stipulating that foreign investment shall be subject to the pre-entry national treatment plus negative list model, establishing the principle of "consistency between domestic and foreign investment" in the form of legislation, prohibiting forced technology transfer, strengthening intellectual property protection, and providing legal certainty for foreign-invested enterprises. Further optimize the foreign investment environment, increase efforts to attract foreign investment, ensure foreign-invested enterprises participate in government procurement activities, support foreign-invested enterprises to participate equally in standard setting, and ensure that foreign-invested enterprises enjoy equal support policies, which further boosts foreign investment confidence. From 2017 to 2024, the national negative list for foreign investment access will be reduced from 93 to 29, and restrictions on foreign investment access in the manufacturing sector will be completely lifted. In 2024, China will successively expand pilot opening-up in value-added telecommunications, medical and other fields, and foreign investment access in the service industry will continue to be liberalized. The implementation of the 2025 Action Plan for Stabilizing Foreign Investment has released a positive signal of further opening up to the outside world, while actively carrying out foreign investment promotion work to effectively address the concerns of foreign-invested enterprises.

Create a fair competition market environment. In 2022, China issued an opinion on accelerating the construction of a unified national market, which clearly proposed to comprehensively clean up various preferential policies that discriminate against foreign-invested enterprises and non-local enterprises and implement local protection. In June 2024, the State Council of China issued the "Regulations on Fair Competition Review", which clearly requires that policies and measures shall not contain content that affects production and operation costs without approval, including not granting tax incentives, special fiscal rewards or subsidies to specific operators, and preferential treatment in terms of factor acquisition, administrative and institutional charges, government funds, social insurance premiums, etc. The Chinese government continues to clean up relevant preferential policies such as special fiscal rewards or subsidies, accelerate the formation of a system in line with international rules, and promote high-quality social and economic development.

Treat domestic and foreign-funded enterprises fairly in the field of taxation. In recent years, China has orderly promoted tax system reform, accelerated the implementation of the principle of statutory taxation, optimized and improved the tax system structure, and better played the important role of taxation in promoting high-quality development and promoting social fairness and justice.

——Taxes for domestic and foreign-invested enterprises are treated equally. All domestic enterprises, regardless of ownership, are subject to a unified tax law and the same tax rate. Foreign-invested enterprises and projects that meet the requirements can enjoy relevant tax incentives and support policies in accordance with regulations.

——Imported and domestic goods are treated equally. According to the relevant rules of the World Trade Organization and relevant domestic laws and regulations, China imposes certain tariffs on imported goods. In addition, in order to reflect the principle of fair tax burden, value-added tax is also levied at the import stage and consumption tax is levied on some consumer goods. The value-added tax can be deducted in the subsequent transaction chain, and the tax burden is passed on to the downstream. For domestic products, value-added tax is levied at various stages such as production and circulation, and consumption tax is levied on some consumer goods in some stages of production and circulation. The scope of collection and applicable tax rates for imported and domestic goods are exactly the same, and there is no "discrimination". China, the European Union, Japan, South Korea and other economies have implemented a turnover tax system, levying value-added tax or consumption tax at the import stage, which is in line with the principles of the tax system and international rules, and is a common practice in relevant countries. The United States does not implement a turnover tax system, and mainly relies on direct taxes such as sales tax, which are levied directly on consumers at the end of the transaction chain, so importers naturally do not need to pay. Such differences are caused by different tax systems in various countries. It does not mean that China, Europe, Japan, South Korea and other countries have imposed additional "discriminatory" or "extraterritorial" taxes on imported goods, nor should they use this as a reason to impose additional tariffs on goods from relevant countries.

——Chinese and foreign citizens are treated equally in personal income tax. It is an international practice to collect personal income tax from foreigners working in their own country. According to China's Personal Income Tax Law, resident individuals must pay tax on income earned in and outside China, while non-resident individuals only pay tax on income earned in China. The criteria for distinguishing between residents and non-residents is whether one has a residence in China, or whether one has lived in China for 183 days in a tax year without a residence, rather than whether one is a Chinese citizen. At the same time, China has provided support policies such as tax exemption on allowances for foreign individuals.

Actively promote the development of digital trade. 12 national digital service export bases have been established across the country, and policies and measures to support the innovative development of the bases have been introduced. Since 2015, 165 cross-border e-commerce comprehensive pilot zones have been established across the country, covering 31 provinces, realizing the integrated development of industrial digitalization and trade digitalization. China manages the Internet in accordance with the law and welcomes Internet companies from all countries that abide by Chinese laws and regulations and provide safe and reliable products and services to develop in China. In 2024, China issued opinions on the reform and innovative development of digital trade to further promote the institutional opening of digital trade, including liberalizing market access in the digital field, promoting and regulating cross-border data flows, and building a high-level open platform for digital trade. In the field of cross-border data flows, in 2024, China will promulgate the "Regulations on Promoting and Regulating Cross-border Data Flows" based on the actual work of data outbound security management, further optimize the regulatory environment for cross-border data flows, and authorize free trade pilot zones to independently formulate negative lists for cross-border data flows. Tianjin, Shanghai, and Beijing free trade pilot zones took the lead in piloting the "negative list for cross-border data flows" to clarify the boundaries of restricted data, reduce corporate compliance costs, and improve policy predictability.

