A spurt of US trade sanctions on China has raised the prospect of an all-out trade war but experts believe cool heads will prevail as the stakes are simply too high for the two powers.
Egged on by a Democratic controlled legislature seeking strong action against Beijing over the US' burgeoning trade deficit, President George W. Bush's administration has thrice in the last three months dragged China to the WTO, the Geneva-based global trade watchdog.
The last two high-profile actions by Washington over China's copyright infringements and market access barriers announced on Monday drew a stark warning from Beijing that they would damage trade relations.
The actions came 10 days after the Bush administration made a landmark ruling to impose penalty tariffs on Chinese products that allegedly receive an unfair boost from government subsidies.
EDITORIAL WARNING
They could well be "first steps toward an all-out trade war with China," the New York Times said in an editorial on Tuesday, warning that any escalation would do more harm to US business than to China's subsidies.
"What would happen to Boeing if the steel used in its jets became more expensive? The last thing a country with a record trade deficit can afford is to hurt its exporters," the newspaper said.
"What must be avoided are the kinds of misunderstandings -- intensified by growing anti-China sentiment in this country -- that lead to tit-for-tat tariff reprisals until things spin out of control," the daily said.
Over the next few weeks, the US Congress plans to consider a bipartisan action against China for allegedly keeping its currency artificially low.
Proponents of the legislation say it will be well-crafted, WTO-compliant and difficult for Bush to veto.
A bill in the last Republican-dominated Congress aimed at punishing China with a tariff if it did not revalue its currency surprisingly won two-thirds support in the Senate in a mere procedural vote. It was held back to give Beijing time to undertake currency reforms.
LEGISLATION A POSSIBILITY
"But now the possibility for legislation in the [new] Congress is real, because the number of people who will vote for strong legislation exceeds the number of people who would have voted for a tariff," Senator Charles Schumer, a Democrat, told a recent Congressional hearing.
Some lawmakers believe that Beijing has undervalued its currency by up to 40 percent in order to boost its exports, and that this is a key reason for the US trade deficit that hit US$232 billion last year.
Despite ominous signs of an escalating trade row, experts are not overly concerned.
Trade frictions between big powers are "part and parcel" of bilateral relations and a full blown trade war between the US and China is unlikely, said Nicholas Lardy, an expert at the Washington-based Peterson Institute for International Economics.
There is also little room for China to retaliate as Washington's actions are being undertaken through the proper channel -- the WTO -- with no guarantees that all the legal suits will end in US favor, Lardy said.
NAYSAYERS
"Contrary to popular opinion, this is not the beginning of a trade war," said Dan Ikenson of the Cato Institute, a libertarian think tank in Washington.
He thinks some of the trade issues will likely be resolved in bilateral consultations within the next two months.
The two nations are scheduled to hold a high-level "strategic economic dialogue" next month.
"The stakes are simply way too high for these disputes not to be resolved amicably, and in a manner which puts the relationship on even firmer footing," Ikenson said.
The US is China's largest overseas market and second-largest source of foreign direct investment while China is the fourth-largest market for US goods and remains the fastest growing major US export market.
While legislators charge that the Bush administration has ignored China's trade violations over the past six years at the expense of US businesses and workers, administration officials point to the five-year transition period that China enjoyed before some of the WTO rules could be fully applied against the Asian giant.
China joined the global body in December 2001.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS