China calls bluff on Trump’s trade warning

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19 Jan, 2018

China calls bluff on Trump’s trade warning

President Donald Trump’s warning regarding China’s trade practices is being taken with a pinch of salt in Beijing, with many officials believing Washington is unwilling to upset the trade dynamics between two of the world’s largest economies, Reuters reports.

However, the relative calm in Beijing is contrasted greatly against members of the US business community, many of whom are citing a growing gulf in communication between the two trade giants.

In fact, such is the concern, a US business delegation recently travelled to Beijing to warn senior Chinese officials that time is running out. “Dialogue is a shadow, a shell, a trickle of what it was, particularly on the economic and commercial issues”, said one US industry source who attending the delegation.

In the past, President Trump has criticised China’s trade practices, challenging their use of what he calls “unfair subsidies” and “non-economic” industrial policy. The Trump administration launched several enquiries last year against China, including a trade probe into cheap Chinese steel entering the US market.

The results of many of those enquiries ate seen as imminent. In fact, during an interview with Reuters on Wednesday, Trump warned of potentially "big damages" against China as a result of the intellectual property inquiry under Section 301 of the Trade Act of 1974.

Meanwhile, the US business delegation that travelled to Beijing also warned that that trade frictions "are not under control" and that there was a high likelihood of "significant actions" coming soon.

Former US Treasury undersecretary for international affairs in the Bush administration, Tim Adams said that the question lies in who who controls intellectual property and how you protect it.

"The question is, how do you use a scalpel to respond to it, and does the scalpel actually change behaviour because it's a scalpel and not a sledgehammer," said Adams, who now leads the Washington-based Institute of International Finance.

On Sunday, China's state-run Global Times said: "Politically, the administration of President Donald Trump can't afford to see China-U.S. economic and trade ties become strained. China is more resilient to a trade war".

In fact, even if Trump does impose “targeted tariffs, as some predict they would likely amount to just a few percentage points of the more than $600 billion annual goods and services trade

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