China will not be bullied with the threat of a trade war

By Li Yong
0 Comment(s)Print E-mail, March 28, 2018
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A trader works at the New York Stock Exchange in New York, the United States, March 22, 2018. U.S. stocks ended lower on Thursday, with the Dow plunging over 700 points, after the U.S. President Donald Trump announced to impose tariff on imported products from China. [Xinhua/Wang Ying]

The U.S. has unilaterally launched tariff packages in defiance of World Trade Organization (WTO) rules in recent months, first announcing tariffs of 25 percent and 10 percent on imported steel and aluminum, and soon after launching additional levies targeting $60 billion of imports from China. 

The first action angered the world, including U.S. allies - but the second has clearly set China as its primary target. 

U.S. trade actions defy WTO rules

These are unmistakably unilateral acts, taken in defiance of established WTO rules and apparently in an attempt to protect U.S. industries by invoking domestic laws and imposing them on trade partners, especially China. Early on, U.S. experts warned that steel and aluminum tariffs could trigger a trade war, and sure enough, immediate retaliatory threats were made by countries, including allies, affected by the levy. 

The U.S. then decided to spare Mexico and Canada, and to grant allies the chance to negotiate for exemptions - what President Trump called "flexibility." The outlined "must meet" conditions for exemption, however, are actually non-negotiable and revealed that the deal amounts to a forced transfer of the American position. As the conditions of "flexibility" were disclosed, it became clear that China was an indirect target, as countries who wanted to negotiate were required to join the "anti-China" camp in order to strike an exemption deal. 

Steel and aluminum tariffs were not the end of the story. The U.S. subsequently unveiled its so-called findings of Section 301 investigations into China's trade practices, and on March 22 President Trump signed a memorandum imposing new tariffs targeting $50-60 billion of Chinese imports - an undisguised declaration of trade war against China.

The Section 301 investigation, however, raised issues that failed to reflect the trade realities between the U.S. and China. Trade imbalance has been an issue, but China has made efforts to work with U.S counterparts to find win-win solutions. While the U.S. fanned the flames with a stubborn insistence on reductionist results, China was busy trying to resolve the issues and avoid escalation through high-level consultations. State Councilor Yang Jiechi made a visit to Washington to attempt reconciliation of trade relations, followed closely by a visit by Politbureau member Liu He in pursuit of peaceful resolutions. 

But these goodwill efforts were ignored; President Trump's tweet that "Trade wars are good, and easy to win" heralded the looming trade war and the U.S.'s chosen path of confrontation. 

There will be no winner in a trade war

China has warned the U.S. that unilateralism and protectionism will set a bad example to the world in dealing with trade disputes. A trade war will have damaging effects on both sides, and no one will come away without injury. Roberto Azevedo, director-general of the WTO, echoed China's position urging the two sides to talk, warning that there will be "no winners" in this confrontation. 

"Disrupting trade flows will jeopardize the global economy at a time when economic recovery, though fragile, has been increasingly evident around the world. I again call for restraint and urgent dialogue as the best path forward to resolve these problems," Azevedo said Friday.

China is ready for the "first of many"

A seemingly elated President Trump said, "This is the first of many," and China is ready for the other measures that may come, be they investment restrictions, alliances against China at the WTO or the exclusion of China in U.S.-led initiatives. China survived U.S. embargo in the middle of the last century, as well as many recent technological blockades. In fact, the Chinese have a tradition of developing under hostile pressures. 

Already there are speculations on how China will respond to the U.S. initiated trade wars. Will there be "soft-measures" or "sharp measures?" Anything is possible, but retaliation is the only choice. China does not want to fight a trade war, but it is absolutely not afraid of a trade war. It is not as strong as the U.S. economically and militarily, but we have confidence in our ability to deal with external bullies. 

And China will not close its door as a result. As Michelle Obama once said, "When you go low, we go high" - an apt description of China's position as we are forced to fight a trade war. China will not be bullied.

Li Yong is director of the China-US-EU Study Center of China Association of International Trade (CAIT).

Opinion articles reflect the views of their authors, not necessarily those of

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