(Yicai Global) July 10 -- The US has been in the driving seat of the global economy, trade, and finance since 1944, but last Friday it spurned the ballast in the China-US relations and triggered a major trade friction between the world's two largest economies.

We all know that US President Donald Trump used various forces at his disposal to rupture the existing international political, economic and security systems in less than 18 months after he moved to the White House. The reason is simple: Trump wants to re-position the country as the victorious, enduring superpower in an evolving world.

The US is still the most powerful country in the world. Flying the flag of "making America great again," Trump has fiercely accused China of reaping a massive trade surplus with the US. However, his administration has turned a blind eye to the hefty gains that the US got from trade in services with China over the past years; astronomical profits that American multinationals generate in Chinese operations every year, and significant contributions of China's over USD1 trillion holdings in US Treasury bills, which both support economic growth and government spending in the States.

The Trump administration is adamant about bringing an end to the existing global division of labor with "China acting as the producer, and the US as the consumer." The goal is to squeeze China's core interests within the global value chain, and maximally weaken China's wealth that it accumulated through economic reforms and market opening over the past several decades, thereby preventing China from overtaking the US in real economy development.

However, given the increasing integration of the global economy and trade system today, even the US cannot disrupt the trade system of the second largest economy. Moreover, after 40 years of economic reforms and market deregulation, China is acutely aware of the importance of having an open economy. The country has continuously lifted market access barriers, improved investment environment, and proactively increased imports of quality foreign products by opening up new import channels. China has committed to developing bilateral and multilateral free trade mechanisms, benefitting both Chinese and foreign businesses with "reform and development dividends," based a vast domestic market and ever-growing consumer demand.

Several years ago, the British, pioneers of modern finance, predicted that the internationalization of the Chinese yuan would provide the biggest "financial dividend" in global currency evolution in the first half of the 21st century. So the UK went all out in recent years to establish London as the central offshore market for the yuan and as a bridge connecting the Chinese capital market and global investors. The move allowed the UK economy to benefit from the yuan's globalization, while consolidating London's position as an international financial center.

China has grown out of a backward economy, virtually cut off from the global production and trade chains some 40 years ago into one of the two "super economies" in the world today with a national gross domestic product of more than USD10 trillion. The underlying reason is that China has adopted a progressive approach to economic development and win-win cooperation with foreign partners. Thanks to market reform and deregulation efforts over the past four decades, China has become one of the most competitive industrial product suppliers in the world, as well as a major trade power, fully integrated into the global value chain.

China is widely seen as one of the countries that benefited the most from economic globalization, so it knows better than to lock itself up in a "dark house." Having achieved initial industrialization and committed itself to a continuous market opening, China is unleashing "dividends" to foreign markets, including the US. High-quality and cost-effective Chinese products and services have brought sustainable and reliable benefits to consumers around the globe including people in the US. Obviously, any rational market player does not want to miss out on such benefits. The rational choice for national governments and businesses is to further open up economic and financial systems and facilitate trade activities.

From the introduction of the national reform program in 1978 and its accession to the World Trade Organization, China offered international investors and consumers "the first wave of reform dividends" -- business opportunities created by allowing foreign businesses to invest in Chinese firms. At this time, it was a market suffering from short supplies, primary products, and cheap finished products.

The second wave of dividends came after China's accession to the WTO in 2001 and lasted until 2016. During this period, the country benefitted from worldwide industry relocation and greater access to foreign markets within the WTO framework, and at the same time provided global investors with investment opportunities generated by an extension of the value chain and benefits brought about with financial market deregulation.

Since the 19th National People's Congress held last October, the Chinese government has introduced major policies in almost every month, ranging from market barrier relaxation, financial sector deregulation, free trade port construction, business environment optimization, and an ever-shortening "negative list" for foreign investment. Most importantly, the government has stepped up efforts to strengthen intellectual property protection, crack down on forced technology transfers and expand imports, while attesting to its strategic vision to push forward market opening as the main leverage for stimulating economic growth and globalization.

The Chinese market is opening up and will not close its doors to the US. The strategic value of China-US economic ties lies not only in the USD600 billion annual bilateral trade or the USD375 billion trade deficit (statistics only tell part of the story), but rather in how the world's two largest economies respond to the challenging issues confronting the global economy today.

In order to stimulate global economic and trade development and achieve financial stability, Chinese and American policymakers need to resolve differences, promote free movements of products and capital, and stick to the greatest common divisor in bilateral trade relations, while securing benefits via shared development and win-win cooperation.

The global economic history of the last three centuries tells us that free trade offers the optimal solution for countries with different resources to achieve collaboration in the increasingly globalized production and trade activities. President Trump should read Milton Friedman's "Capitalism and Freedom," which had a major influence on President Reagan's economic policies. In the book, the economist advocated free trade against government interference and customs tariffs. Trump should know that no country or coalition of multiple nations in the world today can easily cut China off from the core value chain. The US would be doomed to fail if it wanted to deal with China using the same strategy that it used on Japan in the past. The US should instead take a cooperative stance on the matter.

(The author is the dean and a professor of the School of International Finance and Trade, Shanghai International Studies University)