What impact does the TikTok agreement have on US-China trade?
1. Tracing the background of the TikTok agreement
Since its debut, TikTok has swept the world with its unique short-video social model, especially shining brightly in the US market, attracting approximately 170 million American users. It has been deeply integrated into the daily lives of American people and has become an indispensable and important part of the US social media ecosystem. However, some US politicians, disregarding the facts and market rules, have maliciously suppressed TikTok under the pretext of groundless "national security". In 2024, the US Congress passed a bill attempting to force TikTok to "ban if not sold", extending political manipulation into the normally operating business sector and seriously undermining the fair competitive environment of the market. However, the US government also has to face up to TikTok's huge user base and wide influence in the United States. The Trump administration has extended the ban on TikTok for three consecutive times. Against this backdrop, the negotiations between China and the United States on the TikTok issue and the reaching of a basic framework consensus can be regarded as in line with the current demands and a manifestation of the rational return of both sides.
2. The reshaping of the trade structure between China and the United States
(1) Promote the development of digital service trade
As a typical representative of digital service trade, the conclusion of the relevant agreement on TikTok is of great significance. For a long time, goods trade has dominated China's foreign trade. However, with the global economy's transformation towards a service economy, the importance of service trade has become increasingly prominent. From 2020 to 2023, the proportion of China's service trade in GDP rose from 4.5% to 5.3%, accounting for 13.6% of the total trade volume. The conclusion of the TikTok agreement this time will help further expand the export space of China's digital service trade, optimize the trade structure between China and the United States, promote the trade structure to move from being dominated by traditional goods trade to a higher level of coordinated development of goods and service trade, and open up a new path for Chinese culture to "go global" Leverage the TikTok platform to disseminate Chinese cultural elements, lifestyles and other content, enhancing the global influence and recognition of Chinese culture.
(2) Promote technological trade exchanges
According to the agreement, China and the United States have reached a consensus on the entrusted operation of TikTok's US user data and content security business, as well as the authorization of the right to use intellectual property rights such as algorithms. This means that at the technical level, Chinese and American enterprises will carry out deeper cooperation based on this and promote technological trade exchanges. For China, through the authorization of the right to use intellectual property rights such as algorithms, it can not only obtain corresponding economic benefits, but also prompt Chinese enterprises to continuously invest in technological research and development, innovation management and other aspects, enhance their own technological strength and international competitiveness, and occupy a more favorable position in the global technology trade market. From the perspective of the United States, having access to advanced algorithmic technologies can inject new vitality into the development of its related industries, promote complementary advantages between American and Chinese technology enterprises in the field of technology, achieve mutual benefit and win-win results, and thereby drive the prosperous development of the entire China-Us technology trade market and enrich the connotation of the China-Us trade structure.
3. The improvement of the trade environment between China and the United States
(1) Enhance market confidence
Previously, the groundless suppression of TikTok by the United States made many Chinese enterprises hesitate to enter the US market, and their willingness to invest and trade was dampened. The conclusion of the TikTok agreement has sent a positive signal to the market, indicating that China and the United States have the ability and willingness to resolve differences through dialogue and consultation on economic and trade issues. This is conducive to stabilizing business expectations and enhancing the confidence of Chinese enterprises in expanding the US market. Similarly, American enterprises have also seen the broad prospects for cooperation with Chinese enterprises in areas such as the digital economy through the agreement, which has stimulated their enthusiasm for participating in Sino-US trade and investment, promoted the flow of market factors between the two sides, and created a favorable market atmosphere for the healthy development of Sino-US trade.
(2) Optimize the business environment
China clearly opposes politicizing, instrumentalizing and weaponizing scientific and technological as well as economic and trade issues, and firmly safeguards national interests and the legitimate rights and interests of Chinese-funded enterprises. The TikTok agreement reached this time requires the US side to provide an open, fair, just and non-discriminatory business environment for Chinese enterprises, including TikTok, to continue operating in the US. If the US side earnestly fulfills its obligations, it will effectively improve the business conditions of Chinese enterprises in the US, reduce unreasonable administrative intervention and discriminatory policy obstacles, and promote the development of China-Us economic and trade relations in a healthy, stable and sustainable direction. A favorable business environment will also attract more American enterprises to cooperate with Chinese enterprises, promote the facilitation of bilateral trade and investment, and enhance the overall quality and efficiency of China-Us trade.
4. The potential impact on the scale of Sino-US trade
(1) Drive the growth of trade in related industries
The TikTok platform has a huge user base in the United States, and a complete industrial chain ecosystem has been formed around it, including content creation, advertising and marketing, and e-commerce sales promotion. The agreement reached to ensure TikTok's continuous operation in the United States will stimulate the development of related industries and thereby drive the growth of trade in related products and services. For instance, the trade scale of products such as shooting equipment and software tools required for content creation, as well as advertising and marketing services, is expected to expand. Chinese related enterprises, leveraging their industrial advantages and manufacturing capabilities in these fields, are expected to secure more export orders to the United States, thereby promoting the expansion of the export scale of Chinese related products and services to the United States. Meanwhile, relevant enterprises in the United States may also leverage the TikTok platform to expand their market in China, increase exports to China, and promote the two-way growth of trade between China and the United States.
(2) Stimulate the development of emerging trade models
The global popularity of TikTok has given rise to emerging trade models such as short-video e-commerce. After the agreement is reached, these emerging trade models will gain more stable development space in the US market and inject new impetus into the growth of Sino-US trade scale. Consumers discover and purchase characteristic products from China through the TikTok platform, breaking the time and space limitations of traditional trade and broadening trade channels. Chinese small and medium-sized enterprises can take advantage of emerging trade models to enter the US market at a lower cost, increase export opportunities and drive up China's trade volume with the United States. Meanwhile, American businesses can also introduce their products to Chinese consumers through a similar model, promoting American exports to China and thereby further expanding the scale of Sino-US trade as a whole.
Conclusion
The basic framework consensus reached by China and the United States on the TikTok issue is of milestone significance in the trade history between the two countries. It has had a positive and far-reaching impact on the trade structure, trade environment and trade scale between China and the United States, laying a solid foundation for the stable development of bilateral economic and trade relations. However, we should also be clearly aware that in China-Us economic and trade relations, there are still many complex problems and challenges, such as the US side still expanding sanctions against Chinese entities in some fields. In the future, China and the United States need to continue to uphold the principles of mutual respect and equal consultation, implement the outcomes of the TikTok agreement, properly resolve other economic and trade differences, jointly maintain the stability of the global industrial and supply chains, promote higher-quality and more sustainable development of China-Us trade under the new development pattern, and contribute to global economic prosperity.
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