US may find visible and invisible trade barriers with China increasing as tariffs drop for rivals

By Hu Weijia Source:Global Times Published: 2018/6/28 22:53:40

If US President Donald Trump continues to drag the US into a trade war with China, we cannot rule out the possibility that China might fine-tune its foreign trade policy by announcing differential tariffs against imports from different countries.

China said on Tuesday it will cut import tariffs on soybeans from India, South Korea, Bangladesh, Laos and Sri Lanka starting July 1, after the country announced in April that it plans to levy a 25 percent tariff on imports of US soybeans.

Besides soybeans, Beijing announced a long list of tariff cuts, at a time when China's retaliatory tariffs targeted a long list of products imported from the US.

It seems China is adopting a more flexible trade policy amid the ongoing trade skirmish with the US. China might need to break the shackles of its old ideas that allow most of its trade partners to enjoy the same tariffs.

If trade frictions between China and the US continue to escalate, a differentiation strategy is needed to help China win the trade war.

Tariffs are not the only tools that can be used. While the China-US Bilateral Investment Treaty (BIT) came to a deadlock amid the ongoing trade conflicts, positive progress has been made in talks on a China-EU BIT.

The talks were launched in 2013 to fully tap into the potential of bilateral investment between China and European countries.

Removing invisible investment barriers has been a key to the Chinese government's push to improve its investment climate for foreign companies. However, it may be time to adopt a differentiation strategy which allows China to increase the flexibility of its foreign economic policy. China can increase invisible investment barriers for US companies doing business in China as countermeasures, but that won't stop the country from further opening its domestic markets to other countries at different speeds to make US allies more divided.

In the 1980s and 1990s, China's talks with different countries over its economic opening-up were mutually exclusive. However, China's accession to the WTO in 2001 was a milestone in China's economic reform, because the country now acts under a unified policy toward all of its trade partners. Now, China may have to return to the differentiation strategy amid the ongoing trade frictions as Trump shows disdain for multilateral trade agreements and turns the US into a destroyer of the global order.

The author is a reporter with the Global Times.


blog comments powered by Disqus