V. Unilateralism and protectionism undermine the development of bilateral economic and trade relations

As the main founder and participant of the international economic order and multilateral trading system after the end of World War II, the United States should have taken the lead in complying with multilateral trade rules and properly handling trade frictions with other WTO members through the dispute settlement mechanism under the WTO framework. However, in recent years, the United States has pursued unilateralism and economic hegemonism, engaged in the so-called "small courtyard with high walls" and "decoupling and breaking of chains", and provoked economic and trade frictions from all sides, which has not only harmed the interests of China and other WTO members, but also damaged the United States' own international image, shook the foundation of the global multilateral trading system, and will ultimately harm the long-term interests of the United States.

1. Canceling China’s permanent normal trade relations status undermines the foundation of China-US economic and trade relations

In April 2025, the White House released the executive summary of the "America First" trade policy report, saying that it had carefully evaluated the bill of Congress to cancel China's permanent normal trade relations status and made recommendations to the president accordingly. In fact, permanent normal trade relations status (i.e. permanent most-favored-nation treatment) is the core foundation of Sino-US economic and trade relations. If the United States promotes the cancellation of China's most-favored-nation treatment, it will violate the rules of the World Trade Organization, seriously undermine Sino-US relations and the global economic and trade order, and is a typical unilateralism and trade protectionism practice.

The cancellation of most-favored-nation treatment is a serious violation of the rules of the World Trade Organization. The rules of the World Trade Organization require that WTO members unconditionally grant most-favored-nation treatment to other WTO members, and this requirement is legally binding. In 2018, the US government unilaterally announced the imposition of 301 tariffs on relevant Chinese products in accordance with its domestic law, and subsequently took a series of strict unilateral restrictive measures against China in the fields of investment and technology exports. The relevant practices of the United States violate the requirements of the World Trade Organization for most-favored-nation treatment. Among them, the 301 tariff increase measures have been ruled illegal by the World Trade Organization expert group. The practice of canceling most-favored-nation treatment, whether through legislation by the US Congress or any other domestic legal means, directly violates the obligations that the United States should bear under the World Trade Organization and is naked unilateralism and trade protectionism.

The cancellation of the most-favored-nation treatment will seriously undermine the stability of Sino-US economic and trade relations and the global economic and trade order. Permanent normal trade relations have been the foundation for the stability of Sino-US economic and trade relations for more than 20 years, and have a far-reaching and positive impact on the economic and trade exchanges between China and the United States and even the development of the global economy. The cancellation of permanent normal trade relations will make Sino-US economic and trade relations return to the state of lack of certainty and predictability before China joined the World Trade Organization in 2001, and may even lead to the "decoupling and disconnection" of the Sino-US economy. The cancellation of the most-favored-nation treatment will greatly deteriorate the Sino-US economic and trade environment, and other economic and trade fields such as service trade, intellectual property rights, two-way investment, technology control, and personnel exchanges will also be affected. In addition, the cancellation of the most-favored-nation treatment of a World Trade Organization member will fundamentally undermine the most-favored-nation treatment principle of the World Trade Organization, shake the foundation of the multilateral trading system with non-discrimination as its basic value orientation, and cause serious damage to the multilateral trading system and the global economic and trade order.

China firmly opposes the use of unilateralism and protectionism to undermine the multilateral trading system. The multilateral trading system with the World Trade Organization at its core is the cornerstone of international trade and one of the important achievements of the development of human civilization. Most-favored-nation treatment is a basic principle of the multilateral trading system. China has always firmly supported and maintained the multilateral trading system. History and reality have shown that the rules-based multilateral trading system is in the common interests of all countries. Unilateralism and protectionism undermine the global industrial chain, supply chain and value chain, and threaten the stability and development of the world economy. China has always opposed the use of unilateralism and protectionism to undermine the multilateral trading system. It hopes that the United States will face up to the adverse effects that may be brought about by the cancellation of most-favored-nation treatment, work with the majority of World Trade Organization members, and jointly maintain a fair and reasonable international economic and trade order and international trade environment.

