---
title: "Full text of the \"White Paper on China's Position on Certain Issues in China-U.S. Economic and Trade Relations\""
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/235160084.md"
description: "China has always believed that the essence of China-U.S. economic and trade relations is mutual benefit and win-win cooperation. As two major countries at different stages of development and with different economic systems, it is normal for China and the U.S. to encounter differences and frictions in economic and trade cooperation. The key is to respect each other's core interests and major concerns, and to find proper solutions to problems through dialogue and consultation. There are no winners in a trade war, and protectionism leads nowhere. The successes of both China and the U.S. present opportunities for each other rather than threats. We hope that the U.S. side will move towards the Chinese side, following the direction indicated by the leaders of both countries during their conversations, and based on the principles of mutual respect, peaceful coexistence, and win-win cooperation, resolve each other's concerns through equal dialogue and consultation, and jointly promote the healthy, stable, and sustainable development of China-U.S. economic and trade relations"
datetime: "2025-04-09T07:22:57.000Z"
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---

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# Full text of the "White Paper on China's Position on Certain Issues in China-U.S. Economic and Trade Relations"

**Preface**

China is the largest developing country in the world and also the country with the highest average contribution rate to global economic growth. The United States is the largest developed country in the world, with the largest economy globally. The economic and trade relationship between China and the United States is significant for both countries and has 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 surged from less than $2.5 billion in 1979 to nearly $688.3 billion in 2024. The areas of economic and trade cooperation between China and the United States have continuously expanded, and the level has continuously improved, making important contributions to the economic and social development of both countries and the well-being of their people.

However, in recent years, the rise of unilateralism and protectionism in the United States has severely disrupted normal economic and trade cooperation between China and the United States. Since the economic and trade friction between China and the United States began in 2018, the U.S. has imposed high tariffs on over $500 billion worth of Chinese products exported to the U.S. and has continuously introduced policies to contain and suppress China. China has had to take strong countermeasures to firmly defend its national interests. At the same time, China has always adhered to the basic position of resolving disputes through dialogue and consultation, engaging in multiple rounds of economic and trade consultations with the U.S. 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 China-U.S. Phase One Economic and Trade Agreement). After the agreement took effect, China upheld the spirit of the contract, striving to overcome the sudden impact of the pandemic and the subsequent disruptions to the supply chain and global economic recession, and promoting the implementation of the agreement. The U.S. has repeatedly issued statements affirming China's implementation of the agreement. In contrast, the U.S. has continued to tighten export controls, increase sanctions on Chinese companies, and has violated its obligations under the agreement multiple times.

Recently, the U.S. has issued a "America First" trade and investment policy memorandum and an executive summary of the "America First" trade policy report, imposing additional tariffs on Chinese products comprehensively, including tariffs on China under the pretext of issues like fentanyl, imposing "reciprocal tariffs," and further increasing tariffs by 50%. It has also proposed imposing port fees and other 301 investigation restrictions on China's maritime, logistics, and shipbuilding industries. These restrictive measures, which threaten and coerce through tariffs, are a mistake on top of a mistake, further exposing the typical unilateralism and bullying nature of the U.S., which not only violates the laws of market economy but also runs counter to multilateralism, and will have a serious impact on China-U.S. economic and trade relations. China has taken necessary countermeasures based on the basic principles of international law and its laws and regulations.

The tariffs and other economic restrictions imposed by the U.S. on its trade partners have artificially severed the originally mature global supply chain and industrial chain, disrupted market-oriented free trade rules, severely interfered with the economic development of various countries, harmed the well-being of people in all countries, including the United States, and damaged economic globalization.

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

To clarify the facts of China-U.S. economic and trade relations and to explain China's policy position on related issues, the Chinese government has specially released this white paper**1\. The essence of China-U.S. economic and trade relations is mutual benefit and win-win cooperation**

Since the establishment of diplomatic relations between China and the United States, bilateral trade and investment cooperation has yielded fruitful results, achieving complementary advantages and mutual benefit. There are extensive common interests and broad cooperation space between the two countries, and maintaining the stable development of China-U.S. economic and trade relations is in line with the fundamental interests of both countries and their peoples, as well as beneficial to global economic development. Facts have proven that cooperation between China and the U.S. leads to mutual benefits, while conflict harms both sides; China-U.S. economic and trade cooperation is an inevitable choice for mutual benefit and win-win outcomes.

(1) China and the U.S. are important trading partners in goods

Bilateral goods trade has grown rapidly. According to United Nations statistics, the bilateral goods trade volume between China and the U.S. reached USD 688.28 billion in 2024, which is 275 times that of the USD 2.5 billion at the time of diplomatic relations in 1979, and more than 8 times that of the USD 85.5 billion when China joined the World Trade Organization in 2001. Currently, the U.S. is China's largest goods export destination and the second-largest source of imports. In 2024, China's exports to the U.S. and imports from the U.S. accounted for 14.7% and 6.3% of China's total exports and imports, respectively; China is the third-largest export destination and the second-largest source of imports for the U.S., with U.S. exports to China and imports from China accounting for 7.0% and 13.8% of the U.S. total exports and imports, respectively.

The growth rate of U.S. exports to China is significantly faster than its exports to the world. Since China joined the World Trade Organization, U.S. exports to China have grown rapidly, making China an important export market for the U.S. According to United Nations statistics, U.S. goods exports to China reached USD 143.55 billion in 2024, an increase of 648.4% compared to USD 19.18 billion in 2001, far exceeding the 183.1% increase in U.S. exports to the world during the same period (Figure 1).

China is an important export market for U.S. agricultural products, integrated circuits, coal, liquefied petroleum gas, pharmaceuticals, and automobiles. China is the largest export market for U.S. soybeans and cotton, the second-largest export market for integrated circuits and coal, and the third-largest export market for medical devices, liquefied petroleum gas, and automobiles. According to United Nations data, in 2024, 51.7% of U.S. soybean exports, 29.7% of cotton, 17.2% of integrated circuits, 10.7% of coal, 10.0% of liquefied petroleum gas, 9.4% of medical devices, and 8.3% of motor vehicles were exported to China.

The bilateral trade between China and the U.S. is highly complementary. The two countries leverage their respective comparative advantages, resulting in a complementary relationship in bilateral trade (Table 1). According to Chinese customs data, in 2024, the top five categories of goods exported from China to the U.S. were electrical machinery and equipment and their parts, machinery and mechanical appliances, furniture, toys, and plastic products, accounting for a total of 57.2%. The top five categories of goods imported by China from the U.S. were mineral fuels, machinery and mechanical appliances, electrical machinery and equipment and their parts, optical instruments, and soybeans, accounting for a total of 52.8%. Electromechanical products are quite significant in China-U.S. bilateral trade, with notable characteristics of intra-industry trade(2) Sino-U.S. Service Trade Maintains Rapid Growth

The U.S. service industry has a complete range of sectors and strong international competitiveness. Overall, as the economy continues to develop and people's living standards improve, China's demand for services has significantly expanded, leading to rapid growth in Sino-U.S. service trade. According to the U.S. Department of Commerce, from 2001 to 2023, the service trade volume between China and the U.S. expanded from $8.95 billion to $66.86 billion, an increase of six times (Figure 2). According to Chinese statistics, in 2023, the U.S. was China's second-largest service trade partner; according to U.S. statistics, China was the fifth-largest destination for U.S. service exports.

The U.S. is the largest source of China's service trade deficit, with the deficit size generally showing an expanding trend. According to the U.S. Department of Commerce, from 2001 to 2023, U.S. service exports to China expanded from $5.63 billion to $46.71 billion, an increase of 7.3 times; the annual service trade surplus of the U.S. with China expanded 11.5 times to $26.57 billion (Figure 2), reaching as high as $39.7 billion in 2019. In 2023, China remained the largest source country 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 U.S. is mainly concentrated in three areas: travel (including education), intellectual property fees, and transportation services (Table 2).

China's travel service trade deficit with the U.S. continues to expand. According to data from the U.S. Department of Commerce, in 2023, approximately 1.1 million Chinese tourists visited the U.S., with their spending accounting for 14% of the total U.S. service exports to China. Tourism, medical treatment, and studying abroad remain the main consumption items in U.S. service trade. According to U.S. Department of Commerce statistics, U.S. exports of travel services (including education) to China grew from $2.31 billion in 2001 to $20.23 billion in 2023, an increase of 7.8 times.

China's payments for intellectual property fees to the U.S. continue to grow. In 2023, intellectual property fees remained a major source of income for U.S. service trade (accounting for 13.1%). Statistics show that the intellectual property fees the U.S. receives from China account for one-fifth of the total intellectual property fees received from the Asia-Pacific region and 5% of the total intellectual property fees received globally by the U.S.

(3) China Does Not Deliberately Pursue Trade Surplus

The trade balance in goods between China and the U.S. is both an inevitable result of structural issues in the U.S. economy and determined by the comparative advantages and international division of labor between the two countries. China does not deliberately pursue a surplus; in fact, the ratio of China's current account surplus to GDP has decreased from 9.9% in 2007 to 2.2% in 2024.

The benefits of Sino-U.S. economic and trade exchanges are generally balanced. An objective understanding and evaluation of whether Sino-U.S. bilateral trade is balanced requires a comprehensive and in-depth examination, and cannot be based solely on the goods trade balance. In today's context of deepening economic globalization and the widespread existence of international production, the connotation of bilateral economic and trade relations has long exceeded the scope of goods trade; service trade and the local sales of domestic enterprises in each other's countries (i.e., local sales in bilateral investment) should also be includedConsidering the three factors of goods trade, service trade, and the local sales of domestic enterprises in each other's countries, the economic and trade exchanges between China and the United States are roughly balanced (Figure 3).

According to data from the U.S. Department of Commerce, in 2023, the U.S. service trade surplus with China was USD 26.57 billion, indicating a significant advantage for the U.S. in service trade; in 2022, U.S. enterprises' sales in China reached USD 490.52 billion, far exceeding the USD 78.64 billion sales of Chinese enterprises in the U.S., with a gap of USD 411.88 billion, highlighting the multinational operational advantages of U.S. companies.

The U.S. trade deficit with China has decreased as a proportion, while the global deficit has increased. According to data from the U.S. Department of Commerce's Bureau of Economic Analysis, China's share of the total U.S. goods trade deficit has been declining for six consecutive years, from 47.5% in 2018 to 24.6% in 2024, while the U.S. deficit with other countries and regions has significantly increased. In 2024, the total U.S. goods trade deficit reached USD 1.2 trillion, a year-on-year increase of 13%, exceeding USD 1 trillion for four consecutive years.

China's foreign trade is characterized by large imports and exports, and U.S.-China trade is no exception. The value added that China gains from many processed product exports accounts for only a small portion of the total value of goods, while the current trade statistics method calculates China's exports based on total value (the full amount of goods exported from China to the U.S.). If calculated using the value-added method, the U.S. trade deficit with China would significantly decrease.

