Dhaka Courier

China and US Trade war

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There are two perspectives in the above matter- one from China and the other from the US. Chinese foreign ministry spokesman reportedly said on 8th May that the disagreement between them over trade was a “process of negotiation” and “China was not avoiding the problem”. Whereas the US was reportedly taken aback that the extent of changes in the US draft that senior officials of the Trump administration considered these changes as “unacceptable”, given  Chinese history of failing to fulfil reform pledges.

The jewel in the crown of the US aviation market, Boeing, was expected to be a beneficiary of a US-China trade deal. It was reported that China was preparing to buy 100 Boeing planes worth more than US$10 billion, in a bid to satisfy US desires to narrow the trade deficit.

China could move beyond the goods trade and target services, particularly in the finance, tourism and cultural sectors, China reportedly said. It had been expected that a trade deal would nudge China towards liberalising some of its services markets, particularly financial sector industry.

China reportedly warned that Washington made a strategic mistake in proposing raisin tariffs on US$200 billion worth of Chinese goods from 10 per cent to 25 per cent on 10th May.  The move might backfire because “extreme pressure” would not force China to capitulate.

Analysts have also warned that a national security review process for foreign investments in China might enable Beijing to freeze out US investment to an even greater extent than before, as another form of retaliation.

In China, “economic security” has reportedly become a top item on the government agenda, following a notice posted in April by the state planner, the National Development and Reform Commission, stating that its public service department would start accepting applications for national security reviews of foreign investment deals because of an “adjustment of departmental responsibility”.

While the US has used “national security” as the justification for rolling out Section 232 tariffs on products such as steel and aluminum and is considering using the same rationale for levying duty on the global car industry, it is not thought to have the same leverage to act in this manner as Beijing’s central planners.

China has many options for retaliating against the US and is likely to implement tariffs that go beyond trade in goods, a former top government official has said.

Wei Jianguo, a former vice-minister in the Ministry of Commerce, reportedly said that China had the ‘willingness to act to fight a prolonged war’

US agriculture products would be a natural primary target for retaliation, especially wheat, corn and pork, Wei said. These would directly target a key part of US President Donald Trump's electoral base in the run-up to the 2020 election, in which US policy towards China is expected to play a key role.

At the same time, the US broke with the long- term, official line that Chinese exporters pay tariffs, however, a claim which has long since been debunked: tariffs are paid by importers to release a product from the dock at which they enter a country.

It may be recalled that President Trump himself took  to Twitter on multiple occasions, saying China “broke the deal” and that the US will be “taking in tens of billions of dollars in tariffs from China”, adding that “buyers of product can make it themselves in the USA.

US Trade Representative Robert Lighthizer is thought to be ready to implement tariffs on the remainder of China’s exports.

On 10th May, the Office of the United States Trade Representative (USTR) issued a notice confirming the tariff increase to 25 per cent, but also saying that the president “also ordered us to begin the process of raising tariffs on essentially all remaining imports from China, including internet modems, routers, printed circuit- boards vacuum cleaners and furniture which are valued at around US$300 billion”.

“The process for public notice and comment will be published soon in the Federal Register. The details will be on the USTR website as we begin the process before a final decision on these tariffs,” read the note. Former USTR staff expects that the implementation notice will be posted after the talks.

Chinese delegation arrived in the US on 9th May for two days of talks, seen as pivotal This ‘may be the start of the long haul’ in crossing the US-China trade divide.  Washington and Beijing remain far apart on core issues and will alternate between conflict and talks, observers say.

Finally the trade war between US and China hurts all countries economically which import products from the two countries. The present-day world is a multilateral and open, providing the freedom of trade.

Furthermore the question of the Indian Ocean as a zone of peace was given considerable attention in the course of preparation of the 1978 first special session of disarmament of the UN. Attention was raised for the island in the Indian Ocean Diego Garcia which has been a US base for years. It was leased by the US from Britain for 50 years in 1966. The largest US military base with bomber planes B-52 are stationed there.

Security, it may remind us, that is indivisible and may be perceived in both regional and global terms.

Barrister Harun ur Rashid, Former Bangladesh Ambassador to the UN, Geneva.

  • China and US Trade war
  • Barrister Harun ur Rashid
  • Vol 35
  • Issue 45
  • DhakaCourier

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