US Will Take More Harsh Economic Measures toward China

In the second half of 2017, America was busy waving around the club of trade and attacking China. First, it was “Article 301;” then it was the anti-dumping and anti-subsidy investigation of Chinese steel and aluminum. In Davos, the U.S. commerce secretary said more tariffs are coming for China. Before the Lunar New Year, President Donald Trump also threatened to bring more sanctions against China.

Many Chinese media outlets and analysts seemed calm toward America’s threatening attitude; they thought that the mutual dependence between China and America was very high, so a trade war would seriously hurt both sides and thus wouldn’t happen. The talk abroad, however, reflects the opposite view. Most in the international media believe it’s not a matter of if, but when the trade wars will begin.

Trade policies are a critical part of the American strategy toward China. When America considered China a “strategic partner,” the China-U.S. trade friction looked like it was about trade balance, but it was, in fact, a battle of economic strength. America is already planning for a trade war and has built five fronts against China.

The first is frequent use of trade measures as a weapon. In addition to anti-dumping and anti-subsidy, America has also used Article 301 and Article 232, which are even more harmful weapons. Around the end of May, the results of the Article 301 investigation will be unveiled. Trump has said America might collect unimaginable fines from China. If this threat is made real, the China-U.S. trade war will escalate. America is bound to use harsher measures. Some reports have also claimed America is considering using Article 301 to investigate China’s petrochemical products.

Second, using a new technology blockade, the Trump administration is preparing to expand the role of the committee overseeing foreign investment in America to make it into an agency controlling technology as well. The committee will review foreign companies’ acquisitions of American firms and review American companies’ opening of overseas businesses. In addition, America will also add new limits on exporting technology to China and the China-U.S. technology exchange.

The third is forming a new army with an “Eight-Nation Alliance” against China.* In December of 2017, America made Europe and Japan release a joint statement at the World Trade Organization meeting saying that they will increase cooperation in industrial capacity, forced transfer of technology, government subsidies, state-owned enterprises, etc., with China being the obvious target. Also, while America is increasing investigations of Chinese businesses’ acquisitions of American firms, the EU is also pondering similar policies. America and Europe’s matching behavior and joint attack against China could very well become the norm.

The fourth front is curbing Chinese investment. In the year or so since Trump became the American president, only one Chinese business acquisition of an American firm was approved. Ant Financial’s attempted acquisition of Moneygram, as well as many other deals, was shot down by America for reasons of national security. The definition of “national security” is becoming broader and broader; it is not just limited to high-tech industries. Even personal data companies and infrastructure programs are inhibited.

The final front is restructuring global trade to place China at a disadvantage. America is asking for a reform of the global trade system and trying to change it for America’s purposes, to change the rules of multilateral trade, to better reveal American interests, to tie-up Chinese mobility and to inhibit China’s development.

The tree wants to be still, but the storm is not stopping. While China has no intention of fighting America, we cannot escape America bringing a trade war to us. So we need to wake up from a false sense of security and be prepared to retaliate. Some examples of action include choosing products which America exports a lot to China for trade measures, starting anti-tax evasion and antitrust investigations and increasing our monitoring of American companies, researching and proposing new international trade regulations, and taking the initiative in the battles of negotiation.

*Editor’s note: The Eight-Nation Alliance was an international military coalition set up in response to the Boxer Rebellion in the Qing Empire of China. The eight nations were Japan, Russia, Britain, France, the United States, Germany, Italy and Austro-Hungary.

The author is the former associate representative of China’s U.N. delegation at Geneva

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