China is taking multiple measures to actively expand imports. Actively expanding imports is a proactive responsibility of China 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 annually in Shanghai, with the number of participating countries and intended transaction amounts increasing year by year, accumulating an intended transaction amount of over USD 500 billion. In 2024, China's total imports amounted to RMB 18.4 trillion, a year-on-year increase of 2.3%, setting a historical record for import scale and maintaining its position as the world's second-largest import market for 16 consecutive years.

China is orderly expanding its autonomous and unilateral opening up, continuously releasing the potential of its super-large market, providing more opportunities for countries around the world. In 2024, China imported RMB 9.86 trillion from countries participating in the Belt and Road Initiative, an increase of 2.7%, accounting for 53.6% of the total import value. On December 1, 2024, China granted zero tariff treatment on 100% of tariff items to all least developed countries with which it has established diplomatic relations, driving an 18.1% increase in imports from related countries that month. Currently and in the foreseeable future, there is significant room for growth in China's imports. It is expected that by 2030, cumulative imports from developing countries alone will exceed USD 8 trillion.

Actively expanding imports is also an important aspect of China's promotion of high-level opening up. China will orderly expand the opening up of the goods market, implement zero tariff treatment on 100% of tariff items for all least developed countries with which it has established diplomatic relations, continue to leverage important exhibition platforms such as the Import Expo, Canton Fair, Service Trade Fair, and Consumer Expo to promote innovation demonstration zones for national import trade, continuously enhance the facilitation level of import trade, tap into import potential, and transform China's super-large market into a globally shared market, injecting new momentum 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 from the U.S. in China was USD 98.23 billion. In 2023, the U.S. established 1,920 new investment enterprises in China, with an actual investment amount of USD 3.36 billion, an increase of 52.0% compared to the previous year.

The United States is an important investment destination for China, and Chinese enterprises' direct investment in the U.S. has grown rapidly and significantly. According to data from the Ministry of Commerce of China, by the end of 2023, China's direct investment stock in the U.S. was approximately USD 83.69 billion, covering 18 sectors of the national economy. China has established over 5,100 overseas enterprises in the U.S., employing more than 85,000 foreign employees. China has also made substantial financial investments in the U.S.; according to data from the U.S. Department of the Treasury, as of December 2024, China held USD 759 billion in U.S. Treasury bonds, making it the second-largest foreign holder of U.S. Treasury bonds.

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

In international trade relations, countries exchange goods based on comparative advantages to realize their own value, meet each other's needs, and achieve common development. As the two largest economies in the world, economic and trade cooperation between China and the U.S. brings significant economic benefits to both sides. Enterprises and consumers in both countries gain tangible benefits through bilateral trade and investment.

Economic and trade cooperation between China and the U.S. has created a large number of job opportunities in the U.S. According to a report released by the U.S.-China Business Council in April 2024, China is a major market for U.S. goods and services exports. In terms of total goods and services exports in 2022, China was the largest export market for three U.S. states, among the top three export markets for 32 states, and among the top five export markets for 43 states. According to estimates by the U.S.-China Business Council, in 2022, U.S. exports to China created 931,000 jobs in the U.S., ranking third, only behind Canada and Mexico, and surpassing the total number of jobs supported by the U.S. markets of Japan and South Korea combined.

Economic and trade cooperation between China and the U.S. has created numerous business opportunities and profits for U.S. companies (Table 3). China has a vast market and continuously upgrading consumption demands; for example, Tesla's sales in China continue to grow, with sales exceeding 657,000 units in 2024, an increase of 8.8% year-on-year, setting a historical record. More than a dozen U.S.-funded insurance companies have branches in China. American financial institutions such as Goldman Sachs, American Express, Bank of America, and MetLife have achieved considerable investment returns as strategic investors in Chinese financial institutions. Statistics from the U.S. Department of Commerce in August 2024 show that in 2022, there were 1,961 U.S. enterprises in China (with majority ownership and assets, sales, or net income exceeding USD 25 million), with total sales of USD 49.052 billion, an increase of 4.3% year-on-year.

Economic and trade cooperation between China and the U.S. has promoted the upgrading of U.S. industries. In economic and trade cooperation with China, U.S. multinational companies have enhanced their international competitiveness by integrating the advantages of factors from both countries. Apple designs and develops phones in the U.S., assembles and produces them in China, and sells them in the global marketTesla has established a wholly-owned super factory in China to expand production capacity and export to global markets. China has taken on some production processes of American companies, allowing the U.S. to invest resources such as capital into innovation and management, focusing on developing high-end manufacturing and modern service industries, driving the industry to upgrade to high value-added and high-tech fields, and reducing the pressure of energy resource consumption and environmental protection in the U.S.

Sino-U.S. economic and trade cooperation has brought tangible benefits to American consumers. The U.S. imports a large number of consumer goods, intermediate goods, and capital goods from China, supporting the development of the U.S. manufacturing supply chain and industrial chain, enriching consumer choices, lowering living costs, and increasing the actual purchasing power of the American public, especially for low- and middle-income groups.

Sino-U.S. economic and trade cooperation has also created numerous business opportunities and profits for Chinese enterprises. The U.S. is the largest consumer market and the most mature capital market in the world. Chinese companies can expand sales channels, enhance brand international influence, attract global customers and partners through investment in the U.S., and obtain financing more conveniently to support rapid development.

American companies in China provide experience in technological innovation, market management, and institutional innovation for Chinese enterprises, promoting the acceleration of transformation and upgrading of Chinese companies, improving industry efficiency and product quality.

**II. China Earnestly Fulfills the Sino-U.S. Phase One Economic and Trade Agreement**

As a responsible major country, China earnestly fulfills its obligations under the agreement, protects intellectual property rights, increases imports, expands market access, and creates a favorable business environment for investors from all countries, including American-funded enterprises, to participate in and share the dividends of China's economic development.

(1) Continuously Improve Intellectual Property Protection

Innovation is the primary driving force for development, and protecting intellectual property is protecting innovation. China has taken multiple measures in protecting trade secrets, protecting pharmaceutical intellectual property, combating online infringement, and strengthening intellectual property law enforcement, seriously implementing the commitments related to intellectual property in the agreement.

Strengthening 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 Infringing upon Trade Secrets." The Supreme People's Court and the Supreme People's Procuratorate issued the "Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights (III)." The Supreme People's Procuratorate and the Ministry of Public Security issued the "Decision on Amending the 'Regulations on the Standards for Filing and Prosecution of 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 prohibited acts constituting infringement of trade secrets, the definition of criminal acts of trade secret theft, the application for temporary injunctions in trade secret theft cases, and adjustments to the thresholds for initiating criminal investigations.

Improving the pharmaceutical intellectual property protection system. In October 2020, the Standing Committee of the National People's Congress reviewed and passed 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)," and the National Intellectual Property Administration issued the "Administrative Adjudication Measures for the Early Resolution Mechanism for Pharmaceutical Patent Disputes." The Supreme People's Court issued the "Regulations on Several Issues Concerning the Application of Law in Civil Cases Related to Patents for Registered Drugs," establishing an early resolution mechanism for pharmaceutical patent disputes to ensure effective implementation of the systemIn December 2023, the State Council announced the decision to amend the implementation rules of the Patent Law, and the National Intellectual Property Administration simultaneously completed the revision of the patent examination guidelines, providing detailed regulations on the patent term compensation system. In addition, the National Intellectual Property Administration further improved the relevant content regarding the supplementary submission of experimental data in the patent examination guidelines revised in 2021.

Improving the trademark and geographical indication protection system. In April 2019, the Standing Committee of the National People's Congress reviewed and approved the decision to amend the Trademark Law, which added regulations on malicious trademark registration, increased penalties for infringing trademark exclusive rights, and significantly raised the illegal costs for those engaging in counterfeit registered trademark activities. Subsequently, the National Intellectual Property Administration formulated and issued regulations such as "Several Provisions on Regulating Trademark Application and Registration Behavior," "Trademark Infringement Judgment Standards," and "General Standards for Trademark Violations," continuously cracking down on malicious trademark registration applications. In December 2023, the National Intellectual Property Administration issued the "Measures for the Protection of Geographical Indication Products" and "Regulations on the Registration and Management of Collective Trademarks and Certification Trademarks," further improving the legal rules for geographical indication protection.

Actively promoting Sino-U.S. intellectual property exchange and cooperation. Through consultation work plans and signing cooperation memorandums with U.S. intellectual property authorities, deepening mutually beneficial and pragmatic cooperation in various technical fields such as intellectual property examination, expert exchanges, and awareness enhancement. Maintaining good communication with U.S. enterprises with a positive and open attitude, listening to opinions and suggestions regarding China's intellectual property system, and coordinating to address reasonable intellectual property claims of enterprises in China.

Increasing efforts to combat online infringement. In September 2020, the Supreme People's Court issued the "Guiding Opinions on Hearing Civil Cases Involving Intellectual Property Rights on E-commerce Platforms" and the "Reply on Several Legal Application Issues Involving Online Intellectual Property Infringement Disputes," addressing issues such as rapid takedown and the validity of notices and counter-notices. In November 2020, the Standing Committee of the National People's Congress passed the Copyright Law Amendment, which included provisions for 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)," modifying the procedures and penalty clauses for notices and takedowns.

Strengthening intellectual property law enforcement. In August 2020, the State Administration for Market Regulation and others issued the "Opinions on Strengthening the Destruction of Infringing and Counterfeit Goods," and the State Council amended the "Regulations on the Transfer of Suspected Criminal Cases by Administrative Law Enforcement Agencies," requiring that cases involving intellectual property crimes be transferred from administrative law enforcement agencies to public security organs. China has also continuously strengthened law enforcement actions against infringement and counterfeiting. In 2024, market regulation departments organized special actions for intellectual property law enforcement, further strengthening governance in key areas, key products, and key markets. Nearly 675,000 cases were investigated in various special actions, including 43,900 trademark infringement and counterfeit patent cases, with approximately 88,000 law enforcement actions conducted in key physical markets with high incidence of infringement and counterfeiting. The General Administration of Customs further strengthened the enforcement of intellectual property protection, maintaining a high-pressure stance against infringement during import and export processes, seizing 41,600 batches of suspected infringing goods and 81,605,100 items throughout the year(2) Prohibition of Forced Technology Transfer

China firmly opposes any form of forced technology transfer and always conducts international technology cooperation with mutual benefit and win-win as the basic value orientation. It encourages and respects Chinese and foreign enterprises to voluntarily carry out technology transfer and licensing according to market principles, providing a good market environment for Chinese and foreign technology holders to obtain benefits through technology transfer and licensing, and also supporting the promotion of global technological progress and international economic and trade development. The U.S. side refers to the voluntary contractual behavior of foreign-invested enterprises and Chinese enterprises conducting technology cooperation and jointly obtaining commercial returns in the Chinese market as "forced technology transfer," which is inconsistent with the facts.

