Trump’s commercial war against China.- Zhong Shan urges “pause on the brink of a precipice”

“Regarding whether China will retaliate, we have stated our position multiple times lately and the message has been got across very clearly. It’s impolite not to make a return for what one receives, and we will fight to the end. We hope that the US side will take China’s stance seriously, act with ration and caution, and do not be penny wise and pound foolish, which will hurt itself and others as well,” Foreign Ministry Spokesperson Hua Chunying said today at her Regular Press Conference answering to a question on the Presidential Memorandum related to tariffs on goods from China signed by the President of the United States, Donald Trump, yesterday.
“We do not hope to have a trade war with anyone, but we are never afraid of it, she assured”.

PRC’s Minister of Commerce Zhong Shan Holds Talks with the Director-General of the WTO Roberto Azevêdo. Source: Ministry of Commerce of the PRC Website.

The statement by Hua follows some others in the same direction by the same Minister of Commerce of the PRC, Zhong Shan, who urged Trump to “pause on the brink of a precipice”

Trump’s meassures for trade deficit reduction and to cut tech forced transfers

The President of the United States says in his remarks on the Presidential Memorandum on the Actions by the United States Related to the Section 301 Investigation (China): “…in particular, with China, we’re going to be doing a Section 301 trade action. It could be about $60Bn but that’s really just a fraction of what we’re talking about,”says the President of the United States on his remarks published yesterday.

“I’ve been speaking with the highest Chinese representatives, including the President, and I’ve asked them to reduce the trade deficit immediately by $100 billion. It’s a lot. So that would be anywhere from 25%, depending on the way you figure, to maybe something even more than that. But we have to do that.

“I’ve been speaking with the highest Chinese representatives, including the President, and I’ve asked them to reduce the trade deficit immediately by $100 billion. It’s a lot. So that would be anywhere from 25%, depending on the way you figure, to maybe something even more than that. But we have to do that.

President Donald J. Trump, joined by Vice President Mike Pence, Cabinet members, and senior White House staff, signs a presidential memorandum targeting China’s economic aggression, in the Dipolomatic Reception Room at The White House, Thursday March 21st 2018 in Washington.Official White House Photo by Shealah Craighead.

According to the data provided by the US. Census Bureau,the deficit of the country in the field of goods trade with China reached the $375.227Bn in 2017 with US exports at $130.369Bn and $505.597Bn imports from China. The USA posted a $347.016Bn deficit in trade of goods with China in 2016.
The trade deficit between US and the Asian country in January 2018 was at nearly $35.953Bn against the $31.304Bn posted in January 2017.

“The word that I want to use is ‘reciprocal’.” continued Trump in his remarks,” When they charge 25% for a car to go in, and we charge 2% for their car to come into the United States, that’s not good. That’s how China rebuilt itself. The tremendous money that we’ve paid since the founding of the World Trade Organization, which has actually been a disaster for us. It’s been very unfair to us. The arbitrations are very unfair. The judging has been very unfair. And knowingly, we always have a minority and it’s not fair,” Trump pointed.

Leaving aside the request of reducing trade deficit, Trump advances there will be actions before the WTO (World Trade Organisation) to address the problem of direct and hidden actions by the Chinese Government forcing tech transfers and burdening US products being imported into the PRC.
The President of the USA also talked about meassures preventing FDI by Chinese companies aimed to get tech transfers.

Donald Trump signs import taxes on steel and aluminum under section 232 of the 1962 Trade Expansion Act. Toi watch the original photo clic here

Trump’s Presidential Memorandum considers four kind of inunfair practices by the PRC’s Government proven, as derived from the investigation held by the US :

First, China uses foreign ownership restrictions, including joint venture requirements, equity limitations, and other investment restrictions, to require or pressure technology transfer from U.S. companies to Chinese entities. China also uses administrative review and licensing procedures to require or pressure technology transfer, which, inter alia, undermines the value of U.S. investments and technology and weakens the global competitiveness of U.S. firms.

