C OvER STORY
frictions in numerous Chinese and US analyses since Donald Trump
won the presidential election. The recent softened rhetoric on the
trade issue, as one of the policy shifts indicated in the Wall Street Jour-
nal interview, has surprised international media. Business integration
between China and the US may run much wider and deeper than
Trump expected, and could be even greater than at present if more
avenues of potential were explored. For China, it has the leverage to
deal with a shock from the US, and options to find more partners.Weapons of Trade War
Unpredictability is one of the main reasons why Donald Trump
had looked so unlikely and unwelcome to win the election, in the
eye of Western elite groups and most international analysts. It re-
mains the label attached to his presidency so far. However, despite all
the uncertainties he may bring to the bilateral ties and internationalpolitics, Chinese and US analysts have not missed one particular cer-
tainty. They had always been quite sure, before and after his election,
that Donald Trump would wage an attack on imports from China
in some way, including, in the worst scenario, a sweeping trade war.
Indeed, Chinese and US analysts have almost reached a consensus
on both the most vulnerable Chinese products likely to be the first
targeted by the US, and the most effective weapons in China’s arse-
nal to fight back if necessary. Chinese products from sectors mired
by overcapacity are thought to be the most vulnerable. It has already
proved true. So far this year the US has already imposed punitive
tariffs and trade investigations on about 10 steel, aluminium, tire and
chemical products from China. More importantly, the Trump admin-
istration has increasingly focused on China’s subsidies, particularly at
the local level in China, which they believe is the root of China’s price
advantage. Countervailing duties were involved in all these cases. On
April 6, the US filed a complaint with the World Trade Organization
against unreported subsidies by China’s local governments to their
steel, aluminium and fishery companies. On a single day, March 31,
Trump issued two executive orders on trade. One requires the US
trade offices submit an “omnibus report” within 90 days on identify-
ing trading partners whose policies and practices have contributed to
the US trade deficit in 2016. The other is to strengthen US trade law
enforcement on foreign sellers.
China’s Ministry of Commerce has protested all these measures.
Chinese and US analysts believe if China chooses to counteract any
time, it has no lack of ammunition, not just oral protestations. While
China’s huge trade surplus in goods with the US has been the source
of US frustration for years, the US has sold many more agricultural
products to Chinese consumers than it has bought from Chinese
farmers. In addition, China is the largest overseas customer of the US
aircraft giant Boeing. According to research released by The China Fi-
nance 40 Forum (CF40) on its website on April 3, China can choose
to use carrot and stick, importing more US agricultural and energy
products to win the support of the states that supply those, and open-
ing itself up to more on service sector as carrot, or restricting imports
of US soybean, aeroplanes and autos as a hefty stick.
These tit-for-tat tools for both sides are evidence of how intensively
and extensively the world’s two largest national economies have been
trading with each other.Going Local
Besides trade, China-US business ties have been increasingly shaped
by their investment in each other’s markets. “We have demonstrated
that the commercial stakes on both sides are two to four times higher
than commonly used statistics suggest,” concluded a report called
Two-Way Street by the US National Committee on the US-ChinaBoeing Tianjin Composites delivers its millionth product, February 23, 2017
Commuters walk through the Fulton Center in New York on November
10, 2014 when it reopened. China Construction America, the general
contractor of the project, won Project of the Year by New York State Society
of Professional Engineers
Photo by cfpPhoto by cfp