Clearly prohibit forced technology transfer from a legal perspective. The Foreign Investment Law promulgated 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 released in April 2019 states that "administrative organs and their staff shall not directly or indirectly require technology transfer during the implementation of administrative licensing." The Implementation Regulations of the Foreign Investment Law issued in December 2019 further detailed the above provisions, prohibiting any form of forced technology transfer.

Comprehensively strengthen the confidentiality responsibilities of administrative organs and staff. Chinese law clearly stipulates that administrative organs and their staff shall keep confidential the trade secrets of foreign investors and foreign-invested enterprises that they become aware of during the performance of their duties. The Foreign Investment Law states that "administrative organs and their staff shall keep confidential the trade secrets of foreign investors and foreign-invested enterprises that they become aware of during the performance of their duties, and shall not disclose or illegally provide them to others"; administrative staff who "disclose or illegally provide trade secrets they become aware of during the performance of their duties shall be punished according to law; if a crime is constituted, criminal responsibility shall be pursued according to law." The Administrative Licensing Law also has similar provisions.

Continuously expand market openness and investment access. China insists on optimizing the market environment, expanding foreign investment access, and increasing the choices and freedoms of foreign enterprises to invest in China, creating good conditions for foreign enterprises to voluntarily carry out technology cooperation with Chinese enterprises according to 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 continuously introduced a series of measures to encourage foreign investment and continuously improve the foreign investment environment. In 2024, the General Office of the Central Committee of the Communist Party of China 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, adhering to the principle of national treatment without diminishing the access opportunities of existing operating entities," further improving the market access system construction, optimizing the access environment, and enhancing market access efficiency at the central level.

(3) Expand Market Access for Food and Agricultural Products

Agricultural products are an important part of China-U.S. bilateral trade and relate to numerous market entities in both countries. China has overcome the difficulties of the pandemic and honored its commitments by expanding agricultural product purchases. In November 2020, the U.S. government released a report stating that U.S. agricultural exports to China had returned to normal. The U.S. Department of Agriculture and the Office of the Trade Representative released an assessment report in 2020, stating that the China-U.S. Phase One Economic and Trade Agreement is bringing historic results to U.S. agricultureAccording to the agreement, starting from February 2020, China announced the lifting of bans on certain U.S. agricultural products, conditionally restoring trade in U.S. beef, poultry, dairy products, and more. Specifically, this includes: conditionally lifting the ban on U.S. beef and beef products from cattle aged 30 months and older, allowing over 600 U.S. companies to export beef products to China; lifting restrictions on the import of U.S. pet food containing ruminant ingredients, poultry, and poultry products, allowing U.S. pet food containing ruminant ingredients and poultry products that comply with Chinese laws and regulations to be imported; allowing over 300 U.S. companies to export infant formula, pasteurized milk, and other dairy products to China; completing the approval for U.S. edible milk permeate powder, allowing its import; and signing quarantine access agreements to allow the export of eight products to China, including U.S. processing potatoes, avocados, nectarines, blueberries, barley, alfalfa pellets, almond shell pellets, and timothy hay.

(4) Expanding Market Access for the Financial Services Industry

China's independent opening-up policies benefit financial institutions from all countries, including those with U.S. capital, with several U.S. financial institutions successfully gaining access and conducting business. JP Morgan and Goldman Sachs established wholly foreign-owned securities companies in China, while Morgan Stanley obtained controlling rights (holding 94%) in its joint venture securities company in China. JP Morgan Futures and Morgan Stanley Futures became wholly foreign-owned futures companies. BlackRock, Fidelity, LPL Financial, JP Morgan, Morgan Stanley, and Invesco were approved to establish wholly foreign-owned fund management companies. International rating agencies such as S&P and Fitch entered the Chinese market to conduct rating business. American Express and Mastercard's joint venture subsidiaries, LianTong Company and WanShi Network, were approved for bank card clearing business licenses and have successfully commenced operations.

China has successively introduced over 50 independent opening-up measures in the financial industry, significantly relaxing restrictions on foreign investment market access in the financial services sector.

— Completely removing foreign ownership ratio limits. In 2018, the foreign ownership ratio limits for Chinese banks and financial asset management companies were removed, implementing consistent equity investment ratio rules for both domestic and foreign capital. Laws such as the "Administrative Measures for Foreign-invested Securities Companies," "Administrative Measures for Foreign-invested Futures Companies," and "Implementation Rules for Foreign-invested Insurance Companies" have been revised successively, raising the foreign ownership ratio cap in the securities, fund management, futures, and life insurance sectors to 51%, with no limits set from 2020 onwards. It is clearly allowed for foreign capital to enter fields such as credit reporting, rating, and payment, and they are granted national treatment.

— Significantly expanding the scope of foreign capital business. Foreign banks can conduct RMB business as soon as they open. There are no longer separate restrictions on the business scope of foreign securities companies and insurance brokerage companies, achieving consistency between domestic and foreign capital. Foreign capital is allowed to operate insurance agency and insurance adjustment businesses. The requirements for foreign institutions to obtain qualifications for specific businesses such as being the lead underwriter for non-financial corporate debt financing instruments and fund custody have been relaxed.

— Relaxing the qualification requirements for foreign shareholders. The requirement for foreign banks to have total assets of $10 billion to establish a legal bank in China and $20 billion to establish a branch in China has been removed, as well as the requirement for foreign insurance institutions to open representative offices for two years and have a 30-year operating history, among others. There is no longer a requirement for at least one domestic shareholder of a joint venture securities company to be a securities company(5) Maintain the RMB exchange rate basically stable at a reasonable and balanced level

China upholds multilateralism, respects multilateral consensus, has always adhered to multilateral commitments, does not engage in competitive devaluation, implements a managed floating exchange rate system based on market supply and demand, and adjusts with reference to a basket of currencies, fulfilling the agreements made.

Adhere to the direction of market-oriented exchange rate reform. Continuously improve the market-oriented formation mechanism of the RMB exchange rate. The exchange rate is mainly determined by market supply and demand, and normalized foreign exchange intervention is withdrawn. Gradually expand the exchange rate fluctuation range in an orderly manner, enhance the elasticity of the RMB exchange rate, and the daily fluctuation range of the RMB to USD trading price in the interbank spot foreign exchange market has gradually expanded from 0.3% in 2007 to the current 2%. Improve the regularity and market-oriented level of the central parity exchange rate quotation, with major participating banks in the foreign exchange market serving as quoting banks, referencing the previous day's closing exchange rate in the interbank foreign exchange market, and comprehensively considering foreign exchange supply and demand conditions as well as changes in the exchange rates of major international currencies for quoting.

Continuously deepen the development of the foreign exchange market. Introduce multiple measures to enhance the convenience of cross-border trade and investment financing for foreign-related enterprises and individuals, enrich the product system of the foreign exchange market, 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, gradually forming a well-functioning multi-level foreign exchange market system, better meeting the diversified foreign exchange demand of market participants. Currently, the Chinese interbank foreign exchange market can trade more than 40 currencies, with trading varieties covering mainstream products in the international foreign exchange market such as forwards, foreign exchange swaps, currency swaps, and options. In 2024, the trading volume of the interbank foreign exchange market reached USD 41.14 trillion. The resilience of the foreign exchange market has significantly increased, and the ability of market participants to adapt to the two-way fluctuations of the RMB exchange rate has continuously improved. In 2024, the proportion of enterprises using foreign exchange derivatives such as forwards and options to manage exchange rate risks reached 27%.

The stance on exchange rate policy is clear and transparent. Through various channels such as press conferences, minutes of monetary policy committee meetings, and monetary policy implementation reports, China clearly declares its monetary policy stance. In accordance with international practices, regularly publish data such as the central bank's balance sheet, foreign exchange reserve scale, balance of payments, and international investment position to enhance the transparency of exchange rate policy.

The effectiveness of RMB exchange rate marketization reform is significant. The level of marketization of the RMB exchange rate continues to improve, the elasticity of the exchange rate continues to strengthen, and two-way fluctuations have become the norm. The RMB exchange rate has maintained basic stability at a reasonable and balanced level, and China's balance of payments has become more balanced. Since 2020, the RMB exchange rate index measured against a basket of currencies by the China Foreign Exchange Trading Center has generally operated around 100, maintaining relative strength among major international currencies, with no competitive devaluation. The annualized volatility of the RMB exchange rate remains around 3%-4%, roughly equivalent to the volatility of major international currencies, effectively playing the role of an automatic stabilizer for the macroeconomy and balance of payments. In 2024, the surplus of China's current account accounted for 2.2% of GDP, within the internationally recognized reasonable range.

(6) Actively expand trade scale

The Chinese side, based on domestic market needs and adhering to market-oriented and commercial principles as well as World Trade Organization rules, actively promotes the resolution of issues arising during the implementation of agreements and supports relevant enterprises in expanding imports from the United States. The procurement obligations under relevant agreements naturally expired at the end of 2021Exclusion of market-based procurement for goods subject to additional tariffs on the U.S. China will not impose additional counter-tariffs on U.S. imports that meet the conditions and are procured from the U.S. based on market and commercial principles for a certain period, creating favorable conditions for relevant enterprises to import from the U.S. For example, oil, gas, coal, and other products will be included in the scope of goods eligible for exclusion, supporting relevant enterprises in importing related energy products from the U.S. In 2020 and 2021, the value of energy products imported from the U.S. by China in U.S. dollars increased by 144.5% and 114.7% respectively compared to the previous year.

China's expansion of imports from the U.S. has achieved positive results. According to Chinese statistics, while the overall value of goods imported by China in U.S. dollars decreased by 0.6% in 2020 compared to the previous year, imports of goods from the U.S. increased by 10.1%; in 2021, imports of goods from the U.S. grew by 31.9%, also exceeding the overall import growth rate of 30%; the share of imports from the U.S. in China's total goods imports increased from 5.9% in 2019 to 6.7% in 2021. According to U.S. statistics, while the overall value of U.S. goods exports decreased by 13.4% in 2020 compared to the previous year, exports to China increased by 15.9%; in 2021, exports to China also achieved a high growth rate of 21.9%; the share of exports to China in the total U.S. goods exports increased from 6.5% in 2019 to 8.6% in 2021.

During China's compliance process, multiple obstacles arose due to U.S. reasons. The production capacity of relevant U.S. products is limited, leading to insufficient export capacity to China. In 2020, Boeing's aircraft production in the U.S. was only about 40% of that in 2019, significantly impacting deliveries to China. In 2019, U.S. wheat faced adverse weather during the growing and harvesting periods, resulting in serious issues with ergot and vomitoxin exceeding standards, and the quantity of wheat meeting China's food hygiene and quarantine standards was limited, affecting wheat exports to China in 2020.

