China Braces For Trade War With US, Accuses Washington Of "Repeatedly Abusing" WTO Rules

The White House is preparing to unveil $50 billion worth of tariffs on more than 100 different types of Chinese goods Thursday at 12:30 pm ET - what President Trump has characterized as a response to China's larcenous Intellectual Property practices (and, quite possibly, a preemptive strike as China prepares to launch its petroyuan contracts next week).

This is how UBS' Chief US Economic Paul Donovan summarized what is coming:

US President Trump is expected to announce a tax increase for US consumers who have dared to purchase goods that have been partially made in China. There is likely to be a large US flag, suitably photogenic and smiling American workers and a dramatic signature. And selective tariffs, investment restrictions and visa limits.

US Trade Representative Lighthizer said that an "algorithm" was used to maximize the pain to China and minimize the pain to US consumers (this acknowledges that there is pain for US consumers). Trade data (presumably the algorithm input) is complex and often out of date. Saying the word "algorithm" in an authoritative voice does not magically reduce the risks.

The tariffs will be imposed under Section 301 of the 1974 US Trade Act and focus on Chinese high-tech goods. There will also be restrictions on Chinese investments in the US, said US Trade Representative Robert Lighthizer. China's apparel industry may also be hit. For years, China has forced US companies to turn over valuable source code and other intellectual property as the price of gaining entry to one of the world's "most lucrative developing markets." But Trump and his protectionist allies have argued that this is a blatant violation of WTO rules.

China

Back in August, Trump ordered the Commerce Department to launch an investigation into Chinese trade practices under Section 301 - which was regularly invoked by the Reagan administration to punish Japanese exporters.

Meanwhile, as China prepares for a full-fledged "trade war" with Washington, the leaders of the world's second-largest economy are seeking to shore up support for their position from other nations and world trade bodies. China has zeroed in on US export caps as one reason for the widening trade deficit between the world's two largest economies.

Chinese Foreign Ministry spokeswoman Hua Chunying said it was unfair to criticize China's trade practices if the United States won’t sell to China what it wants to buy, referring to US export controls on some high-tech products, per Reuters.

"How many soybeans should China buy that are equal to one Boeing aircraft? Or, if China buys a certain number of Boeing aircraft shReutersould the U.S. buy an equal number of C919s?" Hua said, mentioning China’s new self-developed passenger jet.

However, China still hopes it can hold constructive talks with the United States in a spirit of mutual respect to seek a win-win solution, she added.

US agricultural exports to China stood at $19.6 billion last year, with soybean shipments accounting for $12.4 billion. Chinese penalties on US soybeans will especially hurt Iowa, a state that backed Trump in the 2016 presidential elections and is home to US Ambassador to China Terry Branstad.

Boeing could also find itself in China's crosshairs, particularly as the country's aerospace program is seeking to develop the C919 as a domestic rival to Boeing's jets.

Boeing, which has the biggest market share in China of any aerospace company, said last year it expects China to buy more than 7,000 Boeing jets worth some $1.1 trillion over the 20 years between now and 2036.

Chinese officials repeated threats that their retaliation would be swift.

"With regards to the Section 301 investigation, China has expressed its position on many occasions that we resolutely oppose this type of unilateral and protectionist action by the U.S.," the Commerce Ministry said on Thursday.

"China will not sit idly by while legitimate rights and interests are hurt. We must take all necessary measures to firmly defend our rights and interests."

Jacob Parker, Beijing-based vice president of China operations at the US-China Business Council, said the group wanted to know what action the US administration wants China to take to improve protection for intellectual property, and over forced technology transfer.

Parker said China needs to adopt a tougher deterrent against counterfeiting and IP theft, and do away with joint venture and business licensing requirements that can be used to mandate technology transfers to gain market access.

"It’s really important for them to lay that out so that we have a strategy going forward and it’s not just tariffs for tariffs’ sake."

China celebrated a WTO decision, released Wednesday, declaring Obama-era anti-subsidy tariffs illegal under WTO rules as validation of its claims:.

"The Chinese side never wants to fight a trade war with anybody, but if we are forced to, we will not hide from it," Foreign Ministry spokeswoman Hua Chunying warned on Wednesday. Beijing will "definitely take firm and necessary countermeasures to defend its legal rights," she said, as quoted by China’s Global Times.

