Beijing is left with no choice but to fight back

Ruan Zongze, executive vicepresident of the China Institute of International Studies

The Donald Trump administration fired the first shot in the tariff war against China last week, prompting China to take retaliatory action. During the recent China-US negotiations to resolve the bilateral trade disputes, Beijing showed utmost sincerity to settle the issue. Yet the US sabotaged the negotiations, by making requests that China could never agree to.

Given an inch, the US has always demanded a yard.

Now that the US has declared a tariff war, China has no choice but to fight back, especially because the unreasonable demands and targets the US has raised for China to fulfill make it impossible for the two sides to reach an agreement.

Standing on the side of justice, China is confident of dealing with the tariff war. And that Trump’s protectionist and unilateral moves are being criticized by the rest of the world, as seen during his Europe visit, is proof he is on the wrong side.

Yet China is unwilling to be drawn into a trade war. It has the capability to defend its rights and interests, but it also knows negoti-

Trump has said the tariffs will “encourage China to change the unfair practices identified in the Section 301 action with respect to technology and innovation”. But the investigation under Section 301 of the US Trade Act of 1974 has violated World Trade Organization rules.

Article 1 of the General Agreement on Tariff and Trade on general most-favored nation treatment is the cornerstone of WTO rules and the multilateral trading system established after World War II. It says that no WTO member should offer “treatment no less favorable than” that given to third parties, which means WTO members should not discriminate against each other.

The US’ discriminatory actions against China not only harm China’s interests under the WTO framework but also violate WTO rules. So if China doesn’t respond in kind, it would put its interests as well as those of other WTO members at risk.

But it is more important that China sticks to its path of reform and opening-up. It should not allow the tariff war to disturb its plan to further open up its economy, although it has to take potent measures to counter the US’ provocative actions.

Also, China should fully implement the recently published negative list for foreign investment, as the inflow of foreign capital would help China cope with the aftereffects of the tariff war. And foreign capital that continues to have faith in China’s economy in these tough times is bound to gain significantly from the growth of the Chinese market in the long run.

Another way to meet the challenge is through deepening reform among which building and perfecting a fair environment for competition should be given priority. Since the tariff war could leave many private enterprises facing a life-and-death battle, they should