Insufficient U.S. infrastructure has led to increased transportation costs. For example, most ports in the U.S. Gulf of Mexico cannot directly accommodate very large crude carriers (VLCCs) of 300,000 tons, requiring medium-sized tankers (100,000-200,000 tons) for transshipment, resulting in transportation costs for U.S. crude oil to China being twice as high as those from the Middle East, making it relatively less competitive in international pricing.

Some U.S. products lack competitiveness in terms of price and safety, affecting the willingness of Chinese enterprises to import on a market basis. Compared to U.S. soybeans, South American soybeans have a more obvious price advantage; U.S. beef is about 50% more expensive than South American beef; U.S. rice is less competitive than rice from Southeast Asian countries in terms of quality, appearance, taste, and price, with U.S. rice import prices in February 2020 being approximately 3,000 yuan and 3,500 yuan per ton higher than Thai and Vietnamese rice, respectively. Additionally, in 2018 and 2019, serious accidents involving Boeing's main model, the B737MAX, led to grounding measures taken by most countries worldwide, including China and the U.S., significantly impacting aircraft trade.

U.S. reasons have affected international logistics between China and the U.S. U.S. ports and other infrastructure are in a state of tight balance, and due to the pandemic, many supply chain links such as railways, ports, and container trucks have struggled to adapt, leading to severe congestion at major U.S. ports and blockages in the inland transportation system, resulting in significant cargo backlogsAccording to the operating data of major global container ports released by the Shanghai Shipping Exchange, in 2021, the average time container ships spent at the ports of Los Angeles and Long Beach in the United States was 11.1 days and 10.6 days respectively (compared to 4.3 days and 4.7 days before the pandemic), while during the same period, the average time ships spent at the ports of Shanghai and Shenzhen in China was only 2.96 days and 2.33 days respectively.

(7) Maintain pragmatic communication with the U.S. side on agreement matters

From 2020 to 2021, the Chinese side maintained close communication with the U.S. side at all levels regarding bilateral economic and trade relations and specific issues related to the implementation of the agreement, efficiently advancing relevant work and fully demonstrating China's sincerity in fulfilling its commitments. During this period, the two sides did not initiate the dispute resolution mechanism. According to the agreement, in terms of high-level communication, the Chinese and U.S. sides conducted six phone calls to discuss topics such as the macroeconomic situation, bilateral economic and trade relations, and multilateral cooperation, gaining an overall understanding of the agreement situation. In terms of routine work, the two sides held five quarterly meetings at the deputy ministerial level, 14 monthly meetings and consultations at the bureau level, focusing on communication regarding trade expansion, food and agricultural trade, intellectual property, financial services, and maintaining regular contact through working-level talks and emails to specifically promote the resolution of issues of mutual concern.

According to the agreement, it officially took effect on February 15, 2020. At the same time, the Chinese side provided a public comment period of no less than 45 days for all proposed measures to implement the agreement, fully absorbing opinions and suggestions from both domestic and international sources, and properly responding to reasonable concerns from all sectors.

**III. The U.S. side violates obligations related to the China-U.S. Phase One Economic and Trade Agreement**

After the signing of the China-U.S. Phase One Economic and Trade Agreement, the U.S. side continued to escalate its suppression of China in economic and trade and other fields, introducing a series of restrictive measures such as export controls and investment restrictions, violating the spirit of the agreement. At the same time, the U.S. side continued to hype up issues related to human rights, Hong Kong, Taiwan, Xinjiang, and the pandemic, severely impacting China-U.S. relations and China-U.S. economic and trade relations, obstructing normal bilateral trade and investment activities, and undermining the atmosphere and conditions for implementing the agreement.

(1) Failure to implement commitments related to technology transfer in the agreement

The technology transfer chapter of the agreement stipulates that "for acquisitions, joint ventures, or other investment transactions, neither party shall require or pressure the other party's individuals to transfer technology to its own individuals." The U.S. introduced the "Protecting Americans from Foreign Adversaries Act," using the so-called "protection of U.S. national security" as an excuse to force TikTok to sell or divest, interfering with normal business operations and threatening the technological security and commercial interests of investors. The U.S. side violates the basic principles of a market economy and disrespects and harms the legitimate interests of enterprises.

At the same time, under the guise of maintaining "national security," the U.S. issued rules restricting foreign investment, limiting normal foreign investment by U.S. enterprises, making it difficult for Chinese and U.S. enterprises to cooperate in investment in fields such as semiconductors and microelectronics, quantum information technology, and artificial intelligence. In February 2025, the U.S. also issued a memorandum on "America First" investment policy, announcing adjustments to U.S. investment policy, focusing on further restricting bilateral investment with China, which will cause serious disruptions to China-U.S. investment cooperation(2) Incomplete Implementation of the Agreement on Food and Agricultural Products Trade Commitments

The agreement stipulates that "upon receiving China's formal request for the assessment of China's avian disease-free zone recognition and related supporting information, the Animal and Plant Health Inspection Service of the U.S. Department of Agriculture shall initiate the assessment within 30 days." However, the U.S. side has consistently refused to recognize Shandong's avian influenza-free status, citing non-compliance with U.S. disease-free status recognition requirements. On November 2, 2020, China formally submitted the "Certification Materials for the Avian Influenza-Free Zone in the Jiaodong Peninsula" to the U.S. According to Chapter 10.4 of the World Organisation for Animal Health's Terrestrial Animal Health Code, the pathways for a country or region to achieve avian influenza-free status include both immunization and non-immunization methods. In August 2022, Shandong Province in China established an avian influenza-free zone, with its construction and management complying with the relevant provisions of the Terrestrial Animal Health Code. Since its establishment, China has continuously conducted various monitoring activities, including pathogen monitoring, to demonstrate its maintenance of disease-free status. China has also effectively fulfilled the agreement by recognizing the U.S. disease-free status and has not issued a comprehensive trade ban on U.S. poultry and poultry products following the outbreak. However, the U.S. side has refused to carry out the disease-free status certification, claiming that the high pathogenic avian influenza immunized disease-free zone does not qualify as a disease-free zone, which does not constitute a reciprocal implementation of the agreement and is inconsistent with the principles related to avian influenza disease-free status set forth by the World Organisation for Animal Health.

The agreement states that "both parties intend to engage in technical consultations in potential cooperation areas related to pesticides, including pesticide registration and trial data, and to discuss the establishment of maximum residue limits." However, the U.S. side has not responded positively to China's proposal for jointly advancing cooperation in the pesticide sector. China is the largest source of pesticide imports for the U.S., while the U.S. is China's second-largest pesticide export market. Achieving mutual recognition of pesticide registration trial data as soon as possible aligns with trade facilitation needs, can reduce unnecessary repetitive testing, and lower pesticide registration costs, which is a common demand of pesticide companies from both China and the U.S., and is beneficial for promoting innovation and development in the pesticide sector. China has continuously strengthened communication with the U.S. side, striving to initiate technical consultations in the pesticide field as soon as possible. Since December 2020, China has repeatedly expressed through the U.S. Embassy in China its hope for a prompt response from the U.S. side to establish a communication mechanism and jointly advance cooperation in the pesticide sector, but the U.S. side has not provided any response.

The U.S. side committed in the agreement to promptly complete the import regulatory notification procedures for agricultural products such as Chinese poultry, citrus, fresh dates, and fragrant pears. However, the U.S. has not reciprocally provided tariff exclusion measures for the agricultural products involved in the agreement, hindering substantial exports of Chinese agricultural products to the U.S. The relevant products were not included in the U.S. tariff exclusion list. In 2025, the U.S. imposed a 20% tariff on all products exported from China, citing issues such as fentanyl, along with an additional 34% so-called "reciprocal tariff," and further imposed a 50% tariff, leading to further restrictions on the export of relevant products to the U.S. Chinese aquatic products and dairy products have been automatically detained by the U.S. The General Administration of Customs of China has repeatedly requested the U.S. Food and Drug Administration to clarify the next steps for lifting the automatic detention, in order to promote work as soon as possible, but the U.S. side has not clarified the next steps for resolution.

(3) Incomplete Implementation of the Agreement on Financial Services and Exchange Rate CommitmentsIn recent years, the U.S. has generalized the concept of national security, implementing a series of investment and financing restrictions against China, which has intensified tensions in Sino-U.S. economic and trade relations, disrupted normal economic and trade cooperation between the two countries, and severely affected the willingness of Chinese financial institutions to invest and operate in the U.S. At the same time, some Chinese financial institutions still face discriminatory treatment in their operations in the U.S., which contradicts the principle of fair competition.

The agreement stipulates that if there are disagreements between the two parties regarding the resolution of exchange rate issues, they should be resolved under the framework of the bilateral assessment and dispute resolution arrangement established through consultations between the People's Bank of China and the U.S. Department of the Treasury; if they cannot be resolved, the International Monetary Fund should assist in resolving the issue within its responsibilities. These terms provide a clear route for both parties to resolve their differences. However, after the agreement was signed, the U.S. Department of Commerce introduced new regulations that included undervaluation of the exchange rate in countervailing investigations and introduced the so-called "undervalued Renminbi exchange rate" project in some countervailing cases. This move by the U.S. is inconsistent with World Trade Organization rules and the commitments made in the agreement.

(4) No reasonable facilitation conditions were provided for China to expand procurement and imports.

The unreasonable measures taken by the U.S., such as export controls and sanctions against China, have had a serious negative impact on the implementation of the agreement. Since 2020, the U.S. has violated the spirit of the agreement by introducing multiple unreasonable trade restrictions against China, implementing a series of inappropriate export control measures, and frequently imposing unreasonable sanctions on numerous Chinese enterprises through the entity list, severely damaging the atmosphere of Sino-U.S. economic and trade cooperation and greatly affecting China's imports of related goods and services from the U.S. For example, in October 2022, the U.S. implemented measures to comprehensively upgrade export controls on chips and semiconductor equipment to China, resulting in a 23% and 17.9% decrease, respectively, in the value (in U.S. dollars) of semiconductors and semiconductor manufacturing equipment imported by China from the U.S. The U.S. fabricated the so-called "forced labor" issue, passed the "Uyghur Forced Labor Prevention Act," slandered and discredited Chinese enterprises and products, and restricted the import of related cotton products from China, indirectly affecting Chinese enterprises' imports of cotton from the U.S.

In recent years, against the backdrop of ongoing U.S. suppression of China, coupled with the severe impact of the COVID-19 pandemic on the global economy and trade activities, China could have completely followed the provisions of Article 7.4, Paragraph 4 of the agreement to formally notify the U.S. in writing and withdraw from the agreement; or could have initiated consultations on the force majeure clause with the U.S. according to Article 7.6, Paragraph 1. However, considering the overall situation of maintaining Sino-U.S. relations and economic and trade relations, as well as safeguarding the legitimate interests of enterprises and people from both countries, China has not initiated relevant actions but has instead honored its commitments, overcoming various difficulties to fulfill the agreement arrangements, fully demonstrating China's sincerity. Since the signing of the agreement, the U.S. has yet to raise any complaints against China through the dispute resolution mechanism.

