MNI: China Targeting Negotiation, Removal Of All Levies
MNI (BEIJING) - Beijing’s measured response to the 10% U.S. tariff on all Chinese goods signals its willingness to discuss a deal with Washington which would see the removal of recently-imposed trade levies in exchange for importing more American goods, policy advisors told MNI.
China's targeted approach signals a preference for talks over escalation, said Dong Shaopeng, president of the Beijing Silk-Road Cooperation Association and advisor to the China Securities Regulatory Commission Investor Education Base. China would look to expand purchases of U.S. agricultural products and industrial goods such as aircraft and automobiles as part of a deal similar to 2019’s Phase-One agreement during President Donald Trump’s first term, he said.
However, in return Beijing would be likely to push for Washington to lift all additional trade restrictions imposed under the administrations of both Trump and Joe Biden, including the latest 10% charge, Dong continued, adding negotiators will also demand the removal or reduction of technology restrictions.
Capital Economics analysts estimate Beijing's recently announced 15% charge on U.S. coal and Liquified Natural Gas and 10% for crude oil, farm equipment and some autos would affect USD20 billion of imports, while Trump’s 10% on all Chinese goods would apply to USD450 billion.
China’s countermeasures are targeted at U.S. politicians who advocate suppressing China along with their business backers, Dong said, noting restrictions on the exports of rare earths to the U.S.
China's manufacturers would be able to raise prices in the U.S. to compensate for the effect on their profits of a 10% tariff without a significant impact on sales, Chinese policy advisors recently told MNI. (See MNI: Chinese Firms To Raise U.S. Prices If 10% Tariff Imposed)
WTO
China’s action to file a case against the U.S. at the World Trade Organisation shows Beijing’s commitment to the international rules-based multilateral trade system, said Wang Dong, executive director at the Institute for Global Understanding at Peking University.
But bilateral engagement and balanced trade would be in the interests of both sides, Wang added, noting Vice Premier Ding Xuexiang’s recent comments at Davos that Beijing was not seeking a trade surplus.
“Leaders in Beijing would be open to a deal similar to Phase One, but it requires sincere efforts from Washington to make it work,” Wang said.
White House officials have indicated a Xi-Trump call could happen this week before China’s countermeasures take effect on Feb 10.
FENTYNAL
Chances for a new agreement on fentanyl flows, which Trump accuses China of not doing enough to control, remained low given China had already done everything in its power to control illegal trafficking, Dong said.
“China has previously implemented U.S. suggestions to tighten control, meaning the issue is now an internal matter for the U.S. to deal with,” Dong added.