Under Biden, China faces renewed trade pressure
BEIJING » The U.S.-Chinese trade war isn’t going away under President Joe Biden.
Biden won’t confront Beijing right away, economists say, because he wants to focus on the coronavirus and the economy. But he looks set to renew pressure over trade and technology grievances that prompted President Donald Trump to hike tariffs on Chinese imports in 2017.
Negotiators might tone down Trump’s focus on narrowing China’s multibillion-dollar trade surplus with the United States and push harder to open its statedominated economy, which matters more in the long run, economists say. But no abrupt tariff cuts or other big changes are expected.
“I think Biden will focus more on trying to extract structural reforms,” said Louis Kuijs of Oxford Economics. “It’s going to take some time before we get any shift or explicit announcements.”
Biden is evaluating tariffs on Chinese goods and wants to coordinate future steps with allies, White House spokeswoman Jen Psaki said Monday. She gave no indication of possible changes.
“The president is committed to stopping China’s economic abuses,” Psaki said.
A Chinese foreign ministry spokesman, Zhao Lijian, appealed to Washington to learn from Trump’s “erroneous policies” and adopt a “constructive attitude” but gave no indication of possible changes by Beijing.
“Cooperation is the only correct choice for both sides,” Zhao said Tuesday.
Trump acted on complaints that are shared by Europe and other traders, but Washington has little to show for its bruising war. It brought President Xi Jinping’s government to the bargaining table but roiled global trade, raised consumer prices and wiped out jobs.
The last major development was a year ago, when Beiing promised in the “Phase One” agreement of January 2020 to buy more soybeans and other U.S. exports and stop pressuring companies to hand over technology.
China fell short on those purchases. Amid the coronavirus turmoil, it bought about 55% of what it promised. As for tech policy, some economists say those changes matter but question whether it counts as a win. They say Beijing might have made them anyway to suit its own plans.
China faces more opposition than ever in Washington due to its trade record, territorial disputes with neighbors, crackdown on Hong Kong, reports of abuses against ethnic Muslims and accusations of technology theft and spying.
“The ground has shifted in a significant way,” said Nathan Sheets, a former Treasury undersecretary for international affairs in the Obama administration.
Katherine Tai, Biden’s choice to succeed U.S. Trade Representative Robert Lighthizer, sounded a hawkish note on China in a speech this month.
“We face stiffening competition from a growing and ambitious China,” said Tai. “A China whose economy is directed by central planners who are not subject to the pressures of political pluralism, democratic elections or popular opinion.”
That means China has to make changes if wants to make progress, said Raoul Leering, global trade analyst for ING. He said that while many of Trump’s statements were “close to nonsense,” he was right that China has more trade barriers and official intervention in the economy than the United States.
“It will depend on China, the speed at which they reform and change policies, to see whether Biden will roll back trade barriers,” he said.
After 2½ years and 13 rounds of talks, negotiators have yet to tackle one of the biggest irritants for China’s trading partners — the status of politically favored state companies that dominate industries from banking to oil to telecoms.
Europe, Japan and other governments criticized Trump’s tactics but echo complaints that Beijing steals technology and breaks market-opening promises by subsidizing and shielding companies from competition.
Trump’s opening shot in 2017 was a tax hike on $360 billion worth of Chinese imports. Beijing retaliated with tariff hikes and suspended soybean imports, hitting farm states that voted for Trump in 2016.
The U.S. trade deficit with China narrowed by 19% in 2019 over a year earlier and by 15% in the first nine months of 2020.
That failed to achieve Trump’s goal of moving jobs to the United States. Importers shifted instead to Taiwan, Mexico and other suppliers. The total U.S. trade deficit dipped slightly in 2019, then rose nearly 14% through November last year.