2. The US's generalization of the concept of national security has hindered normal economic and trade cooperation between the two countries

The US government has continuously politicized economic and trade issues under the pretext of national security and introduced various economic and trade restrictive policies and measures. The scope of restrictions continues to expand and the intensity of sanctions continues to increase. In September 2024, the 2024 China Business Environment Survey released by the US-China Business Council showed that US export controls, sanctions and investment reviews on China have become one of the main challenges facing US companies in China.

In terms of trade, the US claims that the persistent trade deficit poses a serious threat to the US economy and national security. The US has also frequently strengthened restrictions on Chinese integrated circuits and communications companies on the grounds of national security, through various unilateral measures such as strengthening export controls, expanding sanctions on China, and closing the US market. In January 2025, the US Department of Commerce issued the final rule "Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles", stating that China's connected vehicle software, hardware and complete vehicles are "unsafe" and restricting their entry into the US market; in the same month, the US Department of Commerce announced the launch of an investigation into the national security risks of information and communication technology and services for drone systems in China and other countries. The US also said it would expand the scope of investigations on information and communication technology and services to cover advanced technologies controlled by so-called "adversary countries".

In terms of investment, the United States has introduced the "Foreign Investment Risk Review Modernization Act" and its supporting administrative system, expanding the review power of the Committee on Foreign Investment in the United States and restricting Chinese companies' investment in the United States in key technologies, key infrastructure, sensitive data and other fields. In January 2025, the final rules for the review of US foreign investment came into effect, comprehensively restricting US funds and companies from investing in China's semiconductor and microelectronics, artificial intelligence and quantum information technology fields. In February, the United States issued the "America First" investment policy memorandum, proposing to expand the scope of US investment restrictions in China from semiconductors and microelectronics, quantum information technology and artificial intelligence to biotechnology, hypersonics, aerospace, advanced manufacturing and directed energy, and further tightening China's restrictions on investment in the United States' "strategic industries".

The series of trade and investment restrictive measures implemented by the United States not only increase the compliance costs of enterprises and seriously hinder the normal economic and trade cooperation between the two countries, but also affect the stability of the global industrial chain and supply chain, and seriously undermine the international economic and trade order.

3. The US abuses export controls to undermine the stability of the global supply chain

In recent years, the United States has generalized national security, abused long-arm jurisdiction, continued to politicize, weaponize, and instrumentalize export controls, imposed sanctions and suppression on industries and companies in other countries, seriously hindered normal global economic and trade exchanges, and undermined the stability of the global industrial chain and supply chain.

The US is suppressing and containing China in the name of national security and human rights. Since 2022, the US has repeatedly upgraded its export controls on semiconductors and artificial intelligence to China on the grounds of so-called national security, from limiting integrated circuits to limiting manufacturing to limiting foundry to limiting software, which is almost a suppression of the entire semiconductor industry chain. The US has adopted discriminatory control measures on artificial intelligence models and integrated circuits that provide underlying computing support. In essence, it is creating "different levels" and "closeness" in the field of artificial intelligence, depriving developing countries, including China, of the right to achieve scientific and technological progress.

In recent years, the United States has included many Chinese entities in the "Uyghur Forced Labor Prevention Act Entity List" on the grounds of forced labor, and has continued to impose export control sanctions on relevant Chinese entities on the grounds of human rights. The sanctioned companies do not have the so-called "forced labor" problem. Some companies have fully realized unmanned production, and some companies have been audited by third-party agencies and no evidence of "forced labor" has been found. The sanctions have caused Chinese companies to face the serious impact of supply, funding, and cooperation cuts, and their legitimate rights and interests have been seriously damaged.

The United States abuses export controls and unreasonably sanctions a large number of Chinese entities. For a long time, the United States has implemented strict export control policies on China. It has also used "blacklist" tools to suppress and contain Chinese entities on the grounds of involvement in Russia, Iran, terrorism, and drugs. Chinese sanctioned entities face difficulties such as supply chain disruptions and obstructed technological cooperation. In recent years, the frequency and intensity of U.S. sanctions against China have increased significantly. A study by a U.S. think tank believes that "the formulation of the U.S. sanctions list lacks transparency and fairness. The procedure for adding items to the export control entity list relies on confidential information and lacks transparency; the criteria for adding items are relatively vague and lack clear definitions; the threshold for removal is extremely high, making it difficult for companies to remove items through judicial proceedings."

