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Free AccessMNI EXCLUSIVE: No China Tit-For-Tat On New US Moves: Advisors
China Likely To Shrug Off Economic Measures, But Geopolitical Moves Could See Response
China will hold off responding to further economic sanctions from the outgoing U.S. administration, believing that Beijing is not the intended target for President Donald Trump's actions, according to policy advisors to Beijing.
"I think we don't need to respond to everything this government (Trump administration) does, but think about the relationship in the long-term. China and the United States need to co-exist with each other in the long-run," said Lv Xiang from the Chinese Academy of Social Sciences and an expert on U.S.-China relationships.
Shi Yinhong, a U.S. expert at Renmin University and an advisor to the state council, along with two other advisors requiring anonymity, also thought it unlikely China would pursue tit-for-tat punishments, especially as Beijing is effectively dealing with a caretaker government.
CORPORATE SANCTIONS
Washington recently announced sanctions on 31 Chinese companies, banning U.S. companies and individuals buying their securities, claiming they are controlled by China's military.
The ban targeted many market-oriented state-owned enterprises, including China Mobile and China Telecommunications which are listed in Hong Kong, and Sinochem, which has subsidiaries listed in the U.S. But advisors said the move aims at setting up the incoming Democratic Biden administration rather than actually targeting China, saying the move bears some similarities to the ban on WeChat and TikTok".
MNI has reported previously that China may not formally utilize its unreliable entity list to hit back the U.S. government's sanctions against Chinese technology companies including Huawei and SMIC. The current no-tit-for-tat reaction from China would be a continuation of that policy.
"In the next 60 days, it is quite possible that Trump may have more petty moves in terms of the economy," another policy advisor predicted.
REVERSABLE
Though the bans and tariffs may be reversed when Biden takes office, advisors now think it may not happen straightaway as such a softened stance toward Beijing would be difficult.
Advisors are now concerned over other possible U.S. moves against Taiwan or Hong Kong which may further sink the relationship.
"These moves would hurt China's sovereignty interests and China will definitely hit back then," Lv said.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.