**IV. China practices the concept of free trade and earnestly adheres to World Trade Organization rules**

Since joining the World Trade Organization in 2001, China has embarked on a deep participation in economic globalization, and the reform and opening-up has entered a new historical stage. China actively practices the concept of free trade, effectively enhances the stability, transparency, and predictability of trade policies, and significantly opens up its market, making positive contributions to maintaining the effectiveness and authority of the multilateral trading system(1) Comprehensively strengthen trade policy compliance work

Since joining the World Trade Organization, China has fully fulfilled its accession commitments, complied with and implemented World Trade Organization rules, improved market economy laws and regulations based on rules, and constructed a legal system that conforms to multilateral trade rules. After joining the World Trade Organization, China has carried out extensive legal and regulatory cleanup and revision work, with the central government cleaning up over 2,300 laws and regulations and departmental rules, and local governments cleaning up over 190,000 local regulations, covering various aspects such as trade, investment, and intellectual property protection.

To implement the requirements of the Third Plenary Session of the 18th Central Committee of the Communist Party of China regarding adherence to the rules of the world trade system and the establishment of a new open economic system, in 2014, the General Office of the State Council issued the "Notice on Further Strengthening Trade Policy Compliance Work," and the Ministry of Commerce released the "Implementation Measures for Trade Policy Compliance Work (Trial)," requiring governments at all levels to conduct compliance assessments against World Trade Organization agreements and China's accession commitments during the formulation of trade policies. In 2024, the Third Plenary Session of the 20th Central Committee of the Communist Party of China proposed to establish a compliance mechanism that aligns 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 be regarded as a necessary prerequisite before the introduction of trade policies. State Council departments, people's governments at or above the county level, and their departments should conduct compliance assessments of proposed policy measures according to the principle of "who formulates, who assesses," ensuring they comply with World Trade Organization rules and China's accession commitments.

(2) Effectively fulfill the tariff reduction commitments upon joining the World Trade Organization

When China joined the World Trade Organization, it made extensive and significant tariff reduction commitments. The Chinese government has honored its commitments, and by 2010, all tariff reduction commitments for goods had been fulfilled, with the overall tariff level decreasing from 15.3% in 2001 to 9.8%. In terms of the bound tariff rates under the World Trade Organization, 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 open strategy, actively expanding imports in recent years and significantly reducing import tariff rates multiple times on its own initiative. In July 2023, with the completion of the eighth step of tariff reduction for products under the Information Technology Agreement expansion, China's overall tariff level further decreased to 7.3%. In 2024, China further announced a zero preferential tariff rate for 100% of tariff items originating from the least developed countries that have established diplomatic relations with China. This fully demonstrates China's firm commitment to advancing opening up and integrating into the global economy. China's lower tariff levels not only provide broad market opportunities for high-quality global goods but also offer diverse choices for domestic consumers, promote the development of global industrial and supply chains, and advance the liberalization of global trade and investment and the process of economic globalization.

(3) Reasonably provide subsidies in compliance with 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 across all industrial sectors, and countries at different stages of development are using subsidy policiesChina promised not to maintain or provide any export subsidies for agricultural products when it joined the World Trade Organization (WTO), and it made commitments in domestic support and industrial subsidies that exceed those of general developing members. Since joining the WTO, China has strictly adhered to the various subsidy disciplines of the WTO and has timely submitted subsidy notifications to the WTO. In June 2023, China submitted a notification of subsidy policies for 2021-2022, involving 69 central and 385 local subsidy policies, achieving full coverage of provincial administrative regions. In July 2024, China will submit a notification of domestic support for agriculture for 2022, with the reporting year being roughly equivalent to that of major developed members such as the United States (for marketing year 2022/2023) and the European Union (for marketing year 2021/2022).

China is committed to establishing a comprehensive fiscal subsidy system that aligns with international practices, promoting a shift in industrial policy from differentiation and selectivity to inclusiveness and functionality. The Chinese government increasingly employs market-oriented and guiding indirect means such as public services, technical standards, and skills training, focusing on supporting technological research and innovation, the development of small and medium-sized enterprises, green energy conservation, and the construction of public service systems in areas of market failure, achieving inclusive support for enterprises within the industry, stimulating the vitality of business entities, promoting fair competition, and improving the socialist market economy system. For example, preferential policies are implemented for eligible individual industrial and commercial households and small profit-making enterprises in terms of personal income tax, corporate income tax, resource tax, property tax, and urban land use tax.

To better leverage subsidies to promote development, China holds an open attitude towards discussions on industrial subsidies within the framework of the WTO. At the same time, relevant discussions need to determine the direction, goals, forms, and boundaries of the discussions, avoiding a generalization into macro discussions on state intervention or industrial policy, and must not touch upon members' economic systems and development models.

Some people hype the so-called "China's overcapacity theory," accusing China of causing "overcapacity" due to macroeconomic imbalances and "non-market economic behaviors" such as subsidies, which impact the international market and harm the employment and supply chain resilience of other countries. China believes that the so-called "China's overcapacity theory" is contrary to reason and common sense. From the perspective of market economic principles, supply and demand are two fundamental aspects of the inherent relationship in a market economy. Supply-demand balance is relatively short-term, while imbalance is universally dynamic. From the perspective of international trade, the emergence and development of international trade is based on the comparative advantages of various countries, engaging in international division of labor and cooperation, thereby effectively enhancing global economic efficiency and welfare. Using "overcapacity" and other excuses to impose restrictions on China's product exports and investment cooperation is, in fact, blatant trade protectionism, which constitutes artificial intervention and fragmentation of the global market, inevitably undermining the stability of global production and supply chains and causing redundant construction and overcapacity. Imposing restrictions through "labeling" will only hinder cooperation and ultimately will not yield the desired results.

(4) Continuously optimize the business environment

The Third Plenary Session of the 20th Central Committee of the Communist Party of China emphasized fully leveraging the decisive role of the market in resource allocation and better playing the role of the government; ensuring that various types of ownership economies can equally use production factors, fairly participate in market competition, and receive equal legal protection, promoting complementary advantages and common development of various ownership economies; and cleaning up and abolishing various regulations and practices that hinder the national unified market and fair competition. The Chinese government is continuously optimizing the business environment through systematic reforms that align with international rules, providing a more transparent, fair, and predictable business environment for global enterprisesContinuously expanding foreign investment access. In July 2017, a negative list management system for foreign investment access was implemented nationwide. In 2019, the Foreign Investment Law was promulgated, stipulating that foreign investment would adopt a pre-access national treatment plus negative list model, establishing the principle of "equal treatment for domestic and foreign capital" in legislative form, while prohibiting forced technology transfer and strengthening intellectual property protection, providing legal certainty for foreign-invested enterprises. Further optimizing the foreign investment environment, increasing efforts to attract foreign investment, ensuring foreign-invested enterprises' participation in government procurement activities, supporting foreign-invested enterprises' equal participation in standard-setting, and ensuring that foreign-invested enterprises enjoy supportive policies equally have further boosted foreign investment confidence. From 2017 to 2024, the national negative list for foreign investment access was reduced from 93 items to 29 items, and restrictions on foreign investment access in the manufacturing sector were completely lifted. In 2024, China successively expanded pilot openings in value-added telecommunications, healthcare, and other fields, continuously relaxing foreign investment access in the service sector. The implementation of the "2025 Action Plan for Stabilizing Foreign Investment" has released positive signals for further opening up, while actively promoting foreign investment and effectively addressing the concerns of foreign-invested enterprises.

Creating a fair competitive market environment. In 2022, China issued opinions on accelerating the construction of a unified national market, clearly stating the need to comprehensively eliminate various preferential policies that discriminate against foreign-invested enterprises and enterprises from other regions, and to implement local protectionism. In June 2024, the State Council of China issued the "Regulations on Fair Competition Review," clearly requiring that policy measures must not contain content that affects production and operation costs without approval, including not granting specific operators tax preferences, special financial rewards or subsidies, and preferential treatment in obtaining factors, administrative fees, government funds, social insurance fees, etc. The Chinese government continues to carry out the cleanup of related preferential policies such as special financial rewards or subsidies, accelerating the formation of a system in line with international rules and promoting high-quality social and economic development.

Fair treatment of domestic and foreign enterprises in the tax field. In recent years, China has orderly promoted tax system reform, accelerated the implementation of the principle of tax legality, 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.

— Equal tax treatment for domestic and foreign enterprises. For all enterprises within the territory, regardless of ownership, a unified tax law is implemented, and the same tax rates apply. Qualified foreign-invested enterprises and projects can enjoy relevant tax preferential support policies as stipulated.

— Equal treatment for imported and domestic goods. According to the relevant rules of the World Trade Organization and domestic laws and regulations, China imposes certain tariffs on imported goods. In addition, to reflect the principle of tax burden fairness, value-added tax is also levied at the import stage, and consumption tax is levied on certain consumer goods, with the value-added tax being deductible in subsequent transaction chains, passing the tax burden downstream. For domestic products, value-added tax is levied at all stages of production and circulation, and consumption tax is levied on certain consumer goods at some stages of production and circulation. The scope of taxation and applicable tax rates for imported and domestic goods are completely consistent, with no "discrimination" whatsoever. China, the European Union, Japan, South Korea, and several other economies implement a turnover tax system, levying value-added tax or consumption tax at the import stage, which is consistent with tax system principles and international rules, and is a common practice in relevant countries. The United States does not implement a turnover tax system, mainly relying 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 paySuch differences are formed due to the different tax systems of various countries and do not imply that China, Europe, Japan, South Korea, and others impose additional "discriminatory" "extraterritorial" taxes on imported goods. Moreover, this should not be used as a reason to impose additional tariffs on goods from relevant countries.

—— Personal income tax for citizens of different countries is treated "equally." It is an international practice to levy personal income tax on foreign personnel working within a country. According to China's personal income tax law, resident individuals are required to pay tax on both domestic and foreign income, while non-resident individuals only pay tax on domestic income. The distinction between residents and non-residents is based on whether they have a residence in China or whether they have lived in China for 183 days or more in a tax year, rather than their nationality. At the same time, China provides support policies such as tax exemptions for relevant allowances and subsidies for foreign individuals.