The US measures are harmful to others and not beneficial to itself, disrupting the stability of the global industrial chain and supply chain. The US abuses its long-arm jurisdiction and artificially "builds walls" and "decouples" through the minimum content rule and foreign direct product rule, which violates economic laws and market rules. It not only makes the industrial cooperation between the two sides face huge uncertainties, but also seriously undermines the international trade order and the security and stability of the global industrial chain and supply chain. For example, the "1017" semiconductor rule promulgated by the United States in 2023 used the minimum content rule for the first time. For specific lithography equipment, as long as it contains any US elements, it must apply for a license from the United States when exporting to China. The "1202" semiconductor measures promulgated by the United States in 2024 set limits on 24 types of semiconductor equipment and added foreign direct product rules, requiring related semiconductor manufacturing equipment produced in other countries to apply for a license from the United States when exporting to China as long as it contains specific US elements. The purpose is to prohibit US products from entering the Chinese market and prohibit similar products from other countries from entering. US chip giant Nvidia said that the new regulations actually threaten global innovation and economic growth, and make it lose the Chinese market and put it at a competitive disadvantage. Research by the Federal Reserve Bank of New York shows that various U.S. sanctions against China have caused U.S. companies to lose approximately $130 billion in market value.

4. The US Section 301 tariff measures are a typical unilateral approach

The US 301 tariff measures are typical unilateralism and protectionism, which have seriously undermined the international trade order and the security and stability of the global industrial chain and supply chain, and have not solved the US's own trade deficit and industrial competitiveness problems. They have also pushed up the prices of US imported goods, and the costs are ultimately borne by US companies and consumers. Recently, the US not only did not terminate the existing 301 investigation, but instead proposed to launch a new 301 investigation against China on so-called non-market policies and practices, going further and further down the wrong path.

The 301 tariffs are not in line with multilateral economic and trade rules. The 301 tariffs seriously violate the most basic and core rules of the World Trade Organization, such as most-favored-nation treatment and bound tariffs. In April 2018, China sued the United States for its tariff measures in the World Trade Organization dispute settlement mechanism. On September 15, 2020, the World Trade Organization officially announced the ruling of the case. The expert group fully supported China's claims and determined that the United States only imposed tariffs on Chinese products, which violated the most-favored-nation treatment obligations of Article 1 of the General Agreement on Tariffs and Trade 1994. The United States appealed on October 26, 2020. However, due to previous obstruction by the United States, the appellate body has been suspended, resulting in the case being pending appeal.

Section 301 tariffs cannot solve the US trade deficit problem. Since 2018, the US has maintained Section 301 tariffs on China for seven consecutive years. During this period, the US trade deficit has not decreased, but has increased from US$950.2 billion in 2018 to US$1,211.75 billion in 2024.

The United States hopes to reduce its trade dependence on China and diversify its import sources by imposing additional tariffs on China. China is one of the largest sources of imports for the United States, which is not a bad thing for the United States. During the COVID-19 pandemic, China exported a large amount of personal protective equipment to the United States to meet the United States' anti-epidemic needs, and the tariff exemptions for many epidemic prevention products have continued to this day.

The 301 tariffs have seriously damaged the competitiveness of American companies and the welfare of consumers. The 301 tariffs have made the prices of taxed goods more expensive, and the related costs are mostly borne by American importers, wholesale and retail links, and consumers. In March 2023, the U.S. International Trade Commission released a report on the economic impact of 232 and 301 tariffs on the domestic industries in the United States, showing that almost 100% of the cost of the tariffs imposed by the United States on China is borne by importers.

(V) The US Section 232 investigation violates multilateral economic and trade rules

Since 2017, the US has frequently used Section 232 investigations as a tool for trade protection and negotiation pressure. From 2017 to 2021, a total of eight Section 232 investigations were launched, including steel, aluminum, automobiles and parts, mobile cranes, etc. The frequency of investigations and the wide range of products targeted are unprecedented.

In April 2017, the U.S. Department of Commerce announced the launch of a 232 investigation into steel and aluminum products imported into the United States. In March 2018, the United States announced that it would impose tariffs of 25% and 10% on imported steel and aluminum products, respectively, on the grounds of maintaining national security. During the investigation of the case, the U.S. Department of Defense wrote to the U.S. Department of Commerce, stating that the imported steel and aluminum products did not affect the Department of Defense's acquisition of steel and aluminum products to meet national defense needs.

It turns out that the 232 steel and aluminum tariffs are not intended to solve the national security issues of the United States, but to exert pressure in the negotiations. In the renegotiation of the North American Free Trade Area, the United States lifted the steel and aluminum tariffs on Canada and Mexico only after obtaining the conditions it wanted; in the revision negotiations of the free trade agreement with South Korea, the United States converted the 232 measures on South Korean steel and aluminum products from tariffs to tariff quotas only after South Korea made concessions in automobile trade; in the negotiations with the European Union, the United States converted the 232 steel and aluminum measures on the European Union from tariffs to tariff quotas only after the European Union agreed to lift restrictions on American products and jointly fight against the so-called "non-market economic behavior" with the United States.

