Tariffs & trade! Foreign investors reaping benefits of China's opening-up, development

Last Friday, the United States announced that a variety of electronic goods such as smartphones, computers and processing chips would be exempted from so-called punishing "reciprocal" tariffs, certainly including those imported from China.

That means such imports from China would be exempted from the 125 percent "reciprocal" tariff, although a previously imposed 20 percent levy would remain in place. The exemption list was published by the US Customs and Border Protection office.

But on Sunday, US Commerce Secretary Howard Lutnick said that such exemptions were only temporary. In an interview with ABC News, he said: "(Electronics are) exempt from the reciprocal tariffs, but they're included in the semiconductor tariffs, which are coming in probably a month or two."

So, what do these exemptions mean, even if they are temporary? A latest report from USA Today may be revealing, but we need to look further at a bigger picture about how global trade – far from being a zero-sum game – benefits the global community.

In an article published on Saturday, USA Today quoted a market analyst as saying that this tariff development was good news for (American) consumers. Wedbush Securities analyst Daniel Ives told the publication: "They can breathe a sigh of relief because this, it's a game changer … You don't have to rush out to the store. We're not seeing US$2,000 iPhones anymore."

USA Today further noted that most of the 200 million iPhones Apple produces every year are made in China, and that the current price of the recently released iPhone 16e is US$699 for the 256-gigabyte model and the more decked-out iPhone 16 Pro starts at US$999.

Certainly American consumers and, for that matter, US tech companies can breathe a sigh of relief, at least for now.

But it's not just about affordable prices or cost efficiency. It's more about how foreign-invested firms have contributed to and benefited from China's foreign trade development.

Today, a senior official of the General Administration of Customs said at a press conference held by the State Council Information Office that foreign-invested firms have contributed altogether one-third of China's imports and exports over the past five years.

In sectors such as electronics and biomedicine, foreign businesses even account for more than 40 percent of China's imports and exports. Their contribution to China's international trade is all the more significant if you notice that of the about 700,000 firms now engaged in China's import and export business, 67,000 are foreign-invested.

Certainly, China has a trade-in-goods surplus with the US, but a considerable part of that profit goes to foreign investors, including those from the US. These investors boost China's employment and overall economic development, while at the same time advancing their own position as competitive global players with increased sales both inside and outside China.

And why do foreign firms like Apple choose to invest in China?

One may think it's because of so-called low cost, but Apple CEO Tim Cook once said that the tooling skill (required to manufacture Apple products) is "very deep here (in China)."

Growing together

In many ways, foreign investment and China's development have formed a win-win relationship. While China grows, it benefits foreign investors as well.

And when a country like China, where the tooling skill is very deep, further opens up to the outside world, foreign investors stand to gain even more.

In a report released on April 8, Xinhua news agency pointed out that China had slashed related items on its national negative list from 190 to 29 in recent years, with greater market openness in the country's pilot free trade zones. And in a landmark opening-up gesture, Xinhua noted, all restrictions on foreign investment in China's manufacturing sector were removed last year, while some developed countries still set barriers against foreign investment in certain manufacturing industries.

Xinhua further reported that China's overall tariff level has been cut to 7.3 percent, a low level nearing the average of developed countries. Moreover, the news agency said, China has extended zero-tariff treatment to all 43 least-developed countries it has diplomatic ties with, the first developing country and major global economy to implement such a unilateral opening-up initiative.

Trade is about sharing. It's not, and should never be, a winners-take-all game.