Actively promote the development of digital trade. Establish 12 national digital service export bases across the country and introduce policy measures to support the innovative development of these bases. Since 2015, 165 comprehensive pilot zones for cross-border e-commerce have been established nationwide, covering 31 provinces, achieving the integrated development of industrial digitization and trade digitization. China manages the internet according to the law and welcomes internet companies from all countries that comply with Chinese laws and regulations and provide safe and reliable products and services to develop in China. In 2024, China will release opinions on the reform and innovative development of digital trade, further promoting the institutional opening of digital trade, including relaxing market access in the digital field, facilitating and regulating cross-border data flow, and creating high-level open platforms for digital trade. In the field of cross-border data flow, in 2024, China will issue regulations on promoting and regulating cross-border data flow, further optimizing the regulatory environment for cross-border data flow, and authorizing free trade pilot zones to formulate their own negative lists for cross-border data flow. The free trade pilot zones in Tianjin, Shanghai, and Beijing will take the lead in piloting the "negative list for cross-border data flow," clarifying the boundaries of restricted data, reducing compliance costs for enterprises, and improving policy predictability.

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

As the main builder and participant in the international economic order and multilateral trading system after World War II, the United States should lead by example in adhering to multilateral trade rules and properly handle trade frictions with other World Trade Organization members through dispute resolution mechanisms within the framework of the World Trade Organization. However, in recent years, the U.S. has pursued unilateralism and economic hegemony, engaging in so-called "small courtyard high walls" and "decoupling and severing chains," provoking economic and trade frictions from all sides, which not only harms the interests of China and other World Trade Organization members but also damages the U.S.'s own international image, undermines the foundation of the global multilateral trading system, and ultimately will harm the long-term interests of the United States.

(1) The cancellation of China's permanent normal trade relations status undermines the foundation of China-U.S. economic and trade relations.

In April 2025, the White House released an executive summary of the "America First" trade policy report, stating that it had conducted a detailed assessment of Congress's proposal to cancel China's permanent normal trade relations status and made recommendations to the president based on this. In fact, the status of permanent normal trade relations (i.e., permanent most-favored-nation treatment) is the core foundation of China-U.S. economic and trade relations. If the U.S. pushes to cancel China's most-favored-nation treatment, it will violate World Trade Organization rules, severely undermine China-U.S. relations and the global economic and trade order, and is a typical practice of unilateralism and trade protectionismThe cancellation of Most-Favored-Nation (MFN) treatment seriously violates the rules of the World Trade Organization (WTO). The WTO rules require WTO members to unconditionally grant MFN treatment to other WTO members, and this requirement has legal binding force. In 2018, the U.S. government unilaterally announced the imposition of Section 301 tariffs on certain products from China based on its domestic laws, and subsequently took a series of strict unilateral restrictive measures against China in areas such as investment and technology exports. The relevant actions by the U.S. violate the MFN treatment requirements of the WTO, and the Section 301 tariff measures have been ruled as violations by a WTO expert panel. The practice of canceling MFN treatment, whether through legislation by the U.S. Congress or any other domestic legal means, directly violates the obligations the U.S. is supposed to undertake under the WTO, representing blatant unilateralism and trade protectionism.

The cancellation of MFN treatment severely undermines the economic and trade relations between China and the U.S. and the stability of the global economic and trade order. Permanent Normal Trade Relations (PNTR) have been the foundation of stable economic and trade relations between China and the U.S. for over 20 years, having profound and positive impacts on economic exchanges between the two countries and even on global economic development. The cancellation of PNTR would return the economic and trade relations between China and the U.S. to a state of uncertainty and unpredictability that existed before China joined the WTO in 2001, and could even lead to an economic "decoupling." The cancellation of MFN treatment would significantly worsen the economic and trade environment between China and the U.S., affecting other areas of economic and trade such as service trade, intellectual property, bilateral investment, technology controls, and personnel exchanges. Furthermore, canceling the MFN treatment of a WTO member would fundamentally undermine the principle of MFN treatment in the WTO, shaking the foundation of the multilateral trading system based on non-discrimination as a fundamental value orientation, and would cause serious damage to the multilateral trading system and the global economic and trade order.

China firmly opposes the unilateralism and protectionism that undermine the multilateral trading system. The multilateral trading system centered on the WTO is the cornerstone of international trade and one of the important achievements of human civilization development, with MFN treatment being a fundamental principle of the multilateral trading system. China has always firmly supported and maintained the multilateral trading system. History and reality show that a rules-based multilateral trading system aligns with the common interests of all countries, while unilateralism and protectionism undermine global industrial chains, supply chains, and value chains, threatening the stability and development of the world economy. China consistently opposes the practices that undermine the multilateral trading system through unilateralism and protectionism, and hopes that the U.S. will recognize the adverse impacts that the cancellation of MFN treatment may bring, and work with the majority of WTO members to jointly maintain a fair and reasonable international economic and trade order and international trading environment.

(2) The U.S. side's broadening of the national security concept hinders normal economic and trade cooperation between the two countries

The U.S. government continues to politicize economic and trade issues under the guise of national security, implementing various economic and trade restrictive policies and measures. The scope of restrictions continues to expand, and the intensity of sanctions is constantly increasing. In September 2024, the U.S.-China Business Council released its 2024 "China Business Environment Survey," indicating that U.S. export controls, sanctions, and investment reviews have become one of the main challenges faced by U.S. companies in China.

In terms of trade, the U.S. claims that the persistent trade deficit poses a serious threat to the U.S. economy and national security. The U.S. has also cited national security as a reason to frequently strengthen restrictions on Chinese integrated circuits and telecommunications companies through various unilateral measures, including tightening export controls, expanding sanctions against China, and closing the U.S. marketIn January 2025, the U.S. Department of Commerce released the final rule on "Ensuring the Security of the Information and Communications Technology and Services Supply Chain: Connected Vehicles," stating that China's connected vehicle hardware and software, as well as complete vehicles, are "unsafe," thus restricting their entry into the U.S. market. In the same month, the U.S. Department of Commerce announced the initiation of a national security risk investigation into drone systems from China and other countries. The U.S. also stated that it would expand the scope of investigations related to information and communications technology and services to cover advanced technologies controlled by so-called "adversary nations."

In terms of investment, the U.S. introduced the "Foreign Investment Risk Assessment Modernization Act" and its accompanying administrative system, expanding the review authority of the Committee on Foreign Investment in the United States (CFIUS) and restricting Chinese enterprises' investments in critical technologies, key infrastructure, and sensitive data in the U.S. In January 2025, the final rule on foreign investment review took effect, comprehensively restricting U.S. funds and enterprises from investing in China's semiconductor and microelectronics, artificial intelligence, and quantum information technology sectors. In February, the U.S. issued a memorandum on the "America First" investment policy, proposing to expand the areas of investment restrictions from semiconductors and microelectronics, quantum information technology, and artificial intelligence to biotechnology, hypersonics, aerospace, advanced manufacturing, and directed energy, further tightening restrictions on Chinese investments in "strategic industries" in the U.S.

The series of trade and investment restrictions implemented by the U.S. not only increase compliance costs for enterprises but also severely hinder normal economic and trade cooperation between the two countries, affecting the stability of global industrial and supply chains and seriously undermining the international economic and trade order.

(3) The U.S. abuses export controls to undermine global supply chain stability

In recent years, the U.S. has generalized national security, excessively exercised long-arm jurisdiction, and continuously politicized, weaponized, and instrumentalized export controls, imposing sanctions and suppression on the industries and enterprises of other countries, severely obstructing normal economic and trade exchanges globally and disrupting the stability of global industrial and supply chains.

The U.S. acts under the guise of national security and human rights to suppress and contain. Since 2022, the U.S. has repeatedly escalated export controls on semiconductors and artificial intelligence to China under the pretext of national security, moving from restrictions on integrated circuits to manufacturing, then to foundries, and finally to software, effectively suppressing the entire semiconductor industry chain. The U.S. has implemented discriminatory control measures on artificial intelligence models and the integrated circuits that provide underlying computing power, essentially creating a hierarchy in the field of artificial intelligence, favoring some while distancing others, depriving developing countries, including China, of their right to achieve technological progress.

In recent years, the U.S. has listed multiple Chinese entities on the "Uyghur Forced Labor Prevention Act Entity List" under the pretext of forced labor and has continuously imposed export control sanctions on relevant Chinese entities citing human rights. The sanctioned enterprises do not have the so-called "forced labor" issues; some have fully achieved automation in production, and others have undergone audits by third-party organizations, finding no evidence of "forced labor." Sanctions have left Chinese enterprises facing severe impacts from supply chain disruptions, funding shortages, and cooperation breakdowns, severely damaging their legitimate rights and interests.

The U.S. abuses export controls and unjustly sanctions a large number of Chinese entities. For a long time, the U.S. has implemented stringent export control policies against China and has used "blacklist" tools to suppress Chinese entities under the pretext of involvement with Russia, Iran, terrorism, and drugs, leading to supply chain disruptions and obstacles in technological cooperation for the sanctioned entities. In recent years, the frequency and intensity of U.S. sanctions against China have significantly increasedAmerican think tank research believes that "the formulation of the U.S. sanctions list lacks transparency and fairness. The process for adding entities to the export control list relies on confidential information and lacks transparency; the criteria for addition are vague and lack clear definitions; the threshold for removal is extremely high, making it difficult for companies to remove themselves through judicial litigation."

U.S. measures harm others without benefiting itself, disrupting the stability of global industrial and supply chains. The U.S. abuses extraterritorial jurisdiction, artificially "building walls" and "decoupling" through minimum content rules and foreign direct product rules, violating economic laws and market rules. This not only creates significant uncertainty for industrial cooperation between both sides but also severely undermines the international trade order and the security and stability of global industrial and supply chains. For example, the "1017" semiconductor rule issued by the U.S. in 2023 first applied the minimum content rule, requiring that for specific lithography equipment, any export to China containing any U.S. elements must apply for a license from the U.S. The "1202" semiconductor measures issued by the U.S. in 2024 impose restrictions on 24 types of semiconductor equipment and introduce foreign direct product rules, requiring that related semiconductor manufacturing equipment produced by other countries must apply for a license from the U.S. if it contains specific U.S. elements when exported to China, aiming to prohibit U.S. products from entering the Chinese market and also to prevent similar products from other countries from entering. U.S. chip giant Nvidia stated that the new regulations actually threaten global innovation and economic growth and put it at a competitive disadvantage by losing the Chinese market. Research from the New York Federal Reserve shows that various U.S. sanctions against China have resulted in a loss of approximately $130 billion in market value for U.S. companies.

(4) The U.S. Section 301 tariff measures are a typical example of unilateralism

The U.S. Section 301 tariff measures are a typical example of unilateralism and protectionism, which not only severely disrupt the international trade order and the security and stability of global industrial and supply chains but also fail to address the U.S.'s own trade deficit and industrial competitiveness issues, while raising the prices of imported goods in the U.S., with the costs ultimately borne by U.S. companies and consumers. Recently, the U.S. not only did not terminate the existing Section 301 investigation but also proposed to conduct a new Section 301 investigation against China regarding so-called non-market policies and practices, straying further down the wrong path.