The US 232 investigation, in the name of national security, is actually a means of trade restrictions and negotiation pressure, which not only damages the legitimate rights and interests of other countries and regions, but also violates the international obligations of the United States and undermines the multilateral trading system. Several WTO members, including China and the European Union, have brought the US 232 restrictive measures on imported steel and aluminum products to the WTO dispute settlement mechanism. In the dispute settlement procedure, the WTO expert group clearly determined that the US 232 steel and aluminum measures violated the core obligations that WTO members must comply with, including the most-favored-nation treatment obligations stipulated in Article 1 of the General Agreement on Tariffs and Trade 1994 and the bound tariff obligations stipulated in Article 2.

On February 10, 2025, the United States issued a notice announcing the restoration of Section 232 measures on imported steel and aluminum products, raising the tariff rate on aluminum products and canceling tariff exemptions for relevant countries. On March 10, the United States launched Section 232 investigations on imported copper and wood respectively. According to the executive summary of the "America First" trade policy report, the United States may also launch new Section 232 investigations on pharmaceuticals, semiconductors and some key minerals.

(VI) The US's illegal and abuse of trade remedy measures increases trade uncertainty

The "America First" trade policy memorandum requires the U.S. Department of Commerce to review the implementation of anti-dumping and anti-subsidy policies and regulations, including cross-border subsidies and "zeroing". The practice of investigating cross-border subsidies and "zeroing" clearly violates the rules of the World Trade Organization. Applying them to anti-dumping or anti-subsidy investigations will artificially exaggerate the extent of dumping or subsidies of other countries on U.S. exports, disrupt the normal international trade order and economic and trade cooperation, and damage the interests of all parties, including the United States, its enterprises and consumers.

Investigating cross-border subsidies violates relevant rules. For a long time, the United States has recognized the basic principle that the World Trade Organization's Agreement on Subsidies and Countervailing Measures (SCM Agreement) does not apply to cross-border subsidies, and has taken a strictly restrictive attitude towards the investigation of cross-border subsidies. The U.S. Federal Code stipulates that unless there are individual statutory exceptions, subsidies are not considered subsidies if they are provided by a government other than the country where the subsidized enterprise is located, or by an international loan or development agency. In April 2024, the U.S. Department of Commerce revised its anti-subsidy regulations, abolished the above provisions of the Federal Code, and completely liberalized the investigation of cross-border subsidies. Since then, the U.S. Department of Commerce has initiated cross-border subsidy investigations in many anti-subsidy cases.

The above-mentioned regulatory revisions and investigation practices of the United States clearly violate the rules of the World Trade Organization. The SCM Agreement stipulates that subsidies are financial assistance provided by the government or any public institution "within the territory of a member", and Article 2 stipulates that targeted subsidies refer to subsidies given to one or more enterprises or industries within the jurisdiction of the subsidy-granting institution. All of these indicate that the subsidy-granting institution and the recipient should be within the same jurisdiction. In fact, the agreement clearly stipulates that "the enterprises receiving subsidies should be enterprises within the territory of the member providing the subsidies". Therefore, only subsidies provided by World Trade Organization members to enterprises located in their territories can be subject to the SCM Agreement to initiate anti-subsidy investigations.

The United States' revision and investigation of the above regulations are also not in compliance with U.S. law. The U.S. Tariff Act of 1930 stipulates that subsidies are subsidies provided by a government or public institution within the territory of a country to enterprises or industries within its jurisdiction. Therefore, the relevant regulatory revisions, investigations and rulings of the U.S. Department of Commerce have no basis or authorization in U.S. domestic law.

Illegal use of the "zeroing" approach to artificially expand the dumping margin. In the history of the World Trade Organization, the "zeroing" approach has been widely questioned and criticized for exaggerating the dumping margin. As of February 7, 2025, the World Trade Organization dispute settlement mechanism has accepted at least 27 cases related to "zeroing" compliance issues, of which two early cases were filed by the European Union, and the remaining 25 cases were filed by the United States. The United States has been ruled to have violated World Trade Organization rules in all related cases that have been heard. On the one hand, the United States refuses to give up "zeroing", and on the other hand, under the pressure of continuous defeats, it has gradually adjusted its "zeroing" approach, but it still uses the vague space in the Anti-Dumping Agreement to insist on "zeroing" in cases where it believes there is "targeted dumping".

If the United States, after reviewing the "America First" trade policy memorandum, "revives" the "zeroing" practice under non-target dumping, it will violate the rules of the World Trade Organization and blatantly violate the rulings made by the World Trade Organization dispute settlement mechanism on the "zeroing" issue in many cases over the past 20 years. The revival and expansion of "zeroing" will artificially "create" dumping or increase the dumping margin, so that the investigated products exported to the United States by other World Trade Organization members will face unfairly high anti-dumping duties, which will damage the interests of various World Trade Organization members and their enterprises.

