Source: Global Times Published: 2018-3-23
China urged the US on Friday not to underestimate China`s determination and capability, and the price that the US will pay for its "arbitrary and reckless behavior," and experts said that more retaliation will follow.
After US President Donald Trump signed a tariffs memorandum against China on Thursday, White House trade adviser Peter Navarro said that "China benefitted far more from trade with the US, meaning retaliation could be difficult for Beijing," AFP reported.
"Some people" from the US are "too arrogant and have misjudged the situation," Chinese Foreign Ministry spokesperson Hua Chunying said at Friday`s routine press conference. "Do not underestimate China`s determination and capacity to safeguard its legitimate interests, and the price that the US will have to pay for its arbitrary and reckless behavior."
When asked about how China will retaliate, she said "It is `impolite` not to `reciprocate.` We will accompany the US to the end."
Earlier Friday, the Ministry of Commerce (MOFCOM) said in a statement that "the US disregards the fact that China is increasing protection on intellectual property, the rules of WTO, and voices from industry," and a trade war is bad for both countries and the rest of the world. "It creates a very bad precedent."
"China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place," said the statement.
There is "hair on fire" concern that the proposed tariffs and restrictions on Chinese investment in the US will lead to retaliation, and measurably hurt the economies of the US, China, and the rest of the world, William Zarit, chairman of American Chamber of Commerce in China, told the Global Times on Friday.
However, a trade war with Trump is not entirely bad for China, said Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation. "Trump`s motives are very likely to pressure us into submission and gain more benefits from us, rather than totally cutting off Sino-US trade ties, so we can also make some trouble for him."
For instance, "we can withdraw some compromises we had made to the US for negotiations." Some newly-emerging industries, which still need protection for international competition, have opened to the US in order to reach an agreement, and now we can close the door again until the US reaches a new agreement with us, Mei said.
The MOFCOM announced Friday morning it will impose tariffs on US imports worth $3 billion in a bid to offset its loss incurred by the US` decision to impose tariffs on steel and aluminum imports.
The ministry plans to impose 15 percent tariff on 120 types of products, like fruits, nuts, wine and seamless tubes, worth $977 million. A 25 percent tariff will be imposed on products that include pork and recycled aluminum products.
This is just the beginning, and "China`s retaliation will specifically target the Trump administration and its protectionist team, so targeting the industries among the [US] states that support Trump in the 2016 presidential election would be effective," Mei noted
Free trade vs protectionist
Trump`s act of protectionism will force major economies that support free trade to stand closer with China, including major countries of the EU like Germany and France, and China will unite these economies to champion free trade, which is also a form of retaliation, said Wang Yiwei, director of the Institute of International Affairs at the Renmin University of China.
"This is not just a trade war between China and the US, but a confrontation between protectionist forces and the economies supporting free trade," Wang noted.
Germany condemned Trump`s plans to impose sanctions against China on Thursday, CNBC reported.
"We consider these tariffs unlawful," Chancellor Angela Merkel told lawmakers in the German parliament Wednesday. She added that Germany was convinced Washington`s threat to impose protectionist policies would ultimately hurt everyone.
"Past experience with tariffs is that if one country starts then there is retaliation and the overall impact is negative for everybody," Clemens Fuest, president at Germany`s IFO Institute, told CNBC Thursday.
Impact to ordinary people
Ordinary Chinese people, in general, are very calm about the trade war. A Beijing resident surnamed Su, 26, told the Global Times that "actually we have very limited dependence on US products because they all can be replaced, and most of them are not necessities."
"The US is not irreplaceable in many areas, like tourism and education, we have many other options elsewhere," said a woman surnamed Fan from Shanghai who plans to send her son for studies abroad.
However, according to an article published in the Washington Post Friday, in a trade war, Trump voters likely get hurt the most, because "tariffs are basically taxes, that means Americans will pay more when they shop."
"That`s especially true for low-income families who spend a higher share of their paychecks on goods and often buy the cheapest products, families that Trump often thinks of as his base."
Commenting on US Commerce Secretary Wilbur Ross` talk that China`s simplest solution to reduce its trade gap with the US is to buy more US liquefied natural gas (LNG), Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said the US is making a "stupid move."
"China, in its huge demand for LNG, is naturally inclined to import more US LNG and has actually imported some in 2017 and holds significant orders under long-term contracts," Lin said. "However, waging a trade war against China will effectually stop such momentum."
Lin noted that despite its longer transportation distance, US LNG could still be cheaper than the aggregate average price of LNG bought by China currently. China is currently the world`s second-largest LNG importer.
"China needs to import very, very large amounts of LNG and from their point it would be very logical to import more of it from us," US Secretary of Commerce was quoted as saying in a Bloomberg report on Thursday.
Wang Yiwei is a senior fellow of Chongyang Institute for Financial Studies, Renmin University of China.