Talks better option than ‘economic intimidation’

Even after Vice-Premier Liu He spoke by phone with the US treasury secretary on Saturday calling for concerted efforts to maintain the stability of trade ties between their respective countries, the Trump administration has made it clear that it intends to squeeze as much as it can from China. Having already slapped hefty tariffs on steel and aluminum imports from China and threatening to impose tariffs on a list of other Chinese products under Section 301 of the Trade Act of 1974, the United States reportedly urged China in a letter last week to cut the tariffs on US automobiles, buy more US semiconductors and give US companies greater access to the Chinese financial sector.

By forcing China to open up its market to US companies in this way, the Trump administration will be hoping to narrow the bilateral trade deficit and create domestic jobs, as well as boosting its support ahead of the mid-term elections in November.

But what is dangerous is that the Trump administration seems to be determined to get concessions from China, no matter how or what the consequences.

US Treasury Secretary Steven Mnuchin said he is “cautiously hopeful” that the two sides will ultimately reach an agreement, and China’s Ministry of Foreign Affairs said on Monday that “the door of dialogue is always open”.

Mnuchin is reportedly weighing up a trip to China for talks, and that should be encouraged. For as Lao Tzu observed, new beginnings are often disguised as painful endings, and the two countries should take the opportunity of their present spat to write a new and progressive chapter for their trade relations.

However, the possibility of an escalating trade war cannot be excluded, as China will not be bullied.

Beijing has said on numerous occasions that it is willing to talk with Washington to ease the trade differences between the two countries, but it will not sit idly by while its legitimate rights and interests are damaged.

As well as harming both sides, such a zero-sum game would also disrupt and depress global trade, which is still showing how sluggishly it recovers from setbacks.

On Monday, a Chinese envoy called on World Trade Organization members to jointly lock protectionism “back into the cage of WTO rules”, saying that the US tariffs breach the organization’s rules.

The US should heed China’s call for it to stop its “economic intimidation” and instead engage in talks and uphold the global trading system which it put in place.