First skirmishes in a trade war?

Jeremy GoldkornJanuary 23, 2018

The New York Times reports (paywall) that American president Trump has “slapped steep tariffs on imports of washing machines and solar energy cells and panels,” perhaps the first move in his long-promised campaign to eliminate cheap imports.
•“Both China and South Korea harshly criticized the move, with both suggesting they could take their complaints to the World Trade Organization,” says the Times.
•The solar tariffs “will rattle an industry that drew in $161 billion of investment globally last year and is dominated by companies in China,” according to Bloomberg.
•Some Chinese companies may be happy about the news: China Money Network says that Suniva, “which widely advertises its products as ‘made in America,’ was one of two U.S.-based solar panel makers to successfully petition the Trump administration to impose the tariffs.” Suniva is 63 percent owned by Chinese conglomerate Shunfeng International Clean Energy.
•Not all American solar companies are happy: one U.S. solar executive tweeted: “We are devastated to learn Trump has imposed a 30% tariff on solar panels virtually killing the solar industry. Solar employs more people than coal and oil combined. Today’s decision will cause the loss of roughly 23,000 American jobs this year.”
•“China has plenty of options to retaliate” against Trump’s tariffs, says Bloomberg, namechecking Boeing, Apple, and soybean imports.
•The soybean market is already jittery after the tariff announcement, per Bloomberg. China’s is the hungriest buyer of American soybeans.
•There has been a “communication breakdown” between American and Chinese officials, which “risks escalating” the trade row, according to the South China Morning Post, however the article says the Davos summit this week may offer “a chance for the two sides to find common ground.”

Source: SubChina “First skirmishes in a trade war?”

Note: This is SubChina’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


Exclusive: Trump considers big ‘fine’ over China intellectual property theft

Jeff Mason JANUARY 18, 2018

WASHINGTON (Reuters) – President Donald Trump said on Wednesday the United States was considering a big “fine” as part of a probe into China’s alleged theft of intellectual property, the clearest indication yet that his administration will take retaliatory trade action against China.

In an interview with Reuters, Trump and his economic adviser Gary Cohn said China had forced U.S. companies to transfer their intellectual property to China as a cost of doing business there.

The United States has started a trade investigation into the issue, and Cohn said the United States Trade Representative would be making recommendations about it soon.

“We have a very big intellectual property potential fine going, which is going to come out soon,” Trump said in the interview.

While Trump did not specify what he meant by a “fine” against China, the 1974 trade law that authorized an investigation into China’s alleged theft of U.S. intellectual property allows him to impose retaliatory tariffs on Chinese goods or other trade sanctions until China changes its policies.

Trump said the damages could be high, without elaborating on how the numbers were reached or how the costs would be imposed.

“We’re talking about big damages. We’re talking about numbers that you haven’t even thought about,” Trump said.

U.S. businesses say they lose hundreds of billions of dollars in technology and millions of jobs to Chinese firms which have stolen ideas and software or forced them to turn over intellectual property as part of the price of doing business in China.

The president said he wanted the United States to have a good relationship with China, but Beijing needed to treat the United States fairly.

Trump said he would be announcing some kind of action against China over trade and said he would discuss the issue during his State of the Union address to the U.S. Congress on Jan. 30.

Asked about the potential for a trade war depending on U.S. action over steel, aluminum and solar panels, Trump said he hoped a trade war would not ensue.

“I don’t think so, I hope not. But if there is, there is,” he said.

In Beijing, foreign ministry spokesman Lu Kang said there were no laws in China to force foreign investors to transfer technology, but acknowledged such things may happen as part of “market behavior” between companies working with each other.

“There is absolutely no government meddling in these actions,” Lu told a daily news briefing on Thursday.

“At the same time, I want to stress that China will resolutely protect its legitimate rights,” he added, without elaborating.

Jeffrey Schott, a senior fellow at the Peterson Institute for International Economics, said the penalties under Section 301 of the Trade Act of 1974, which authorized the investigation into China’s intellectual property practices, would probably include a package of both tariffs and restrictions on Chinese investment in the United States.

“I suspect the U.S. measures will involve restrictions in areas where we don’t have WTO (World Trade Organization) obligations,” Schott said. “Trump likes to talk about tariffs so that may be part of the package too. The Chinese would have the legal right to retaliate against tariff increases.”

