China displays restrained retaliation in trade dispute
BEIJING China is to impose retaliatory import tariffs on 128 US products – goods that amount to US$3 billion – targeting staples that include California wines, fruits and almonds.
The move yesterday follows US President Donald Trump’s decision this week to slap tariffs on about US$50b worth of Chinese goods, triggering a potentially damaging trade confrontation with Beijing.
Chinese officials said the proposed actions were in response to the White House’s previous tariffs on steel and aluminum, which took effect yesterday. But the lopsided responses signal vastly different strategies between the world’s two largest economies in an escalating dispute that has raised fears of a trade war.
Trump wants quick action and big results. China is aiming for restrained, targeted movements – an attempt to ward off a full-on conflict, but also to show that it won’t cede too much ground.
‘‘China is playing this very smartly, doing just enough retaliation to prove it’s serious,’’ said Arthur Kroeber, managing director of Gavekal Dragonomics, a Beijing research firm. ‘‘It’s doing what it can to position itself as the global good guy, with a fair amount of success.’’
The Chinese tariffs would first hit US products such as avocados and nuts, with 15 per cent tariffs. If officials deem it worthwhile, Beijing could also place 25 per cent tariffs on American-made goods such as pork and aluminium.
Yesterday’s statement did not indicate a specific date when the tariffs would go into effect, but said that businesses had until March 31 to offer opinions. It said officials would ‘‘take legal action within the framework of the World Trade Organisation’’.
The announcement did not mention Trump’s latest tariffs, which follow an investigation into China’s intellectual property practices and its harm to American businesses. Officials found that China forced US companies to hand over their trade secrets or make unfair concessions for access to its vast market.
But in a separate statement, Chinese officials called Trump’s intellectual property investigation ‘‘typical unilateralism and trade protectionism.’’
China did not want a trade war, they said, but was ‘‘absolutely not afraid of a trade war’’.
Analysts struggled to immedi- ately understand why items such as wine, a product from the Democratic stronghold of California, would make the list but not top US imports such as sorghum and soybeans. Chinese officials last month launched a probe into American sorghum imports, and both agricultural products come from regions more supportive of Trump.
The White House will publish the list of targeted goods within the next 15 days, and authorities may be waiting until they see the breakdown or face even heftier actions.
China’s top economic officials, a number of whom were educated AP in the US, are known for their savvy of the American system and its electoral cycles.
‘‘For Trump, it is easier to blame other countries for the US’s problems and garner votes in the midterm election, instead of taking the pain to restructure the country’s economy,’’ China Daily, a state-run English newspaper, said yesterday in an editorial. ‘‘He cannot force China to give in, however, because China knows the US’s demands are insatiable.’’
China is one of the world’s most protectionist countries, and American businesses have long complained about requirements to create joint ventures or sacri- fice proprietary information. Alongside the new tariffs, the US Treasury Department will restrict Chinese investment in American tech firms.
Trump’s tariffs reflect beliefs that years of negotiations have failed, and that China now threatens its security and success in areas like artificial intelligence. China, under President Xi Jinping, has sought to strengthen its advanced industries and global standing. The US was essentially demanding that China ‘‘provide as much market access to the US as the US provides to China’’, said Scott Kennedy, an expert on China’s economic policy at the Centre for Strategic and International Studies in Washington, DC.
Trump likes to prove his point by highlighting a growing trade deficit with China, which reached a record US$375 billion last year, according to the US Commerce Department. While the latest tariffs could hit certain sectors, its macro impact on China’s GDP was still minimal, said Wang Tao, head of Asia economics at UBS bank in Hong Kong.
Trump’s steel tariffs would affect China even less, as the nation makes up only 2.5 per cent of US steel imports due to existing regulations.
But the latest moves hint at the start of what could become a titfor-tat battle that cracks global supply chains and increases costs for consumers. The ramifications could extend well beyond trade in goods. About 350,000 Chinese students study in the US, and Chinese tourists spend more money there than those from any other country, according to Wang Huiyao, president of the Centre for China and Globalisation, a Beijing-based think tank. LA Times