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Free AccessREPEAT:Minor US Trade Sanctions on China Possible, Experts Say
Repeats Story Initially Transmitted at 09:56 GMT Aug 7/05:56 EST Aug 7
BEIJING (MNI) - A possible investigation that could lead to trade sanctions
on China by the U.S. may be postponed amid the two countries' stronger
cooperation on Korean peninsula denuclearization and objections from the U.S.
business community, although some China trade experts interviewed by MNI believe
small-scale sanctions are possible in the future.
As one of the most interconnected bilateral trading partnerships, the
U.S.-China relationship seems to have cooled slightly, and analysts interviewed
by MNI said conflicts may continue to emerge between the two, especially with
President Donald Trump in the White House.
"Trump was a businessman and his policies tend to be negotiable, so they
usually could change fast and with uncertainties," Liu Yingkui, director of the
China Council for the Promotion of International Trade, said in an interview
with MNI on Monday. "He wants to bargain, but may not take real actions."
On Saturday, 15 United Nations Security Council members voted unanimously
on a U.S.-drafted plan to place sanctions on North Korea. Trump applauded the
votes from China and Russia and tweeted that the sanctions would be "the single
largest economic sanctions ever on North Korea," with "a very big financial
impact."
The Security Council resolution would ban exports of coal, iron, iron ore,
lead, lead ore and seafood from North Korea, which is expected to reduce its
exports by around $1 billion annually -- equal to a third of North Korea's
annual export revenues. The sanction plan also prohibits countries from
increasing the number of North Koreans working abroad.
The announced sanctions came a few days after the press reported the Trump
administration was considering a plan to investigate what it said was China's
"unfair" trade practices.
The investigation was to focus on China's intellectual property violations
and its forced technology transfers from U.S. companies as a requirement to do
business in China. It was regarded as a response to China's lack of effort in
reining in North Korea's nuclear weapons ambitions, and could have lead to
sanctions on some Chinese companies and sectors.
But Politico cited unidentified sources as saying that the investigation
was postponed, with no date rescheduled. CNBC and the South China Morning Post
also reported that several U.S. government bodies, as well as various business
sectors, including the agricultural industry, had objected to the plan.
The investigation would have been conducted under Section 301 of the Trade
Act of 1974, which allows the president to take unilateral sanctions such as
increasing tariffs and placing restrictions on specific Chinese sectors.
"These kinds of trade conflicts are normal," Liu said. He said a trade war
is not likely to happen between China and the U.S. because it does not fit into
their "global strategies," adding that it would end up hurting both countries,
with China likely to retaliate as it has done in past instances.
Liu called for equal dialogues between the two countries.
"The huge trade imbalance has existed for a long time," Liu said. "And it
is a result of the mutual complement of industrial structures in China and the
U.S. The U.S. should not use this as an excuse to impose unfair trade
sanctions."
But Yu Miaojie, economics professor at Peking University's National School
of Development, who specializes in international trade and China's economic
development, told MNI that Trump is eventually likely to create sanctions under
Section 301.
"Sooner or later, the U.S. would impose partial sanctions on its trade with
China," Yu said. "I don't think it's related to the North Korean problem. Even
if [the North Korea problem] did not exist, Trump would take some action when he
sees a trade deficit, and it fits into his usual way of doing things."
Yu said Trump's possible sanctions on China would be "purely economic
measures" and would be similar to sanctions he put on Canada in April --
imposing stiff tariffs of up to 24% on Canadian softwood lumber.
As a reaction to China's huge trade surplus and the Trump administration's
dissatisfaction with the results of the 100-day action plan between the two
sides, Trump's possible sanctions on China trade would be unfair and
unreasonable, Yu said, adding that China has not aimed for a huge trade surplus
as it does not necessarily benefit the country.
"A trade deficit means a nation borrows money from another country with a
trade surplus, just like ordinary people borrow money using their credit card
for consumption," Yu said. The U.S.-China trade imbalance, he said, results from
different strengths and the different economic structures of the two countries.
As to Trump's tweet on July 29 claiming China does "nothing" in achieving
denuclearization of North Korea and "China could easily solve this problem," Liu
said Trump's attempted connection between the Korean peninsula issue with
U.S.-China trade is "unreasonable."
China Ministry of Commerce Spokesman Gao Feng stressed the importance of
the U.S.-China trade partnership last Thursday at a press briefing. He said that
China is willing to continue to cooperate and work with the U.S., but that any
World Trade Organization member should obey WTO rules in its trade actions.
But whether or not trade sanctions are on the horizon, "U.S.-China trade is
not in for smooth sailing," Yu said.
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
To read the full story
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Please enter your details below.
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.