(VII) The US's use of fentanyl as an excuse to impose trade restrictions on China will not help resolve the issue

In February and March 2025, the US imposed additional tariffs on Chinese products exported to the US twice, citing issues such as fentanyl, and threatened to cancel the duty-free policy for small packages from China. On April 2, the US announced that it would cancel the duty-free policy for small packages from China starting May 2. This practice is groundless and will not only fail to solve its own problems, but will also undermine China-US economic and trade cooperation and the normal international trade order.

The US accusations against China are in disregard of facts. China is one of the countries with the strictest and most thorough drug control policies in the world. It has included fentanyl drugs in the Catalogue of Narcotic Drugs and has implemented strict control over their production, operation, use and export. So far, no cases of such drugs being lost in the production and circulation links have been found. The State Drug Administration implements a licensing system for the export trade of fentanyl drugs. On the basis of strict review, it actively conducts international verification with the competent authorities of the importing countries. Each batch of export trade must be confirmed by the competent authorities of the importing countries for legality before issuing a narcotic drug export permit.

In 2023, China exported a total of 9.766 kilograms of fentanyl drugs, mainly to South Korea, Vietnam, Malaysia, the Philippines in Asia, Chile, Panama, Colombia, Paraguay in Latin America, and Poland, Germany, France and other countries in Europe. No fentanyl drugs of any variety or dosage form have been exported to North America.

China and the United States have carried out extensive and in-depth anti-drug cooperation and achieved remarkable results. On April 1, 2019, at the request of the United States, China, in the spirit of humanitarian goodwill, issued a notice to list fentanyl-related substances as a whole category, even though there was no large-scale abuse in the country. It was officially implemented on May 1 of that year, becoming the first country in the world to implement permanent listing of fentanyl-related substances as a whole category. Since then, the Ministry of Public Security of China has organized special operations to combat new drug crimes such as the production and trafficking of fentanyl-related substances for three consecutive years. After the listing of fentanyl-related substances as a whole category, China has not received any notification from the United States that such substances have been seized from China.

The US's concerns about the tax exemption for small parcels are unnecessary. The US claims that the tax exemption policy for small parcels and the supporting simplified customs clearance arrangements may impact domestic industries, causing tax losses and lack of supervision on product quality and safety. This concern has no realistic basis. First, the tax exemption policy for small parcels has limited impact on the domestic market. Consumers' personal purchases of personal items from abroad are a beneficial supplement to personal consumption. Although the global retail parcel import volume has grown rapidly in recent years, the overall scale is relatively limited, and its share in the global trade volume and social retail volume is still small, far from a dominant position. Second, the implementation of the tax exemption policy for small parcels can reduce administrative costs. Under the tax exemption policy for small parcels, customs can focus more resources on the supervision of high-value goods and high-risk goods, and improve the overall supervision efficiency. If the tax exemption policy for small parcels is cancelled, checking small parcels one by one and levying taxes will bring huge supervision costs, greatly increasing the logistics and customs clearance costs of enterprises. Third, the product quality and safety of small parcels are guaranteed. Most Chinese cross-border e-commerce platforms have a no-reason return period of no less than 30 days, during which consumers can return goods for refunds without reason, or even not return goods but only refund. This is not only a clause to protect the rights of consumers, but also a clause to urge cross-border e-commerce sellers to strictly control product quality. Fourth, the control of high-risk goods is effective. China's small-value parcels are mainly clothing, electronic products, toys, etc. As countries continue to strengthen supervision and improve technical means, there is no evidence that prohibited items have been found in small parcels from China.

The tax-free policy for small parcels conforms to the development trend of international trade. The World Customs Organization recommends that customs of various countries set the lowest tariff threshold. The World Trade Organization's Trade Facilitation Agreement encourages members to set a de minimis value or taxable amount that is exempt from tariffs and domestic taxes. The vast majority of countries in the world implement a tax-free policy for small parcels and simplify the customs clearance process for related goods. The Chinese government collects tariffs, value-added tax and consumption tax on personal items sent into the country, and exempts the taxable amount within RMB 50. The policy has achieved good results.

——Promote the diversification of the consumer market. Consumers can buy goods from all over the world at lower prices, enriching their shopping choices. This policy has the advantages of meeting consumers' personalized needs, fast delivery and cost savings, and improves the consumer experience. Taking China's Tmall International import platform as an example, as of 2024, the platform has covered more than 4,000 brands and millions of products, covering food, maternal and child products, home life, fashion apparel and other fields, and is still expanding.

——Help more small, medium and micro enterprises to participate in international trade. Cross-border e-commerce is the embodiment of new productivity, reducing trade links and lowering trade barriers. Cross-border e-commerce retail business directly connects small, medium and micro enterprises and consumers, providing these business entities with more trade opportunities, expanding the scale of trade and optimizing the trade structure. At present, there are more than 120,000 cross-border e-commerce trading entities in China, becoming an important force in participating in international trade.

