The US-China trade war has developed into a surreal conflict between the world's two-largest economies. Photo: iStock
The phase one trade deal between China and the United States is looking rather thin on detail. Photo: iStock

Invoking images from the Hollywood gangster genre, Wang Shouwen warned that China would never surrender to “cut throat” diplomacy in the trade war with the United States.

Whatever the costs.

Speaking at a news conference in Beijing, the vice-minister of commerce made it clear Beijing would not buckle under pressure after Washington imposed another round of tariffs on Monday worth US$200 billion.

Talks, he also insisted, were a waste of time until President Donald Trump’s administration backed off from confrontation and opened a conversation based on “equality” and “mutual respect.”

“Now, that the US has adopted this type of large-scale trade restrictions, they’re holding a knife to someone’s throat,” Wang said on Tuesday. “Under these circumstances, how can negotiations proceed?”

Twenty-four hours earlier, President Xi Jinping’s government had rolled out an extensive white paper, condemning the White House for starting a new economic Cold War.

“Intimidation” and “bullying” were words frequently used to describe Washington’s hardline stance.

“[The US] has brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China,” the government document stated in a Xinhua report.

‘Economic measures’

“It has intimidated other countries through economic measures, such as imposing tariffs, and attempted to impose its own interests on China through extreme pressure. The key, however, lies in how to enhance mutual trust, promote cooperation and manage differences,” the white paper concluded.

All three elements are in short supply. Already Trump is planning to wheel out tariffs on the remaining Chinese imports worth approximately $267 billion. Effectively, that would hit nearly 20% of all exports from the world’s second-largest economy.

To help manufacturers being frozen out of the US market, Beijing has announced plans to reduce taxes and trim costs for exporters.

“We will actively take all types of measures to help companies resolve their difficulties,” Luo Wen, the vice-minister of Industry and Information Technology, told the Chinese media.

Still, a more proactive approach should be pursued to bring Washington back to the negotiating table.

Bai Ming, the deputy director of the International Market Research Institute at the Ministry of Commerce, has suggested that US companies doing business in China should be targeted.

“I think for US investment that only aims to reap profits from China without a tangible contribution in employment or technologies to the domestic market, the government can be harsher,” Bai told the state-run Global Times.

For Team Trump, this goes to the very heart of the argument about “forced technology transfers” and widespread “violations of intellectual property rights.”

US Trade Representative Robert Lighthizer has been particularly hawkish on the subject, fueling Beijing’s neurotic belief of a clash of civilizations, favored by the state-run media.

‘Technology transfers’

At times, Lighthizer has been outspoken, but he certainly holds sway at the Court of The Donald.

“We have had long-standing problems with China about technology transfers and cyber theft at the expense of the American economy,” he told Fox News. “We plan to stop forced technology transfers.”

Naturally, Beijing has dismissed these claims.

In response, the US could point to the European Union, which also has a problem with IP property rights in China, as well as other key issues.

Both the US and EU are concerned in varying degrees about the impact of the “Made in China 2025” policy and the highly-contentious Belt and Road Initiative.

Coupled with a ballooning trade deficit which hit a record $375.2 billion last year, the US is expected to dig in for the long haul.

Expect more “cut-throat” diplomacy in the months ahead.

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