Meanwhile, the Commerce Ministry said in a statement that Vice-Minister Wang Shouwen had slammed Trump’s new wave of protectionism at an informal meeting of ministers from 50 World Trade Organization (WTO) member-states in India earlier this week.

"Trade restriction measures will not only hurt the global trade order but also cause serious damage to the multilateral trade system," Wang said, urging all countries to "support the global multilateral trade system and defend the authority and effectiveness of WTO rules."

The Commerce ministry welcomed Wednesday’s WTO ruling against Obama-era anti-subsidy tariffs on Chinese goods. The decision "proves that the US side has violated WTO rules, repeatedly abused trade remedy measures, which has seriously damaged the fair and just nature of the international trade environment and weakened the stability of the multilateral trading system," the statement said.

China's shift to a consumption-based economy has made it less dependent on exports - so the $50 billion tariffs imposed by the US likely won't have much of an impact. But Moody’s Investors Service said the impact would be far greater if the US significantly expands tariffs and throws in broad-ranging protectionist measures.

If that comes to pass, China could retaliate against US companies, cancelling orders for Boeing planes and nixing a pending deal for Qualcomm to acquire NXP Semiconductors. It could also foil Tesla's push to build a factory on the mainland.

But as China hopes an amicable solution might be worked out, the boost to Trump's popularity since announcing the steel and aluminum tariffs (which are incredibly popular among ordinary working Americans, even as they've turned pundits and "experts" apoplectic with rage) has emboldened him to seek a more aggressive tack.

And now we wait for Trump's official launch of trade war with China just after noon.

Comments

gdpetti Offthebeach Thu, 03/22/2018 - 10:42 Permalink

Petro is old school... the NWO doesn't need it to fuel the machines. All of this is old empire politics... China is starting to take the helm away from us and we are acting just like Britain when the same happened to them.. though there is a racial issue involved here, the basic dynamic is control of the system, the helm of global goverance... our time is quickly coming to an end.. The Art of War has China and especially Russia, trying to avoid unnecessary conflict with an enemy seeking excuses to go to war... which has always been our end-game scenario leading up to our current moment in time... the end of the OWO and the coming out party for the NWO... which has always been the same SG behind the curtain here in Oz.

Everyone everywhere will use whatever fiat is the fiat of the land... same with universal language.. currently English... that language will go on without us or Britian, Australia etc... by simple rules of ease of use and spread/domination.... China's Xi is trying to stay in the shadows, but is slowly being drawn out onto the main stage... Putin's been there from his start... and like the rest of us, has learned the truth as he's been subjected to our BS... look at the Brit's Parliament hearings the other day.. total farce... and anyone paying attention can easily see it... same with FB/Google et al recently as all their games are exposed/outed... same with intel ops like the school shootings, etc... all herd control even as the culling has begun for the main event as Mother Nature swings on in... and game over... Doesn't Xi know this? that's the real question... does any of these politicians realize WTF is approaching and why? They act as if they don't, but most all of them are expendable... same with the herd..

In reply to by Offthebeach

Gaius Frakkin'… Trumpury Clinton Thu, 03/22/2018 - 08:15 Permalink

Am I a bigot for not wanting White women to spread their legs for niggers wholesale? You bet I am.

A woman just fucks whatever reminds her of the messiah, alpha dog, or whatever. That's why so many little obamas were created between 2008 and 2016.

The world is way more complicated than some liberalist prick can possible comprehend. Probably because most of them have never held onto a woman for very long.

Tribalism is the new thing. Nationalism is just a consequence of it. Better get use to it.

In reply to by Trumpury Clinton

107cicero Thu, 03/22/2018 - 08:06 Permalink

China is the world's largest economy, has been since 2014.  This article is incorrect.

One must measure GDP by PPP-Parity price  as how much one's currency can buy in goods in its own economy..  The IMF measures economies this way.

Go to wikipedia for China it will show$25 trillion PPP where US is $19 trillion.

Come on zerohedgers you guys should KNOW this!!!

rwe2late shovelhead Thu, 03/22/2018 - 09:20 Permalink

there's a relationship:

we called up the Bureau of Economic Analysis that publishes the GDP statistics. I asked what happens when the credit card companies make more money on penalties than they make in interest. ...

The answer they gave us was: “That’s not interest. We count that as a financial service, and financial services are an addition to GDP.” So all the added penalties that people pay for falling behind in their debts for arrears are counted as a growth in GDP – as economic growth!

https://www.counterpunch.org/2018/03/22/modern-day-debtors-prisons-and-…

 

In reply to by shovelhead

Brazen Heist Thu, 03/22/2018 - 08:19 Permalink

The US abuses its power when ever the fuck it feels like it, so any credibility about a "rules based" international "order" is virtually non-existent.

