Indiscreet moves by Washington harmful to bilateral ties, global economy

By Zhang Zhixin Source:Global Times Published: 2018/3/4 21:23:40

Illustration: Liu Rui/GT

Liu He, a member of the Political Bureau of the Communist Party of China Central Committee and director of the General Office of the Central Leading Group for Financial and Economic Affairs, visited the US from Tuesday to Saturday. Before him in early February, State Councilor Yang Jiechi paid a visit to the US during which he met US President Donald Trump and Secretary of State Rex Tillerson. Liu made this critical visit when China-US trade ties became delicate, with implications for the bilateral relationship in 2018.

Tensions in Sino-US trade ties have flared up recently. According to US statistics, the US trade deficit with China climbed to $375 billion in 2017, enraging Trump. The president said "We've developed a great relationship with China, other than the fact that they've been killing us on trade for the last long period of time ... killing us, absolutely killing the US on trade" at a joint White House news conference on February 23. A report to Congress on the president's trade agenda by US Trade Representative Robert E. Lighthizer on Wednesday vowed to use "all available tools" to combat unfair practices and to defend US national interests against "hostile" powers such as China and Russia. Trump announced on Thursday he would impose hefty tariffs on steel and aluminum products from countries including China.

Meanwhile, Washington has been seeking to expand the jurisdiction of the Committee on Foreign Investment in the United States against acquisition by Chinese companies citing the excuse of national security. The committee rejected the $1.2 billion proposal of Chinese company Ant Financial to acquire US money transfer company MoneyGram International Inc in January over concerns that the data can be used to identify US citizens. It also blocked the $580-million sale of Xcerra, a US semiconductor company, to a Chinese fund, citing national security concerns.

The US deems threats from China a critical issue. While Trump railed against China's "theft" of US intellectual property, Washington has recently turned the focus of its trade policy on China to investigating the latter's intellectual property system.

More importantly, Washington now thinks that engagement by previous administrations with China has failed and allowing China's accession to the World Trade Organization was a serious mistake. In Washington's eyes, China shows no interest in a full transition to a market economy. While US strategic circles used to define Sino-US relations as coexistence of competition and cooperation, the Trump administration tends to see the ties through the lens of competition. As a result, the US now prefers confrontation in its economic and trade policy and doesn't want to solve disputes through dialogue and consultations.

Trump's planned hefty tariffs on steel and aluminum products cast a shadow on Liu's visit. As US imports of steel and aluminum from countries like China, Canada and Russia are mostly lower end for civilian use, they won't jeopardize its national security. In fact the US has levied hundreds of anti-dumping and countervailing duties on imported steel and aluminum products to excessively protect US products. This will backfire, and the US may be shooting itself in the foot. China launched an anti-dumping and anti-subsidy investigation into imports of US sorghum on February 4 and the EU plans to respond to US trade tariffs with countermeasures.

Liu visited the US in the sincere hope of restarting bilateral economic and trade dialogue and easing tensions. This deserves more thought from the US. Given the high level of economic interdependence between China and the US, any indiscreet move from Washington may bring grave consequences to bilateral ties and the global economy.

The author is a vice research fellow with the institute of American Studies at the China Institutes of Contemporary International Relations.

Posted in: VIEWPOINT

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