Sino-US relations seemed solid enough last November, when Donald Trump was delighted by his lavish “state visit-plus” to Beijing. He also came home with $250 billion worth of deals (see WiC387).
But Washington’s relationship with Beijing soon began to deteriorate. Less than two weeks after Trump’s trip his administration told the WTO that it opposed the granting of market economy status to the Chinese. A month later a national security report labelled China as a “strategic competitor” and a number of takeovers of American firms by Chinese entities were blocked over security concerns.
Now a trade war is brewing. On Monday, the Chinese government flagged the suspension of tariff concessions on 128 types of US imports, mostly agricultural products including pork and fruit. But it classed the move as “a countermeasure” to tariffs on Chinese steel and aluminium imports first announced in early March. In a rapidly worsening environment President Trump this week threatened tariffs on up to $60 billion of Chinese imports after allegations of “forced technology transfer” and “cyber theft” (WiC402).
Both sides are talking tough. “We don’t want a trade war, but we are not afraid of it. If someone insists on starting a trade war, we will fight till the end,” a Chinese foreign ministry spokesman reiterated on Tuesday.
The question now is whether the US president will translate his executive order into action and impose 25% tariffs (under Section 301 of trade laws). This week his administration published a long list of imports that could be hit with American sanctions. Many of the targeted items, according to Washington, are products that benefit from Chinese industrial policies, including “Made in China 2025”, a plan for a technical upgrade of the country’s economy.
While Washington is taking aim at China’s tech ambitions, Beijing might have identified an Achilles heel for American imports: garbage.
On March 23 at a WTO meeting, American officials expressed concerns (again) over China’s decision to refuse imports of foreign trash, reiterating that the sanctions are causiing disruptions across the global recycling industry. China has banned the import of 24 types of solid waste since the beginning of this year on environmental grounds. However, the move has upset a number of other nations, particularly those that rely heavily on the Chinese to take their waste (see WiC383).
The Chinese have called the complaints “hypocritical”.
“Could it be said that US restrictions on its export of high-tech and high value-added products to China are legitimate, while China’s lawful restrictions on the import of foreign rubbish are illegal?” a foreign ministry spokesperson said last month.
According to Sohu Finance, the US exports a third of its waste and 40% of it previously ended up in China. The ban means many domestic dumps are now overflowing.
“This shows exactly how a trade war is going to hit the Americans,” one netizen responded.
“Should I feel proud or ashamed?” another asked of the notion that recycling US rubbish could turn out to be negotiating leverage for the Chinese.
On Wednesday Sino-US friction moved back from trash to tariffs as Beijing escalated its threats – unveiling plans for 25% tariffs on an additional range of American goods, including soybeans, whiskey, cars and planes.
The hope is that both sides are posturing and that they will pull back from the brink of a fuller confrontation. State news agency Xinhua suggested that the latest measures will only be implemented if the US government acts on imports from China, for instance, and Larry Kudlow, a television personality who is now one of Trump’s senior economic advisors has also called for calm.
“There’s no trade war here. What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already backchannel talks going on,” he told American TV.
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