Rules based? Oh you mean our rules! Yeah, we don't even follow them either.

Thanks for cooperating, chumps.

HushHushSweet Thu, 03/22/2018 - 08:22 Permalink

China should thank its lucky stars (and the Rothschilds) that its even in the WTO.

It tried for 15 years to get membership, but was repeatedly declined due to human rights abuses. The US was particularly adamant against allowing China into the WTO.

Then, just like magic, less than a week after 911 (and seemingly out of the blue), China got its membership on September 17, 2001, despite admitting to ongoing human rights abuses.

And now, 15 years later, it's lecturing the US on how it should conduct its business.

Where there's a Rothschild financial headquarters, there's a way.

http://usa.chinadaily.com.cn/business/2012-11/28/content_15966078.htm

http://www.blakkpepper.com/2016/05/400-chinese-billionaires-and-rothsch…

 

 

 

 

107cicero HushHushSweet Thu, 03/22/2018 - 09:15 Permalink

I remember how China got into the WTO.  When the US was planning ofr the invasion of Afghanistan, the Chinese had garrisons in eastern Afghanistan.  Two divisions of them.  The US agreed to stop thier veto of WTO if they withdrew their troops..  Don't you remember seeing all those caves with Chinese ammo and rifles on TV?

 

China withdrew their soldiers and the rest is history.

 

US gets out maneuvered one more time!!

In reply to by HushHushSweet

rwe2late 107cicero Thu, 03/22/2018 - 09:49 Permalink

 China did supply and train Afghan insurgents during the Soviet occupation.

But your claim that "two divisions" of Chinese troops were in Afghanistan prior to the USA invasion is not credible. And further, they withdrew as part of a WTO deal?

(Unless of course you can supply a credible link. I could not.)

In reply to by 107cicero

Joe A Thu, 03/22/2018 - 08:23 Permalink

Trade deficits are usually bad for a country because why import if you can produce yourself and why import if you can export? That being said, US life styles, but also China's and other countries' exports, were subsidized by the world paying in dollars and by the world buying American bonds, stocks and debts. China's rise can be contributed to globalization and the fact they subsidized their exports by buying dollars and US bonds and used their cheap labor to gain a competitive advantage. China and the world might however just stop paying in dollar and buying American bonds, stocks and debt if the 'reward' of exporting to the US falls away.

And America might find problems producing stuff themselves for they would turn out to be too expensive to produce or to export.

The tariff measures are clearly aimed at reducing China's rise as an economic and military powerhouse.

Cardinal Fang Thu, 03/22/2018 - 08:23 Permalink

I'm sorry, did I miss that $1.1 trillion order for 7000 Boeings?

Yeah, right, at the same time the ChiComs are building out their own airliner...

this is the same globalist bullshit that got GE into trouble...

Any predictions that Boeing will even be around in 2036?

I mean, unless we have WWIII, then Boeing will be golden...

Econogeek Thu, 03/22/2018 - 10:00 Permalink

"... the $50 billion tariffs imposed by the US likely won't have much of an impact." 

and "... the steel and aluminum tariffs (which are incredibly popular among ordinary working Americans, even as they've turned pundits and "experts" apoplectic with rage)... "

The soybean tariffs will be particularly tough for China, since Brazil is having a massive drought and since Chinese imports of US soy are so huge -- it's hard to diversify suppliers on short notice without spiking the prices you'll pay when everyone knows you're desperate for supply.  Chinese middle class will see increasing prices for meat, not pleasant for social cohesion.  The seriousness of this for China can be incomprehensible to well-fed Americans.

If we are actually going to make it harder for China to steal intellectual property, that would be HUGE for both of us, big implications for relations.  I'll believe it when I see it.

This article is full of misinformation, assertions presented as analysis, and spin. Since when do Tylers post this kind of thing?  Why is trade something the Tylers seem to have lost their grip on?

Herdee Thu, 03/22/2018 - 10:35 Permalink

Trump's strategy is to circle the wagon. In other words he'll agree to NAFTA with Canada and Mexico if they go along with him on his position on Chinese tariffs and then he exempts Europe as long as the EU goes along with tariffs on Chinese goods as well.