Trade probe is Trump's bargaining chip to pressure China

Source:Global Times Published: 2017/8/15 23:38:39

US President Donald Trump signed a memorandum Monday that directs US trade representative Robert Lighthizer to investigate whether China is involved in forcing foreign companies to transfer technology in exchange for being allowed access to the Chinese market and whether China stole US intellectual property rights. Trump said this is "a very big move" and "just the beginning."

It is believed that Trump would provoke China over trade issue sooner or later. Trump attaches great importance to the domestic economy and he stubbornly believes that the biggest domestic woe is caused by external economies such as China. During his campaign, he made the electorate believe he could easily solve this issue, and now it is time to fulfill his promises.

The US economy is highly marketized. The distribution and the pattern of international industries in this globalized era are decided by the market. A US president has no ability to adjust the global industrial pattern at will. Trump, six months into his presidency, should already understand the limits of his administration.

After Trump took office, he did not announce right away that China is a currency manipulator, nor did he impose punitive tariffs on Chinese products. The investigation into China's alleged unfair trade practices will last about one year. Generally, Trump has softened his China policy, but he has kept US pressure on China so he could gain the upper hand while bargaining with China.

The US launched a Section 301 investigation against China in 1991, 1994 and 1996 respectively. Each time, the two reached a compromise eventually and avoided a trade war. This was all before China had joined the WTO. If the US uses Section 301 to sanction China, the move is even more illegal and rule-breaking.

Now it is hard to predict how far the US investigations will go and what the conclusions will be. The US will collect a number of bargaining chips and ask China to pay the bill. China needs to adopt detailed countermeasures to cope with US artifice.

Beijing should consider anti-monopoly and anti-dumping investigations into US companies and collect evidence of the US' unfair competition. In addition, China should plan retaliatory precautions in the export sectors the US cares about the most, including agricultural products and automobiles.

Trade competitiveness must be kept under the WTO framework. The use of Section 301 is the US' arbitrary move to impose pressure on others through its national strength. The more often Section 301 is launched, the more the US will lose its competitiveness.

The US' investigations this time will touch upon China's trade management system. But there is no distinction between China's governing style and that of the US. It is absurd that Washington requires Beijing, its equal partner, to follow its commands.

The current Sino-US trade pattern was formed through decades of efforts. A full-blown trade war is no less than a revolution. The US system determines that it is not capable of tackling such a revolution. The scale of the Chinese market is expanding and China has a solid foundation of trade. As long as we prepare for the worst-case scenario, China should be confident about this game.

Posted in: EDITORIAL

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