BEIJING: China’s response to the US tariff increase of $18 billion worth of Chinese goods in transactions ranging from syringes to batteries gives an impression that the relationship between the world’s largest economies will face more coldness than another trade fight.
China condemned President Biden’s exacting course and pledged “firm methods” to safeguard its interests.
However, it also suggests something new – and a sense of confidence – compared to 2018 when Trump-era tariffs on $300 billion worth of Chinese products led to an increasingly escalating trade war, according to analysts.
The differences between then and now include that the Biden White House had previously indicated potential actions it could take against China while the tariffs are for industries-as well as electric vehicles and batteries with limited economic impact where Chinese companies dominate.
In retaliation for these tariffs, Chinese state media accused the United States of defying its own free trade traditions as well as making such moves that would jeopardize climate objectives and raise costs for American consumers.
Essentially you’re doing wrong unto yourself.
That was not so two years ago when a negotiator stated “you’re putting a knife at China’s throat” amid suggestions by state-owned media about measures such as US food boycotts or selling off US debt holdings.
“China can take moral high ground,” said Wang Huiyao, founder and president of Center for China & Globalization, a Beijing-based think tank. “It doesn’t go around with those who violate international rules.”
The statement from the Ministry Of Commerce was among its most severe in language accusing Washington of breaching the spirit of an agreement struck late last year in San Francisco by Presidents Xi Jinping and Joe Biden to stabilize bilateral relations.
Biden has voiced his desire to win this era over China without engaging in trade wars; U.S. officials have focused on specific areas like cooperation on climate change with Beijing
‘What doesn’t kill you’
According to KEEN Intelligence, China has room to retaliate before the tariff comes into effect. But so much has happened since the trade war in 2018.
In that year, less than 800k electric cars were manufactured by Chinese automakers. EV production had grown eight times by 2023 in China, surpassing Japan as the world’s largest automobile exporter and Chinese automakers are expanding further from Southeast Asia to Europe.
Huawei, which had been crippled by US sanctions in 2019, has bounced back, leading demand for China-made chips and challenging Apple and Tesla in terms of smartphone business and EVs respectively.
“It seems the famous quote applies to China’s technology companies.” Xinhua said commenting on US tariffs. “What does not kill you makes you stronger.”
Beijing knew this phase of imposing tariffs were imminent. While visiting China recently US Treasury Secretary Janet Yellen among others drove home a message that the nation’s industrial power to produce more electric vehicles (EVs), solar panels, and batteries than its economy can accommodate was hurting American jobs as well as companies dealing with these products.
Chinese officials and state media have rejected this argument saying local EV makers prevail through innovation as well as supply chain advantages rather than subsidies.
Last year, the US imported $427 billion worth of products from China and exported $148 billion to the second largest economy in the world, creating a trade imbalance that has persisted for decades and become an increasingly controversial topic in Washington.
According to analysts, both leading candidates for the 2024 presidency take a hard stance on China before the November elections.
“China will have trouble staging this warfare if it comes to tariffs,” said Sean Stein, CEO of American Chamber of Commerce in China. The move announced was much lower than expected.”
“It is different from America had rolled out”, he added.
When Beijing looks past election day, it will seek a preferred partner.
“What makes this Biden initiative election driven?” asked Wang. “It is different from what Trump did because he was already president for one year and thus carrying out a war of commerce rather than election.”
