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.
CROSS-STRAIT COLLABORATION: The new KMT chairwoman expressed interest in meeting the Chinese president from the start, but she’ll have to pay to get in Beijing allegedly agreed to let Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) meet with Chinese President Xi Jinping (習近平) around the Lunar New Year holiday next year on three conditions, including that the KMT block Taiwan’s arms purchases, a source said yesterday. Cheng has expressed interest in meeting Xi since she won the KMT’s chairmanship election in October. A source, speaking on condition of anonymity, said a consensus on a meeting was allegedly reached after two KMT vice chairmen visited China’s Taiwan Affairs Office Director Song Tao (宋濤) in China last month. Beijing allegedly gave the KMT three conditions it had to
STAYING ALERT: China this week deployed its largest maritime show of force to date in the region, prompting concern in Taipei and Tokyo, which Beijing has brushed off Deterring conflict over Taiwan is a priority, the White House said in its National Security Strategy published yesterday, which also called on Japan and South Korea to increase their defense spending to help protect the first island chain. Taiwan is strategically positioned between Northeast and Southeast Asia, and provides direct access to the second island chain, with one-third of global shipping passing through the South China Sea, the report said. Given the implications for the US economy, along with Taiwan’s dominance in semiconductors, “deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority,” it said. However, the strategy also reiterated
‘BALANCE OF POWER’: Hegseth said that the US did not want to ‘strangle’ China, but to ensure that none of Washington’s allies would be vulnerable to military aggression Washington has no intention of changing the “status quo” in the Taiwan Strait, US Secretary of Defense Pete Hegseth said on Saturday, adding that one of the US military’s main priorities is to deter China “through strength, not through confrontation.” Speaking at the annual Reagan National Defense Forum in Simi Valley, California, Hegseth outlined the US Department of Defense’s priorities under US President Donald Trump. “First, defending the US homeland and our hemisphere. Second, deterring China through strength, not confrontation. Third, increased burden sharing for us, allies and partners. And fourth, supercharging the US defense industrial base,” he said. US-China relations under
The Chien Feng IV (勁蜂, Mighty Hornet) loitering munition is on track to enter flight tests next month in connection with potential adoption by Taiwanese and US armed forces, a government source said yesterday. The kamikaze drone, which boasts a range of 1,000km, debuted at the Taipei Aerospace and Defense Technology Exhibition in September, the official said on condition of anonymity. The Chungshan Institute of Science and Technology and US-based Kratos Defense jointly developed the platform by leveraging the engine and airframe of the latter’s MQM-178 Firejet target drone, they said. The uncrewed aerial vehicle is designed to utilize an artificial intelligence computer
RSS