Section 301 tariffs do not comply with multilateral trade rules. Section 301 tariffs seriously violate the most basic and core rules of the World Trade Organization, such as most-favored-nation treatment and tariff constraints. In April 2018, China brought a case against the U.S. tariff measures to the World Trade Organization's dispute resolution mechanism. On September 15, 2020, the World Trade Organization officially announced the case ruling, with the expert group fully supporting China's claims, determining that the U.S. imposed tariffs only on Chinese products, violating the most-favored-nation treatment obligations under Article 1 of the 1994 General Agreement on Tariffs and Trade. The U.S. appealed on October 26, 2020. However, due to prior U.S. obstruction, the appellate body has been paralyzed, leaving the case in a state of pending appeal.

Section 301 tariffs cannot solve the U.S. deficit problem. Since 2018, the U.S. has maintained additional Section 301 tariffs on China for seven consecutive years. During this period, the overall U.S. deficit has not decreased as a result; instead, it has risen from $950.2 billion in 2018 to $1,211.75 billion in 2024.

The U.S. hopes to reduce its trade dependence on China through additional tariffs and achieve diversification of import sources. China is one of the largest sources of imports for the U.S., which is not necessarily a bad thing for the U.SDuring the COVID-19 pandemic, a large amount of personal protective equipment exported from China met the needs of the United States in combating the pandemic, and many tariff exemptions for epidemic prevention products have continued to this day.

The 301 tariffs have severely harmed the competitiveness of American businesses and consumer welfare. The 301 tariffs have made the prices of taxed goods more expensive, with most of the related costs borne by American importers, wholesale and retail sectors, and consumers. In March 2023, the U.S. International Trade Commission released a report on the economic impact of the 232 and 301 tariffs on domestic industries in the U.S., showing that nearly 100% of the costs of the tariffs imposed on China were borne by importers.

(5) The U.S. 232 investigation violates multilateral trade rules

Since 2017, the U.S. has frequently used the 232 investigation as a tool for trade protection and negotiation pressure. From 2017 to 2021, a total of 8 232 investigations were initiated, covering steel, aluminum, automobiles and parts, mobile cranes, and more. The frequency of investigations and the range of targeted products are unprecedented.

In April 2017, the U.S. Department of Commerce announced the initiation of a 232 investigation into steel and aluminum products imported into the U.S. In March 2018, the U.S. announced a 25% and 10% tariff on imported steel and aluminum products, respectively, citing national security. During the investigation, the U.S. Department of Defense sent a letter to the Department of Commerce stating that imported steel and aluminum products did not affect the Department of Defense's ability to obtain steel and aluminum products needed for national defense.

It has been proven that the 232 tariffs on steel and aluminum did not address U.S. national security issues but were instead used to exert pressure in negotiations. In the renegotiation of the North American Free Trade Agreement, the U.S. lifted tariffs on steel and aluminum products from Canada and Mexico only after obtaining desired conditions; in the negotiations to revise the free trade agreement with South Korea, the U.S. converted the 232 measures on South Korean steel and aluminum products from tariffs to tariff quotas only after South Korea made concessions on automotive trade; in negotiations with the European Union, the U.S. converted the 232 steel and aluminum measures on the EU from tariffs to tariff quotas only after the EU agreed to lift restrictions on U.S. products and jointly confront so-called "non-market economic behavior" with the U.S.

The U.S. 232 investigation, under the guise of national security, effectively imposes trade restrictions and negotiation pressure, harming the legitimate rights and interests of other countries and regions, violating U.S. international obligations, and undermining the multilateral trading system. Several World Trade Organization members, including China and the EU, have brought the U.S. 232 restrictions on imported steel and aluminum products to the WTO dispute resolution mechanism. In the dispute resolution process, the WTO expert group clearly determined that the U.S. 232 measures on steel and aluminum violate the core obligations that WTO members must comply with, including the most-favored-nation treatment obligation stipulated in Article 1 of the 1994 General Agreement on Tariffs and Trade and the binding tariff rate obligation stipulated in Article 2.

On February 10, 2025, the U.S. issued a notice announcing the reinstatement of the 232 measures on imported steel and aluminum products, increasing the tariff rate on aluminum products and canceling tariff exemptions for related countries. On March 10, the U.S. initiated a 232 investigation into imported copper and timber. According to the executive summary of the "America First" trade policy report, the U.S. may also initiate new 232 investigations into pharmaceuticals, semiconductors, and some critical minerals(6) The U.S. Violates and Abuses Trade Remedy Measures, Increasing Trade Uncertainty

The "America First" trade policy memorandum requires the U.S. Department of Commerce to review the implementation of anti-dumping and countervailing duty policies and regulations, including multinational subsidies and "zeroing"①. Investigating multinational subsidies and the practice of "zeroing" clearly violates World Trade Organization (WTO) rules, and applying them to anti-dumping or countervailing duty investigations artificially exaggerates the dumping or subsidy margins of other countries' exports to the U.S., disrupting normal international trade order and economic cooperation, harming the interests of all parties, including the U.S. and its businesses and consumers.

Investigating multinational subsidies violates relevant rules. For a long time, the U.S. has recognized that the WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement) does not apply to the basic principles of multinational subsidies and has maintained a strict limitation on investigations of multinational subsidies. The U.S. Federal Code stipulates that, unless there are statutory individual exceptions, if the subsidy is provided by a government of a country other than that of the subsidized enterprise, or by international loans or development institutions, it is not considered a subsidy. In April 2024, the U.S. Department of Commerce revised its countervailing duty regulations, abolishing the aforementioned provisions of the Federal Code, completely opening up investigations into multinational subsidies. Subsequently, the U.S. Department of Commerce initiated investigations into multinational subsidies in several countervailing duty cases.

The aforementioned regulatory revisions and investigative practices by the U.S. clearly violate WTO rules. The SCM Agreement states that subsidies are financial contributions provided by the government or any public body "within the territory of a member," and Article 2 specifies that specific subsidies refer to those granted to certain enterprises or industries within the jurisdiction of the subsidy-granting authority. This indicates that the subsidy-granting authority and the recipient must be within the same jurisdiction. In fact, the agreement explicitly states that "the enterprises receiving subsidies must be enterprises within the territory of the member providing the subsidies." Therefore, only subsidies provided by WTO members to enterprises located within their territory can be subject to countervailing duty investigations under the SCM Agreement.

The U.S. revisions to the aforementioned regulations and investigative practices also do not comply with U.S. law. The U.S. Tariff Act of 1930 stipulates that subsidies are those provided by a government or public body within the territory of a country to enterprises or industries within its jurisdiction. Therefore, the relevant regulatory revisions, investigations, and rulings by the U.S. Department of Commerce lack the basis or authorization of U.S. domestic law.

Improper use of "zeroing" practices artificially expands dumping margins. In the history of the WTO, the practice of "zeroing" has been widely questioned and criticized for exaggerating dumping margins. As of February 7, 2025, the WTO dispute settlement mechanism has accepted at least 27 cases related to the compliance of "zeroing," of which 2 early cases involved the European Union as the respondent, while the remaining 25 cases involved the U.S. In all related cases that have been adjudicated, the U.S. has been ruled to have violated WTO rules. On one hand, the U.S. refuses to abandon "zeroing," while on the other hand, under the pressure of continuous losses, it has gradually adjusted its "zeroing" practices, but to this day still utilizes the ambiguous space in the Anti-Dumping Agreement to insist on "zeroing" in cases where it believes there is "targeted dumping."If the United States "revives" the "zeroing" practice under non-targeted dumping after reviewing it according to the "America First" trade policy memorandum, it will violate World Trade Organization (WTO) rules and openly contravene the rulings made by the WTO dispute resolution mechanism over the past 20 years regarding the "zeroing" issue in numerous cases. The revival and expansion of "zeroing" will artificially "create" dumping or increase the dumping margin, thereby subjecting the investigated products exported to the U.S. by other WTO members to unfairly high anti-dumping duties, harming the interests of all WTO members and their enterprises.

(7) U.S. trade restrictions against China under the pretext of fentanyl are unhelpful in solving the problem

In February and March 2025, the U.S. imposed comprehensive tariffs on Chinese products exported to the U.S. twice under the pretext of fentanyl and other issues, threatening to cancel the tax exemption policy for small packages from China. On April 2, the U.S. announced the cancellation of the tax exemption policy for small packages from China starting May 2. This practice is baseless, not only failing to resolve its own issues but also undermining China-U.S. economic and trade cooperation and the normal international trade order.

The U.S. accusations against China disregard the facts. China is one of the countries with the strictest and most thorough drug control policies in the world, having included fentanyl-related drugs in the "Catalog of Narcotic Drugs" and implementing strict controls over their production, operation, use, and export. To date, no cases of loss of such drugs have been found in the production and circulation stages. The National Medical Products Administration implements a licensing system for the export trade of fentanyl-related drugs, actively conducting international verification with the competent authorities of importing countries based on strict reviews. Each batch of export trade must be confirmed for legality by the competent authorities of the importing country before a narcotic drug export permit is issued.

In 2023, China exported a total of 9.766 kilograms of fentanyl-related drugs, mainly to South Korea, Vietnam, Malaysia, the Philippines in Asia, and Chile, Panama, Colombia, Paraguay in Latin America, as well as Poland, Germany, France in Europe, without exporting any varieties or dosage forms of fentanyl-related drugs to North America.

China and the U.S. have carried out extensive and in-depth cooperation in drug control, achieving significant results. At the request of the U.S., on April 1, 2019, China, in the absence of large-scale abuse in its own country, released a notice to classify fentanyl-related substances as controlled substances out of humanitarian goodwill, which officially took effect on May 1 of the same year, making China the first country in the world to implement permanent classification of fentanyl-related substances. Since then, the Ministry of Public Security of China has organized special operations to combat the production and trafficking of fentanyl-related substances and other new drug crimes for three consecutive years. After the classification of fentanyl-related substances, China has not received any reports from the U.S. regarding the seizure of such substances from China.