Throughout his 2016 election campaign, Trump routinely threatened to impose a 45 percent across-the-board tariff on Chinese goods as a way to level the playing field for American workers. At the time, he was also accusing China of manipulating its currency to gain an export advantage, a claim that his administration has since dropped.

Trump said on Wednesday that China stopped meeting the criteria for currency manipulation after his election, and he said making that designation while trying to work with Beijing to rein in North Korea would be tricky.

“How do you say, ‘hey, by the way, help me with North Korea and I‘m going to call you a currency manipulator?’ It really doesn’t work,” Trump said.

The president also said he and Chinese President Xi Jinping had not discussed China’s plans with regard to purchases of U.S. Treasury bonds.

Bloomberg reported earlier this month that Chinese officials reviewing the country’s foreign exchange holdings had recommended slowing or halting purchases of U.S. Treasury bonds.

Trump said he was not concerned such a move would hurt the U.S. economy.

“We never talked about it. They have to do what they do,” he said.

Additional reporting by James Oliphant, Ayesha Rascoe, Lesley Wroughton, David Lawder, and Ben Blanchard in BEIJING; Editing by Alistair Bell

Source: Reuters “Exclusive: Trump considers big ‘fine’ over China intellectual property theft”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

Trump Spearheads New Effort to Combat Chinese Trade Exploitation

US President Donald Trump (2nd R) speaks to China’s President Xi Jinping (L) in front of US First Lady Melania Trump (2nd L) and Xi’s wife Peng Liyuan (R) in the Great Hall of the People in Beijing on November 9, 2017.
Donald Trump urged Chinese leader Xi Jinping to work hard and act fast to help resolve the North Korean nuclear crisis during talks in Beijing Thursday, warning that “time is quickly running out”. / AFP PHOTO / Jim WATSON (Photo credit should read JIM WATSON/AFP/Getty Images)

New national security strategy places focus on ending China’s trade wars

BY: Adam Kredo
December 15, 2017 1:40 pm

President Donald Trump is placing new focus on targeting China’s exploitation of the international trade system, putting the issue front-and-center in his newly released National Security Strategy, according to new information obtained by the Washington Free Beacon and multiple sources briefed on previously unreported details of the administration’s new policy.

As part of Trump’s newly issued strategy to tackle pressing national security priorities, in a document known as the NSS, the White House is planning efforts to combat China’s longstanding practices to exploit the international trade system and harm the U.S. economic stature, according to these sources, who said the plan places renewed focus on the ties between economic security and national security.

The Free Beacon was briefed about this previously unreported portion of the NSS ahead of the formal unveiling of the plan scheduled for Monday.

Trump, a vocal critic of China’s unfair trade policies, is said to have directed senior White House national security officials to target China and other countries who exploit the international trade system, according to White House insiders.

Economic prosperity and national security are inextricably linked in the White House’s view, according to these sources who said previous administrations had failed to adequately highlight this angle in their own National Security Strategy documents.

“For the last several decades, no public policy issue has been of more concern to Donald Trump than unfair trade practices that put both American workers and business owners at a disadvantage,” one source close to the White House and briefed on the NSS told the Free Beacon. “Years before he ran for president he’s been a strong critic of Chinese business practices—but he’s been even more critical of US policymakers who have done little to address this as an issue of America’s economic health.”

“So it’s natural to find that the National Security Strategy stresses this,” the source explained. “Over the last few administrations of both parties, we’ve pretended that our nation’s economic security is a less important thing than say, climate change or in the number of parties running for parliamentary elections in the Middle East. This National Security Strategy is a much-needed corrective, largely because it returns us to common sense and away from ideological abstractions.”

Two specific passages in the focus on efforts by China and other countries to exploit the international trade system and harm U.S. economic interests.

“The United States helped to expand the liberal economic trading system to countries that did not share our values in the hopes that these states would liberalize their economic and political practices, and provide commensurate benefits to the United States,” the new White House NSS language states. “Experience now suggests that these countries distorted and undermined key economic institutions without prompting significant reform of their economies or politics.”

