US-China trade war is bad news for Beijing. Illustration: iStock
China's trade surplus with the United States has widened during the pandemic. Illustration: iStock

Everybody needs a friend. Spooked by the trade dispute with Washington and the threat of tariffs worth US$34 billion on an array of Chinese imports on July 6, Beijing is scrambling around for allies.

It is also preparing for a full-blown “conflict” on the economic front after a leaked document “purportedly sent to” state-run “media outlets” was published by China Digital Times and reported by Asia Times.

“All media should prepare for [a] protracted conflict,” the document stated. “Don’t follow the American side’s fluctuating declarations. Play down the correlations between the stock market [slump] and trade [dispute. And] do not make further use of ‘Made in China 2025,’ or there will be consequences.”

The depth and scale of what can only be described as a propaganda notice underline China’s concerns as tensions escalate amid signs of a slowing economy from manufacturing to retail and investment.

Yet as the clock ticks down to President Donald Trump’s expected
T-Day announcement, Beijing has been making overtures to the European Union, which has also been targeted by the US, to bolster its case.

‘Trade policies’

Media reports suggest that President Xi Jinping’s administration has put “pressure on the European Union to issue a strong joint statement against” American “trade policies.”

“In meetings in Brussels, Berlin and Beijing, senior Chinese officials, including Vice-Premier Liu He and the Chinese government’s top diplomat, State Councillor Wang Yi, have proposed an alliance between the two economic powers and offered to open more of the Chinese market in a gesture of goodwill,” Reuters reported.

“But the European Union, the world’s largest trading bloc, has rejected the idea of allying with Beijing against Washington, five EU officials and diplomats [said] ahead of a Sino-European summit in Beijing on July 16-17,” the news agency added.

Offers of increased market access to the world’s second-largest economy would certainly have been discussed. But Brussels has become wary of such moves with the EU Chamber of Commerce in China complaining of “promise fatigue.”

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In its annual confidence survey of companies, the EUCCC reported that doing business in the country had become more challenging during the past year as firms face regulatory barriers, market-access restrictions and unequal treatment.

“The European Chamber urges China to follow through on its promises of reform and opening-up that have been repeatedly stated since President Xi’s speech to the World Economic Forum in January 2017,” the business group, which represents more than 1,600 foreign firms, stated in the report.

“While some of these pledges have been written into legislation, European companies have yet to see much real concrete implementation,” it added.

The EU is also involved in a World Trade Organization row with China in Geneva concerning intellectual property rights infringements, another key plank of Washington’s trade spat with Beijing, as well as the “Made in China 2025” policy.

Phenomenal rise

Still, China considers it is being used as a scapegoat because of its phenomenal rise in the past 20 years and is preparing for a long, drawn-out battle, despite a slowing economy fueled in part by Beijing’s war on corporate and local government debt.

These “perceptions” were echoed by the state-owned Global Times, which is run by the official Communist Party’s newspaper, the People’s Daily. In a wide-ranging editorial, it asked:

“Is the world on the eve of chaos? It appears so. The global trade war that US President Donald Trump threatens has become increasingly likely. This will change the world’s perception on global order and 21st-century international relations and, eventually, cause a series of domino effects.

“The trade war has its origins and Trump is not the only one behind it. West-led globalization has brought about some unexpected changes, among which [is] the rise of emerging markets such as China and India. Washington believes that these changes have undermined its absolute advantages and thus wants to unilaterally rewrite global economic rules on a large scale.”

Even though the mood music has stopped, the rhetoric continues.

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