The U.S. concerns about the tax exemption for small packages are unnecessary. The U.S. claims that the tax exemption policy for small packages and the accompanying simplified customs clearance arrangements may impact domestic industries, leading to tax revenue loss and issues with product quality and safety supervision. This concern lacks a factual basis. First, the tax exemption policy for small packages has a limited impact on the domestic market. Consumers purchasing personal items from abroad is a beneficial supplement to personal consumption. Although the global retail package import value has grown rapidly in recent years, its overall scale remains relatively limited, accounting for a small proportion of total global trade and social retail sales, far from reaching a dominant position. Second, implementing the tax exemption policy for small packages can reduce administrative costsUnder the small-value tax exemption policy, customs can concentrate more resources on the supervision of high-value goods and high-risk cargo, enhancing overall regulatory efficiency. For instance, canceling the small package tax exemption policy and inspecting small packages one by one for taxation would incur enormous regulatory costs, significantly increasing logistics and customs clearance costs for businesses. Thirdly, the product quality and safety of small packages are guaranteed. Most Chinese cross-border e-commerce platforms have a no-reason return period of no less than 30 days, allowing consumers to return and refund without reason within the time limit, or even refund without returning the goods. This not only protects consumer rights but also urges cross-border e-commerce sellers to maintain strict quality control over their products. Fourthly, the control of high-risk goods is effective. The small package goods exported from China mainly include clothing, electronics, toys, etc. In the context of countries continuously strengthening regulation and enhancing technological means, there is no evidence proving that prohibited items have been found in small packages from China.

The small package tax exemption policy aligns with the trends in international trade development. The World Customs Organization recommends that customs in various countries set a minimum threshold for tariffs. The World Trade Organization's Trade Facilitation Agreement encourages members to set exemptions from tariffs and domestic taxes for small-value goods or taxable amounts. The vast majority of countries globally implement small package tax exemption policies and simplify the customs clearance process for related goods. The Chinese government combines the collection of tariffs, value-added tax, and consumption tax on personal items sent into the country, exempting amounts under 50 yuan, and the policy has achieved good results.

—Promoting diversification in the consumer market. Consumers can purchase goods from around the world at lower prices, enriching shopping choices. This policy meets consumers' personalized needs, ensures quick delivery, and saves costs, enhancing the consumption experience. Taking China's Tmall International import platform as an example, by 2024, the platform has covered over 4,000 brands and millions of products across various fields, including food, maternal and infant products, home life, and fashion, and is continuously expanding.

—Helping more small and micro enterprises participate in international trade. Cross-border e-commerce reflects new productive forces, reducing trade links and lowering trade barriers. Cross-border e-commerce retail directly connects small and micro enterprises with consumers, providing these businesses with more trade opportunities, expanding trade scale, and optimizing trade structure. Currently, there are over 120,000 cross-border e-commerce trade entities in China, becoming an important force in international trade.

—Promoting global economic cooperation. The rapid development of cross-border e-commerce injects new vitality into international trade. This policy effectively reduces trade costs through digital platforms and efficient logistics, helping global supply chains allocate resources more flexibly, further promoting global economic connectivity. China's cross-border e-commerce platform Alibaba International Station serves over 26 million active business buyers in more than 200 countries and regions worldwide. Enterprises connect with global suppliers through the platform, flexibly adjust procurement strategies, analyze different market demands, achieve on-demand production, and improve resource utilization efficiency.

(8) The U.S. imposition of so-called "reciprocal tariffs" harms itself

On April 2, 2025, the U.S. government announced the imposition of so-called "reciprocal tariffs" on trade partners, with a tariff rate of 34% imposed on China, and an additional 50% tariff on China's legitimate countermeasures. The U.S. approach disregards the balanced results achieved through years of multilateral trade negotiations and ignores the fact that the U.S. has long profited significantly from international trade, attempting to erect trade barriers under the guise of "industrial protection" and "national security."Not only does it seriously violate World Trade Organization rules, severely impact the multilateral trading system, and significantly harm the legitimate rights and interests of relevant parties, but it also does not help solve its domestic economic problems and will inevitably backfire and lead to self-inflicted consequences.

"Reciprocal tariffs" will increase inflationary pressure in the United States. Predictions from Yale University's Budget Lab indicate that after the implementation of "reciprocal tariffs," in the event that other countries take countermeasures, the increase in the Personal Consumption Expenditures (PCE) price index in the U.S. will expand to 2.1%. On average, low, middle, and high-income households in the U.S. will lose $1,300, $2,100, and $5,400 respectively, becoming the ultimate "payers" of the tariffs. The impact of the new round of tariffs will significantly increase the retail price pressure on daily consumer goods such as food, clothing, electronics, and household items in the U.S.

"Reciprocal tariffs" weaken the industrial foundation of the U.S. The Trump administration attempted to force the return of manufacturing through tariffs, but in fact, tariffs will transmit costs through the supply chain, exacerbating the risks of supply chain disruptions and industrial hollowing, making it more difficult to develop manufacturing. Data from the Peterson Institute for International Economics shows that over 90% of the tariff costs will be passed on to U.S. importers, downstream companies, and final consumers.

"Reciprocal tariffs" exacerbate panic in financial markets. The day after the announcement of the U.S. "reciprocal tariffs," all three major U.S. stock indices plummeted by more than 5%. At the same time, the exchange rate of the U.S. dollar against the euro significantly declined, indicating that market concerns about tariffs disrupting economic operations have intensified, severely impacting confidence.

"Reciprocal tariffs" increase the risk of economic recession in the U.S. Institutions such as JP Morgan and Goldman Sachs have significantly raised the probability of a U.S. economic recession. Relevant research suggests that "reciprocal tariffs" and the countermeasures from related countries could lower the growth rate of U.S. real GDP by about 1 percentage point.

At the same time, "reciprocal tariffs" will distort the global market resource allocation, undermine the foundation of global cooperation, and affect the long-term stable growth of the world economy. The U.S. imposition of "reciprocal tariffs" disrupts the stability of global industrial and supply chains, severely impacting the global economic cycle. WTO Director-General Ngozi Okonjo-Iweala stated that the U.S. tariff increases will have a huge impact on global trade and economic growth prospects, potentially leading to a decline of about 1% in global merchandise trade volume by 2025, a downward revision of nearly 4 percentage points from the previous forecast.

Historical practice has repeatedly proven that trade protectionism does not help improve the domestic economy; rather, it severely undermines the global trade and investment system and may trigger a global economic and financial crisis, ultimately harming oneself.

**6\. China and the U.S. can resolve economic and trade differences through equal dialogue and mutually beneficial cooperation**

As the two largest economies in the world, China and the U.S. have extensive and rich economic and trade exchanges, covering a wide range of areas and involving diverse entities, making differences normal. The best way to solve problems and bridge differences is through equal dialogue, seeking paths for mutually beneficial cooperation. The cooperation between China and the U.S. not only concerns the well-being of the people of both countries but will also have a profound impact on world peace and development.

(1) Equal dialogue should be the basic attitude of major powers in solving problems

Historically, disputes and differences between countries are not uncommon, but the methods of resolving these issues vary. Resolving disputes through dialogue and consultation is not only more efficient but also helps the international community avoid unnecessary costsBoth China and the United States have their own national conditions and are at different stages of development. Historically, the two countries have experienced cooperation in addressing challenges such as anti-fascism, counter-terrorism, and responding to public health emergencies, as well as effective collaboration in promoting the establishment of a multilateral trade system and fostering open and prosperous development in the Asia-Pacific region. Through an equal dialogue mechanism, both sides can clearly express their attitudes towards each other's main concerns, clarify relevant facts, explain the reasons for their concerns, explore the factors leading to related issues, and discuss possible solutions. Problems arising from development should be resolved through development, and issues that arise in the short term may no longer be a concern from a medium- to long-term perspective. In fact, no country will abandon its reasonable development interests to cater to or satisfy unreasonable demands from other countries, but this does not prevent both sides from seeking possible solutions through equal dialogue.

(2) Mutually beneficial cooperation is conducive to achieving each country's development goals

Both China and the United States have their own development visions and goals. Whether it is optimizing the allocation of resource factors, better adapting to the changes in development models brought about by the continuous emergence of innovative technologies, or creating a stable global development environment, both China and the United States need to move towards each other and develop collaboratively.

Mutually beneficial cooperation is conducive to improving the input-output ratio. Through mutually beneficial cooperation, unnecessary repeated investments can be reduced, and limited resources can be allocated to areas that need them more, thereby enhancing development efficiency. Mutually beneficial cooperation also helps correct the imbalance in international trade, providing consumers with a richer selection of products and services through effective market competition.

Mutually beneficial cooperation is conducive to faster adaptation to new changes. Historical experience shows that the emergence of new technologies improves production efficiency while also impacting existing socio-economic models. Technological advancements, including artificial intelligence, are reshaping the economic ecosystem, and the transformation of energy structures requires rapid responses from all parties. China and the United States can strengthen cooperation in innovation, production, services, and consumption to enhance their responsiveness and capacity to cope with technological upgrades, gaining 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, while China is an active participant. The multilateral rules accepted by all parties have significantly reduced the costs of international economic and trade cooperation. The mutually beneficial cooperation between China and the United States can alleviate 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 combined economic output of the two countries accounts for more than one-third of the world, and their total population represents nearly one-quarter of the global population, with bilateral trade accounting for about one-fifth of the world. The United States is the largest consumer market globally, while China is the second largest. Through the global supply chain, China and the United States provide extensive opportunities for various stakeholders, driving the export of raw materials, production of intermediate goods, and development of the service industry in related countries, thereby enhancing the efficiency and effectiveness of the global value chain. A healthy, stable, and sustainable China-U.S. economic and trade relationship benefits both countries and the world.

China and the United States can work together to promote the rational reform of international economic governance rules to adapt to the development of productive forces. The multilateral trade system centered around the World Trade Organization and regional trade agreements represented by bilateral free trade agreements are important platforms for economic governance. Different parties may have different expectations for an ideal multilateral economic governance mechanism, but blaming and resisting passively are unhelpful. A more proactive approach should be taken to seek consensus and explore paths for improving the multilateral economic governance system**Conclusion**

History shows us that cooperation between China and the United States benefits both sides, while conflict harms both. Strengthening cooperation between China and the United States aligns with the expectations of the entire world. For the world economy to achieve faster development, a fair, open, transparent, and rules-based global market is needed. Without cooperation between China and the United States, such a global market is difficult to form. International trade rules need to be continuously updated to adapt to changes in the world economy, and cooperation between China and the United States is also needed to guide this process. New technologies and products, such as artificial intelligence, biotechnology, and quantum computing, are constantly emerging and evolving. To prevent and manage potential security risks and ensure that technology is used peacefully and not abused, cooperation between China and the United States is necessary to establish relevant rules and order.

There are no winners in a trade war, and protectionism leads nowhere. Success for both China and the United States presents opportunities rather than threats to each other. It is hoped that the U.S. side will work with the Chinese side in the direction indicated by the leaders of both countries during their conversations, based on mutual respect, peaceful coexistence, and win-win cooperation principles, to resolve each other's concerns through equal dialogue and consultation, and jointly promote the healthy, stable, and sustainable development of China-U.S. economic and trade relations.

① In the calculation of dumping margins (the difference between export prices and normal values), only positive values are taken, and all negative values are treated as zero, without offsetting against positive values. Compared to normal practices, "zeroing" often significantly increases the calculated dumping margins, thereby raising the dumping margins and anti-dumping duty rates.

_Source: Xinhua News Agency_

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