Economic wars are just as dangerous as military ones, according to the Trump administration.

“Today, that economic system is under stress,” the new strategy states. “It continues to serve our interests, but it must be reformed to help workers prosper, protect innovation, and reflect the principles upon which that system was founded. American prosperity is also threatened by an economic competition playing out in a broader strategic context.”

A second source briefed by the White House on the new strategy told the Free Beacon that Trump played a personal role in ensuring that China and other bad trade actors are included in the new national security vision.

“This is Trump’s document through and through, but perhaps nowhere more than the emphasis on restoring economic security,” the source said. “Over and over, the strategy explains the links between economic prosperity and national security, and how predatory economic behavior from rivals like China directly threatens our ability to protect ourselves and our interests.”

Source: Washington Free Beacon “Trump Spearheads New Effort to Combat Chinese Trade Exploitation”

Note: This is Washington Free Beacon’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.

U.S. formally opposes China market economy status at WTO

David Lawder December 1, 2017

WASHINGTON (Reuters) – The United States has formally told the World Trade Organization (WTO) that it opposes granting China market economy status, a position that if upheld would allow Washington to maintain high anti-dumping duties on Chinese goods.

The statement of opposition, made public on Thursday, was submitted as a third-party brief in support of the European Union in a dispute with China that could have major repercussions for the trade body’s future.

China is fighting the EU for recognition as a market economy, a designation that would lead to dramatically lower anti-dumping duties on Chinese goods by prohibiting the use of third-country price comparisons.

The U.S. and EU argue that the state’s pervasive role in the Chinese economy, including rampant granting of subsidies, mean that domestic prices are deeply distorted and not market-determined.

A victory for China before the WTO would weaken many countries’ trade defenses against a flood of cheap Chinese goods, putting the viability of more western industries at risk.

U.S. Trade Representative Robert Lighthizer told Congress in June that the case was “the most serious litigation we have at the WTO right now” and a decision in China’s favor “would be cataclysmic for the WTO.”

Lighthizer has repeatedly expressed frustration with the WTO’s dispute settlement body and has called for major changes at the organization.

The USTR brief, which follows a Commerce Department finding in October that China fails the tests for a market economy, argues that China should not automatically be granted market economy by virtue of the expiration of its 2001 accession protocol last year.

“The evidence is overwhelming that WTO members have not surrendered their longstanding rights … to reject prices or costs that are not determined under market economy conditions in determining price comparability for purposes of anti-dumping comparisons,” the brief concludes.

The move comes as trade tensions between Washington and Beijing are increasing as the Trump administration prepares several possible major trade actions, including broad tariffs or quotas on steel and aluminum and an investigation into Chinese intellectual property misappropriation.

The Commerce Department on Tuesday launched the first government-initiated anti-dumping and anti-subsidy investigations in decades on Chinese aluminum sheet imports.

U.S. officials say that 16 years of WTO membership has failed to end China’s market-distorting state practices.

“We are concerned that China’s economic liberalization seems to have slowed or reversed, with the role of the state increasing” David Malpass, U.S. Treasury undersecretary for international affairs, told an event in New York on Thursday.

“State-owned enterprises have not faced hard budget constraints and China’s industrial policy has become more and more problematic for foreign firms. Huge exports credits are flowing in non-economic ways that distort markets,” Malpass said.

The brief submitted to the WTO also argues that China should be treated the same way as communist eastern European countries, including Poland, Romania and Hungary were when they joined the WTO’s predecessor organization, the General Agreement on Tariffs and Trade, in the late 1960s and early 1970s.

A senior U.S. official said those countries eventually earned market economy status as evidence of state subsidies and state distortions waned. He added that going forward, WTO members wishing to use third-country price comparisons against Chinese imports would need to keep presenting evidence of economic distortions.

Reporting by David Lawder; editing by Steve Orlofsky and Sandra Maler

Source: Reuters “U.S. formally opposes China market economy status at WTO”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

People in Thucydides Trap Upset by Trump, Xi Mutual Currying Favor

Chinese President Xi Jinping was so eager to please US President Donald Trump that he treated Trump with a State Visit +, an honor no foreign leader has ever enjoyed in China.

Trump was certainly pleased and said and wrote something in return.