Second, China imposes substantial restrictions on, and intervenes in, U.S. firms’ investments and activities, including through restrictions on technology licensing terms. These restrictions deprive U.S. technology owners of the ability to bargain and set market-based terms for technology transfer. As a result, U.S. companies seeking to license technologies must do so on terms that unfairly favor Chinese recipients.

Third, China directs and facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and to generate large-scale technology transfer in industries deemed important by Chinese government industrial plans.

Fourth, China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies. These actions provide the Chinese government with unauthorized access to intellectual property, trade secrets, or confidential business information, including technical data, negotiating positions, and sensitive and proprietary internal business communications, and they also support China’s strategic development goals, including its science and technology advancement, military modernization, and economic development.

China matures rising import duties on more than 100 US products

Given both the US Presidential Memorandum and the remarks published by Donald Trump on Chinese unfair commercial practices and forced technology transfers to allow US companies operate in the PRC’s domestic market,the government of the Asian country announced today that is maturing compensating meassures amounting to at least $3Bn. Among them PRC’s government is thinking about establishing import duties on around 128 US products currently being imported to China, such as wine or pork.

China does not want a trade war but not affraid to retaliate

“The US has acted in disregard of China’s strengthened protection for intellectual property rights, the WTO rules and the call of the business community. This is a typical act of unilateralism and trade protectionism and the Chinese side strongly opposes it. Such action does not serve the interests of China, the US and the world at large and sets a very bad example. Under no circumstances will China sit idly and allow its legitimate rights and interests to be undermined. We are fully prepared to firmly defend our legitimate interests,” Hua Chunying underscored.

“As to the Section 301 investigation, China has made clear its stance on many occasions. We do not hope to have a trade war with anyone, but we are never afraid of it. We have the confidence and capability to cope with any challenge. We hope the US will make cautious decisions and avoid placing China-US trade relations in danger.”

Foreign Ministry Spokesperson Hua Chunying’s at the Regular Press Conference on March 23rd, 2018. Source PRC Ministry of Foreign Affairs Website.

“In making his remarks, the relevant American individual you mentioned – she reffers to US National Trade Council Director Peter Navarro- is a little bit too arrogant. He has apparently miscalculated the situation and underestimated China’s resolve and capability to defend its own legitimate rights and interests as well as the price the US has to pay for its recklessness and willfulness.”

Navarro said yesterday that China benefited far more from trade relations with the United States than the reverse,so that retaliation could be difficult for China.

A trade war will undermine the interests of American consumers, companies and market, says PRC

“As we stressed repeatedly, the China-US trade ties are mutually beneficial in essence. A case in point is that the imports of low-cost, labor-intensive products from China in large quantities have considerably lowered the consumption cost for American consumers and increased consumer’s surplus. This in fact improves consumer’s welfare and also helps the US to curb inflation in the larger sense. As such, the US has benefited greatly from it both at the micro and macro level. The US’ persistence in advancing the Section 301 investigation and publishing the so-called findings to pick a trade war will undoubtedly undermine the interests of American consumers, enterprises and the financial market directly.

“As you can see, all the three major US stock indexes have fallen following the signing of the Memorandum, which is a vote of no confidence to relevant wrong policies and moves of the US side by the financial market, and it also sheds light on the international community’s concerns over relevant reckless and dangerous policies and actions taken by the US side,” The spokes person from PRC Forign Ministry Hua Chunying pointed.

Image over the headline.- President Donald J. Trump participates in a bilateral meeting with President Xi Jinping at the Great Hall of the People, Thursday, November 9, 2017, in Beijing, People’s Republic of China. Official White House Photo by Shealah Craighead

Related Eastwind links:

EU on Trump’s import duties on metals.- The temporary exemption not enough

EU, taking action against Trump’s duties on steel and aluminum imports

Related external links:

Remarks by President Trump at Signing of a Presidential Memorandum Targeting China’s Economic Aggression

Presidential Memorandum on the Actions by the United States Related to the Section 301 Investigation (China)

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