China is prepared to step up its scrutiny of US companies in the event US president-elect Donald Trump takes punitive measures against Chinese goods and triggers a trade war between the world’s two biggest economies after he takes office, according to people familiar with the matter.
The options include subjecting well-known US companies or ones that have large Chinese operations to tax or antitrust probes, the people said, asking not to be identified because the matter is not public. Other possible measures include the launch of anti-dumping investigations and scaling back government purchases of US products, according to the people.
However, any retaliation by China against Trump could be risky. A backlash may result in China damaging access to its biggest trading partner, said Michael Every, head of financial markets research at Rabobank Group in Hong Kong.
“When you have a country with a large trade deficit that retaliates against a country with a large trade surplus with it, it’s the country with the trade deficit that wins,” Every said. “The country with the surplus loses, every time.”
America’s trade deficit with China narrowed to US$31.1 billion from US$32.5 billion in October as US exports to the nation were the strongest since December 2013, according to the most recent data available. That brought the trade deficit to US$288.78 billion for the 10 months to the end of October.
China’s central government compiled the possible countermeasures after collecting opinions from various departments, the people said. The punitive steps would only be carried out if the US acts first and after senior Chinese leaders sign off on them, they said.
Representatives at China’s Ministry of Commerce, National Development and Reform Commission, State Administration of Taxation and General Administration of Customs either did not respond or could not immediately comment to Bloomberg queries.
Representatives at Trump’s transition team did not respond to a request for comment.
Late last year, China fined General Motors Co, the second-largest foreign carmaker in the country, nearly US$30 million for antitrust violations after the company was accused of setting minimum prices on some models made by its SAIC-GM Co Ltd (上汽通用汽車). General Motors Co said at the time it respects local laws and that it would fully support its venture in China to ensure all appropriate actions are taken.
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