However, SupChina’s report “An ‘incredible welcome ceremony’ for Trump but few results” today described how many US media are upset by such mutual currying of favor as those media have fallen deep in Thucydides Trap and will not be pleased unless the US has done something to effectively contain China or at lease fight a trade war, if no military war, with China.

The report says that there are few results in Trump’s visit in its title.

In fact, there has been tremendous achievement, first of all and most important of which is the two leaders have got mutual understanding that they want win-win cooperation instead of falling into Thucydides Trap.

China and the US have signed deals worth $250 billion. The report says that there are no details. Certainly, if one has taken part in the discussion of such large deals, they certainly know that it takes time for conclusion of contracts for such deals. However, at least, the signing of the deals showed the intention for win-win cooperation.

In the US, a John Pomfret published an open letter to Xi in Washington Post to worn Xi that there are lots of people deeply in Thucydides Trap who want to fight a trade war with China. Perhaps Trump could not stop them or may even be impeached by them and replaced with someone deeply in Thucydides Trap.

There are also quite a few people deeply in Thucydides Trap in China such as Colonel Liu Mingfu, who advocates China’s military rise to replace the US as world number one in his book “China Dream: The Great Power Thinking and Strategic Positioning of China in the Post-American Era”. The book became a bestseller as soon as it was published. It proved that there were lots of Chinese people who have also fallen deep in Thucydides Trap.

China is lucky to have a leader who has the wisdom to see the disaster that Thucydides Trap may bring to both China and US and who has gained the authority as the core of leadership to silence the opposition from the large number of stupid Chinese who have fallen deep into Thucydides Trap.

China’s Xi is prepared for a trade war so that he has launched China’s Belt and Road initiatives to take great risks in investing in poor countries in order to make them rich to be able to buy Chinese goods so that when China has lost US market, those countries will provide substitute market.

That takes time, but it also takes time for Trump’s enemies to remove him, if possible. China is now fully centralized so that Xi, a leader characterized by quick decision and quick action, is able to make and implement decisions quickly. There is no centralized power in the US. Decisions, if ever be possible, are made very slowly. Perhaps, by the time opposition has grown strong enough to remove Trump, with joint efforts Xi and Trump have to a great extent overcome the trade imbalance between the two countries so that no trade war will be necessary or practical.

In addition, by that time, China and Russia may have succeeded in establishing the Asian Union like the EU to enable all those in the Union to grow rich through win-win cooperation.

The US wants to be world leader. Look at the mirror, do you look like a world leader with declining economy, dilapidated infrastructures, disability to control drugs, crimes and flood of illegal immigrants?

In the past, ASEAN regarded the US as its leader, but now it does not want to take side between the US and China. Is US still its leader?

How many countries obey US leadership now?

China shall be regarded by the US as the country among all countries in the world that respects US world leadership the best. Look, what grand welcome China gave to Trump. That is precisely the honor China has ever given to a world leader.

I would like to ask: Will the Americans deep in the Trap be happy if Xi starts a trade war to drive away McDonald’s hamburgers, Kentucky’s chicken, Pizza Huts’ pizzas, Ford and General Motors’ cars, Iphones, Coca-cola and Pepsi’s soft drinks, etc. that are popular in Chinese market due to China’s open-door policy? American companies produce those goods in China so that they are not regarded as US export to China. If the sales of US goods produced in China are taken into account in the trade balance between the US and China, there is no Chinese trade surplus at all in the trade between China and the US.

Are those goods indispensable in China? Are there no alternative sources for those goods in the world?

Stupid people whether Chinese or American are arrogant. That is why they have fallen into Thucydides Trap.

Comment by China Kai Yee on SubChina’s report, full text of which is reblogged below:

An ‘incredible welcome ceremony’ for Trump but few results

Jeremy Goldkorn, Editor-in-Chief

Donald Trump enjoyed his treatment in Beijing. He changed the main image on his Twitter account to a photo of himself and Xi Jinping standing together with their wives, and tweeted the following on November 9:

15:08 Beijing time: President Xi, thank you for such an incredible welcome ceremony. It was a truly memorable and impressive display!

21:58 Beijing time: In the coming months and years ahead I look forward to building an even STRONGER relationship between the United States and China.

Both tweets are accompanied by short videos that are similar in style and content to Xinhua News Agency productions.

What was the result of Trump’s two day stay in Beijing? It’s perhaps best told in a series of headlines, abridged for easy reading:

  • Trump praised China and blamed past U.S. administrations for the trade deficit, but while he was having a “beyond terrific” time, human rights lawyers faced harassment and house arrest. —The Guardian
  • The American president placed his bets on flattering Xi Jinping, producing no visible structural changes. Trump said he was looking to President Xi Jinping to “do something” about America’s opioid epidemic, but China’s online opioid bazaar is booming. —The New York Times (paywall)
  • Air Force One took off from Beijing leaving behind nice optics but few gains on trade or North Korea. The $250 billion worth of deals announced by the U.S. administration feature little of substance — many are “memorandums of understanding…with few details, rather than contracts.” Another example of hype is that the Boeing China order hawked by Trump is said to be mostly old news. —Bloomberg
  • Taiwan is the most important and sensitive issue in Sino-US ties, Xi Jinping told Trump. —Reuters
  • Trump and Xi took no questions at an event on Thursday billed as a news briefing, as the American president cooperated with Beijing’s sweeping efforts to control the message of his heavily choreographed visit. —Associated Press
  • Trump has given Xi Jinping a pass on the South China Sea. —Quartz
  • While Trump was in Beijing, the People’s Daily reported that China has plans to test launch a Long March rocket in the South China Sea soon, for commercial purposes.

So the visit went smoothly and media reports talk of a bromance between Xi and Trump. But the bros may not be able to maintain the bonhomie:

  • The Economist says (paywall) that while Xi and Trump look friendly now, anti-U.S. feeling is stirring in China, and that “the anti-American strain now seems to run from the top of the Chinese state (Messrs Xi and Wang [Huning 王沪宁]) to the bottom (Xinhua and internet trolls).”

•In the Washington Post, John Pomfret has published an open letter to Xi Jinping, which warns that “a backlash is brewing against your country in the United States, and it goes well beyond Trump,” and many of Pomfret’s colleagues, “even those from the Democratic Party, are in complete agreement with Trump’s former aide, Stephen K. Bannon, that the United States is in an economic war with China and that Americans have done far too much to facilitate your nation’s rise.”

What Arrows the US Has to Use against China?

Will the US shoot China with such arrows in such quivers? Wikipedia picture.

According to Reuters’ report titled “U.S. business group urges Washington to ‘use every arrow’ against China”, US business group is quite bellicose in dealing with China. I wonder whether they want to fight a trade war to shoot China with arrows. I am really sorry that I see few arrows in US quiver, especially those to be used for US business in China.

Anyway, it is ridiculous that in our era of stealth fighters and GPS guided missiles, some people still want to use arrows in war. However, that is really the sorry situation for US business in China as Chinese investment is insignificant in the US while US investment in China is very great, but China can easily drive away US investment as China has not only the financial but also the technology resources to drive away US business from China now though China may suffer some losses in a trade war with the US.

However, the losses will mainly be caused by US restriction on China’ exports to the US instead of by US business leaving China. Even if China lacks the financial and technology resources, Japanese and European businessmen will be happy to have the opportunities to replace US investment.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at

U.S. business seeks action, not trade war, in Xi-Trump summit

By Michael Martina and Diane Bartz | BEIJING/WASHINGTON Tue Apr 4, 2017 | 7:48am EDT

Although worried about the prospect of a trade war, American businesses operating in China nonetheless want President Donald Trump to wring some concessions on market access from China’s leader Xi Jingping when the two meet this week.

Trump warned in a tweet last week the meetings at his Mar-a-Lago resort on Thursday and Friday will be “very difficult” and “American companies must be prepared to look at other alternatives.”

Trump has said he wants U.S. companies to stop investing in China and instead create jobs at home. He has also accused China of manipulating its currency to boost exports.

Critics within U.S. industry have accused China of unfair government subsidies to its companies, and of flooding the U.S. market with cheap products from steel to solar panels, while restricting foreign investment over vast swathes of the world’s second-biggest economy.

But they also worry Trump’s policies on China are not entirely clear, with his trade team still not in place, and may be subject to a ‘grand bargain’ involving other issues such as North Korea.

