On July 6, 2018, the United States preemptively launched its “trade war” by officially imposing a 25 percent tariff on imported Chinese products worth US$34 billion. The US also announced that the tariff would be increased on certain imported products worth $16 billion.
By
XIAO QIAN
·5 minutes read
AP/CHINATOPIX
A ship hauls containers at a container port in Qingdao in eastern China\'s Shandong province Friday, July 6, 2018. The United States hiked tariffs on Chinese imports Friday and Beijing said it immediately retaliated in a dispute between the world\'s two biggest economies that President Donald Trump says he is prepared to escalate.
On July 6, 2018, the United States preemptively launched its “trade war” by officially imposing a 25 percent tariff on imported Chinese products worth US$34 billion. The US also announced that the tariff would be increased on certain imported products worth $16 billion.
In response to the US provocation, the Chinese government was forced to take necessary retaliatory steps. On July 10, the US escalated the situation by releasing a list of $200 billion in Chinese products to be imposed with a 10 percent import tariff and requested public opinion on the plan.
China’s position and views
The issue of US-China trade has always attracted global attention, including Indonesia’s. As the Chinese Ambassador to Indonesia, I would like to share China’s position and views on the issue.
First, the US launching its “trade war” against China has no legal basis in international law and may even endanger the global economy.
The US has blatantly and openly violated World Trade Organization (WTO) principles, namely that countries should not discriminate between trading partners (“most favored nation” treatment) and should be committed to an agreed level of duties (tariff binding). The US policies were typically unilateral in its attempt to implement trade protectionism and achieve hegemony. In its request for public opinion on its “Section 301 Investigation” against China, as much as 91 percent of Americans rejected the idea.
The US has launched not only a Section 301 investigation against China but also a Section 232 investigation into other major economic regions in the so-called name of national security, thereby launching the largest “trade war” ever in the economic history of mankind.
The US’s actions will surely be harmful towards global economy and trade and destroy the global supply and value chains. Consequently, the actions will slow global economic recovery, trigger global financial turmoil and harm the interests of international consumers. Eventually, the US will only harm its own interests.
Second, the “reasons” the US cited in launching its “trade war” against China are baseless. Regarding the issue of the US trade deficit with China, China has never deliberately induced surpluses in its international trade balance. Multiple factors have led to the trade deficit, including the US’s terribly low savings rate, the US dollar’s role as the international reserve currency and the difference between the US and China in terms of industrial competitiveness and division of international labor.
Statistically, foreign companies contribute more than half of Chinese exports to the US. Apart from that, the US’s long-standing policy of limiting exports of high-technology products is among the reasons for the trade deficit.
The Chinese government has strived for a long time to improve its legal system to protect intellectual property rights. In 2017, China disbursed $28.6 billion in intellectual rights royalties, a 15-fold increase since 2001. The accusations of China stealing intellectual property are baseless.
The Chinese government has never been involved in “forceful transfer of technology” to foreign companies. Technological cooperation between Chinese companies and their foreign counterparts are based on contractual and voluntary principles. The legal rights and interests of foreign companies in investing and operating in China are protected by law.
The industrial policies China has carried out, such as “Made in China 2025”, are commonplace around the world and they are open to foreign companies. This is fairer compared to, say, the US’s subsidy policy in agriculture and manufacturing.
National interests
Third, China does not wish for a “trade war” with the US, but has been forced to take necessary measures to protect its national interests and defend the principles of free trade and a multilateral trade system. China sees trade disputes between countries as an important issue, and it always pushes for resolution through dialogue and coordination with sincerity and maximum patience.
Between February and June this year, China held four high-level economic consultations with the US and pushed for a joint statement on May 19, wherein the two countries agreed upon trade and economic partnerships and committed not to launch a “trade war” against each other. However, due to its domestic political needs, the US broke its promises, left the bilateral consensus and insisted on launching its “trade war” against China.
In the face of such emergency situations brought forth by the US unilateral action, China was forced to retaliate by reporting these actions to the WTO through its dispute resolution mechanism.
Fourth, China will continue with its reform and transparent conduct while strictly defending the principles of free trade and a multilateral trade system. This year marks the 40th anniversary of China’s reform and openness policy. High-quality economic growth in the future will depend on this reform and openness.
As President Xi Jinping said in his speech at the opening ceremony of the Boao Forum for Asia, “China’s doors will not be closed; they will be wide open”. The Chinese government will hold firmly to the principle that markets hold an important role in determining the allocation of resources. The Chinese government will also continue to push its openness to foreign countries, protection of intellectual property rights, creation of a conducive investment climate and strengthening mutually beneficial cooperation with all other countries.
China has always believed that unilateralism and protectionism will never resolve trade problems and will only create new problems. Globalization is the trend, and it is inevitable. All countries must walk hand-in-hand to nurture international economic growth through cooperation and to share the benefits through friendly deliberations.
Recently, China has decreased its import tariffs for medicines, cars and a handful of consumer goods. China will also hold its first ever China International Import Expo in Shanghai in November this year in order to expand its imports.
China is willing to work together with the international community to support economic globalization through concrete efforts in order to defend a multilateral trade system and put the international trade order back on the right track as soon as possible.
