Mon, May 14, 2018 - Page 6 News List

The Liberty Times Editorial: China needs to play by the rules

On May 3 and 4, high-ranking US and Chinese officials met in Beijing for a first round of trade talks. The media reported that Washington had given a “detailed list of asks” to Beijing before the talks, asking that China reduce its trade surplus with the US by at least US$200 billion by the end of 2020 and immediately cease providing subsidies and other types of government support to advanced tech industries that fall under the “Made in China 2025” plan.

The US also demanded that China reduce its tariffs on all products in “non-critical sectors” to levels no higher than corresponding US import tariffs, that China guarantee it will not retaliate in response to actions taken by the US to protect US technology and intellectual property, and that China withdraw its request for WTO consultations regarding intellectual property rights disputes.

The US received no answer or promises from China, and the two nations recognized that differences exist on major issues. No substantial progress was made during the two-day talks, and the only agreement made was that they would continue talking.

US President Donald Trump keeps imposing punitive measures on China, such as raising import tariffs on imported steel and aluminum products and on US$50 billion worth of Chinese goods, and imposing a seven-year ban on purchases of technology and components from US suppliers by Chinese telecoms equipment maker ZTE Corp.

The US might also ban US enterprises from exporting chips to China and purchasing telecommunications equipment and smartphones from Huawei Technologies Co and ZTE, as well as limiting the high-tech research that China can conduct in the US.

Trump is making move after move with such force that it has almost shattered China’s dream of becoming a tech giant under the “Made in China 2025” industrial plan.

By comparison, China’s countermeasures, such as imposing higher imports tariffs on some US imports, cutting imports of soybeans and other US agricultural products, are not as effective.

China apparently has fewer bargaining chips than the US in this “undeclared new cold war” over technology, as former Australian Prime Minister Kevin Rudd put it.

Loongson Technology Co Ltd chief executive officer Hu Weiwu (胡偉武), who developed China’s first chip, recently said that if the US does not sell chips and CPUs to China, a huge number of Chinese enterprises, including all the high-tech and electronics businesses that one can think of, would have to close and would not even last a month.

China simply does not have the capital to fight a trade war focused on intellectual property rights and high-tech industries. It is therefore adopting a two-pronged strategy, on the one hand saying that “we are not afraid of a trade war” in a bid to placate the Chinese public’s nationalistic fury, while on the other adopting a delaying tactic by promising a partial opening up and lowering of the thresholds for foreign enterprises to access the Chinese market.

However, China’s past record of broken promises make these commitments empty phrases that are unlikely to be acceptable to the Trump administration, which emphasizes “America first” and fair trade.

There is little optimism that US-China talks are to resolve the nations’ differences, especially as the US has hit a sore spot by demanding that China stop subsidizing high-tech industries under the “Made in China 2025” banner.

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