Trump is set to enter the meeting without several key advisors, including his pick for trade negotiator, Robert Lighthizer who has yet to be confirmed by Congress. His nominee as ambassador to China, Iowa Governor Terry Branstad, has also yet to be confirmed, while several posts in the U.S. State Department that formulate Asia policy remain unfilled.

“With this in mind, it is hard to imagine that there will be much in the way of concrete accomplishments at this summit, or even that there has been any significant interagency discussion on strategy leading up to it,” said Randal Phillips, Mintz Group’s Beijing-based managing partner for Asia and the former chief CIA representative in China.


Some of the largest U.S. companies have contributed to the billions of dollars of foreign direct investment that have poured into China over the past two decades, creating hundreds of thousands of jobs. They include tech companies like Apple, which makes much of its iPhone in China, automakers such as General Motors and Ford, heavy machinery firms like Caterpillar, retailers like Starbucks and makers of shaving foam and detergent, like Procter & Gamble.

U.S. steel producers want Trump to press Xi on Chinese steel prices, according to a source who has been in discussions with the administration in advance of the summit.

U.S. automakers complain about a disparity in tariffs: The United States has a 2.5 percent tariff on auto imports, China’s is 25 percent.

But the stakes are perhaps highest for American technology firms, who worry that China’s new cyber-security law, which takes effect in June, sets potentially discriminatory standards for multinationals.

The Information Technology & Innovation Foundation (ITIF), a think-tank whose board includes representatives from Apple, IBM Google and other tech heavyweights, has urged the Trump administration to pressure China to “stop rigging markets”. It warned that possible retaliation from Beijing was not a reason for inaction.

Trump has staked out various positions on China as president in his tweets, phone calls and statements.

In a phone call with Xi after taking office, Trump gave ground on one of Beijing’s most sensitive issues – the status of Taiwan – after earlier suggesting he might not stick to Washington’s long-held “one China” policy.

Trump signed two executive orders on trade on Friday, one to improve import tariff collection and another to study the causes of the U.S. trade deficit. Trump said at the White House signing ceremony he and Xi were “going to get down to some serious business” and vowed that “the theft of American prosperity” by foreign countries would end.

Chinese Vice Foreign Minister Zheng Zeguang said on Friday the U.S.-China trade imbalance was mostly the result of differences in the two countries’ economic structures and noted China had a trade deficit in services.

China tops the list of countries who have trade surpluses with the United States, with a $347 billion surplus last year.


Some in the U.S. business community worry about tit-for-tat retaliation in trade disputes with China.

Jacob Parker, vice president of China operations at the U.S.-China Business Council, said the two presidents need to take “positive actions that would lead to a more durable relationship, not retaliatory actions that would lead to a trade war”.

The list of commercial issues between the two countries was so long, it would be impossible to make a major dent in them with one meeting, he said.

China is the largest export market for U.S. soybean producers, accounting for 62 percent of U.S. soy exports in 2016 with a value of over $14 billion, leading some experts to suggest the sector could be particularly vulnerable to retaliation.

Steve Censky, chief executive of the American Soybean Association, told Reuters he hopes Trump will take a “prudent” approach to the trade relationship and address any issues in a “workman-like manner”, recognizing that both countries have a lot to lose if the relationship suffers.

William Zarit, chairman of the American Chamber of Commerce in China met senior Trump administration officials in February, and said “it was clear they were very familiar with the issues facing American companies in China, perhaps more so than previous administrations”.

But several corporate lobbyists, representing a range of companies expressed concern Trump’s lack of attention to detail could prove counterproductive when it comes to the intricacies of the massive trade and investment relationship.

“It’s not yet clear whether … this is a White House that wants to fundamentally reset the terms of the relationship or tinker at the edges and declare a public relations win,” said a China expert at a Washington business lobby who asked not to be named.
(Reporting by Michael Martina in Beijing; Diane Bartz, David Shepardson and Joel Schectman in Washington; Nichola Groom in Los Angeles; and Mark Weinraub in Chicago; Editing by Bill Tarrant)

Source: Reuters “U.S. business seeks action, not trade war, in Xi-Trump summit”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.