——Promote global economic cooperation. The rapid development of cross-border e-commerce has injected new vitality into international trade. Through digital platforms and efficient logistics, this policy effectively reduces trade costs, helps the global supply chain to allocate resources more flexibly, and further promotes the interconnection of the global economy. Alibaba International Station, a Chinese cross-border e-commerce platform, serves 26 million active corporate buyers in more than 200 countries and regions around the world. Through the platform, companies can connect with global suppliers, flexibly adjust procurement strategies, analyze different market demands, achieve on-demand production, and improve resource utilization efficiency.

(VIII) The US’s imposition of so-called “reciprocal tariffs” harms both itself and others

On April 2, 2025, the US government announced the imposition of so-called "reciprocal tariffs" on its trading partners, including a 34% "reciprocal tariff" on China, and a further 50% tariff in response to China's legitimate countermeasures. The US practice disregards the balance of interests achieved in multilateral trade negotiations over the years, and the fact that the US has long profited greatly from international trade. It attempts to erect high trade barriers in the name of "industrial protection" and "national security", which not only seriously violates the rules of the World Trade Organization, seriously impacts the multilateral trading system, and seriously damages the legitimate rights and interests of relevant parties, but also does not help solve its domestic economic problems. It will inevitably be backfired and suffer the consequences.

"Reciprocal tariffs" push up inflationary pressure in the United States. The Yale University Budget Lab predicts that after the implementation of "reciprocal tariffs", with other countries taking countermeasures, the price increase of US personal consumption expenditures (PCE) will expand to 2.1%, and low-, middle- and high-income families in the United States will lose an average of US$1,300, US$2,100 and US$5,400, becoming the final "payers" of the tariffs. Affected by the new round of tariffs, the pressure on the retail prices of daily consumer goods such as food, clothing, electronic products and daily necessities in the United States will increase significantly.

"Reciprocal tariffs" weaken the U.S. industrial base. The Trump administration is trying to force the manufacturing industry to return to China through tariffs, but in fact, tariffs will be transmitted step by step through the industrial chain and supply chain, exacerbating the risks of supply chain disruption and industrial hollowing out, and increasing the difficulty of developing the manufacturing industry. According to data from the Peterson Institute for International Economics, more than 90% of the tariff costs will be passed on to U.S. importers, downstream companies and end consumers.

"Reciprocal tariffs" have exacerbated panic in the financial market. The day after the US announced its "reciprocal tariffs", the three major US stock indexes all plunged by more than 5%. At the same time, the exchange rate of the US dollar against the euro fell significantly, indicating that the market's concerns about tariffs interfering with economic operations have intensified and confidence has been severely impacted.

"Reciprocal tariffs" increase the risk of a U.S. recession. Institutions such as JPMorgan Chase and Goldman Sachs have significantly raised the probability of a U.S. recession. Related research suggests that "reciprocal tariffs" and related countries' countermeasures against the U.S. may reduce the U.S. real GDP growth rate by about 1 percentage point.

At the same time, "reciprocal tariffs" will also distort the allocation of global market resources, undermine the foundation of global cooperation, and affect the long-term stable growth of the world economy. The US's imposition of "reciprocal tariffs" will undermine the stability of the global industrial chain and supply chain, and severely impact the world economic cycle. World Trade Organization Director-General Ngozi Okonjo-Iweala said that the US's imposition of tariffs will have a huge impact on global trade and economic growth prospects, and may cause the overall global merchandise trade volume to shrink by about 1% in 2025, a decrease of nearly 4 percentage points from the previous forecast.

Historical practice has repeatedly proved that trade protectionism does not help improve a country's economy, but instead seriously undermines the world trade and investment system, may trigger a global economic and financial crisis, and will ultimately harm both others and oneself.

6. China and the United States can resolve economic and trade differences through equal dialogue and mutually beneficial cooperation

As the world's top two economies, China and the United States have large-scale economic and trade exchanges with rich connotations, wide coverage, and multiple subjects. It is normal for them to have differences. The best way to solve problems and bridge differences is to seek mutually beneficial cooperation through equal dialogue. The cooperation between China and the United States not only concerns the well-being of the two peoples, but will also have a profound impact on world peace and development.

1. Equal dialogue should be the basic attitude for solving problems among major countries

Historically, disputes and disagreements between countries are not uncommon, but the ways to resolve them are different. Resolving disputes through dialogue and consultation is not only more efficient, but also allows the international community to avoid unnecessary costs.

China and the United States have their own national conditions and are at different stages of development. In history, the two countries have worked together to meet challenges such as anti-fascism, anti-terrorism, and responding to public health emergencies. They have also carried out fruitful cooperation in promoting the establishment of a multilateral trading system and promoting openness and prosperity in the Asia-Pacific region. Through the equal dialogue mechanism, China and the United States can clearly express their attitudes on their respective major concerns, clarify relevant facts, explain the reasons for raising concerns, explore the factors that lead to relevant issues, and discuss possible solutions. Problems arising in development must be solved by development, and problems that arise in the short term may no longer be a problem in the medium and long term. In fact, no country will give up its own reasonable development interests in order to cater to or meet the unreasonable demands of other countries, but this does not prevent the two sides from finding possible solutions through equal dialogue.

2. Mutually beneficial cooperation is conducive to China and the United States achieving their respective development goals

China and the United States both have their own development visions and goals. Whether from the perspective of optimizing the allocation of resources and factors, better adapting to the changes in development models brought about by the continuous emergence of innovative technologies, or from the perspective of creating a stable global development environment, China and the United States need to move toward each other and develop in a coordinated manner.

Mutually beneficial cooperation is conducive to improving the input-output ratio. Through mutually beneficial cooperation, unnecessary repeated inputs can be reduced, limited resources can be used in areas where they are more needed, and development efficiency can be improved. Mutually beneficial cooperation is also conducive to correcting the imbalance of international trade and providing consumers with more abundant product and service choices through effective market competition.

Mutually beneficial cooperation is conducive to faster adaptation to new changes. Historical experience shows that the emergence of new technologies has brought impacts to the original social and economic model while improving production efficiency. Technological progress, including artificial intelligence, is reshaping the economic ecology, and the transformation of energy structure also requires all parties to respond quickly. China and the United States can strengthen cooperation in various fields such as innovation, production, services and consumption, improve the response speed and response capabilities to technological upgrades, and obtain greater development benefits.

Mutually beneficial cooperation is conducive to enhancing the sustainability of development. The United States was once an advocate of the current multilateral economic and trade rules, and China was an active participant. The multilateral rules accepted by all parties have greatly reduced the cost of international economic and trade cooperation. Mutually beneficial cooperation between China and the United States can reduce market concerns about uncertainty and support the accelerated recovery of the global economy.

3. The world expects China-U.S. cooperation to bring more development opportunities

China and the United States play important roles in the global economic system. The total economic output of the two countries exceeds one-third of the world, the total population accounts for nearly one-quarter of the world, and the bilateral trade volume accounts for about one-fifth of the world. The United States is the world's largest consumer market, and China is the world's second largest consumer market. Through the global supply chain, China and the United States have provided a wide range of opportunities for all stakeholders, driven the export of raw materials, the production of intermediate products, and the development of the service industry in related countries, and improved the efficiency and benefits of the global value chain. The healthy, stable and sustainable development of China-US economic and trade relations is beneficial to both China and the United States, as well as to the world.

China and the United States can work together to promote the rationalization of international economic governance rules to adapt to the development of productivity. The multilateral trading system with the World Trade Organization as its core and regional trade agreements represented by bilateral free trade agreements are both important platforms for economic governance. The expectations of all parties for the ideal multilateral economic and trade governance mechanism may be different, but accusations and passive resistance will not help. A more positive approach should be taken to seek consensus and explore ways to improve the multilateral economic governance system.

Conclusion

History has shown us that cooperation between China and the United States is beneficial to both sides, while confrontation will hurt both sides. Strengthening cooperation between China and the United States meets the expectations of the whole world. For the world economy to achieve faster development, it needs a fair, open, transparent and rule-based world market. Without China-US cooperation, such a world market will be difficult to form. International trade rules need to be constantly updated to adapt to changes in the world economy, and they also need the guidance of China-US cooperation. New technologies and products such as artificial intelligence, biotechnology, and quantum computing are constantly emerging and iteratively updated. To prevent and control potential security risks and ensure the peaceful use of technology without abuse, China and the United States need to cooperate to establish relevant rules and order.

There are no winners in a trade war and no way out for protectionism. The success of China and the United States is an opportunity for each other rather than a threat. We hope that the United States and China will meet each other halfway, follow the direction indicated by the two heads of state in their call, and in the spirit of mutual respect, peaceful coexistence and win-win cooperation, resolve their respective concerns through equal dialogue and consultation, and jointly promote the healthy, stable and sustainable development of China-US economic and trade relations.

① In the process of calculating the dumping amount (the difference between the export price and the normal value), only positive values ​​are taken, and all negative values ​​are regarded as zero, and are not offset against positive values. Compared with normal practices, "zeroing" often significantly increases the calculated dumping amount, thereby increasing the dumping margin and anti-dumping duty rate.