May 31, 2018
White house statement announcing plans to implement tariffs on China’s exports goes against agreement reached in Washington less than two weeks ago.
Despite the truce in the trade hostilities between the United States and China that was agreed less than two weeks ago after their talks in Washington, the White House on Tuesday announced it is ready to pull the trigger on tariffs and other measures to protect US technology and intellectual property from what it called China’s “discriminatory” trade practices.
Although China responded that this was within its expectations, it has understandably been irked by the US reneging on the Washington agreement. A Foreign Ministry spokesperson said on Wednesday the US was eating its words and squandering its credibility in international relations.
That the trade spat has flared up again after the Washington meeting seemed to have taken the heat out of it, has sparked fresh concerns about the impact it could have on the global economy and value chains.
On Wednesday, the OECD added its cautionary note alongside those previously issued by the World Trade Organization and the International Monetary Fund.
China on its part is genuinely trying to defuse tensions and reach a settlement. It reiterated on Wednesday that it does not want to fight, although it will stand up for itself if forced to. It hopes to reach an agreement through constructive dialogue.
But although the latest move by the US might be an attempt to leverage some concessions from China during US Commerce Secretary Wilbur Ross’ upcoming talks in Beijing, China should be prepared for more arbitrary and wayward actions by the US, since the Donald Trump administration seems to be intent on targeting China’s ability to compete with it in the high-tech arena.
According to reports, the US State Department is now going to cut the length of the visas issued to Chinese science and technology students from June 11, particularly those studying robotics, aviation and high-tech manufacturing, sectors China identified as priorities in its Made in China 2025 plan aimed at moving its manufacturing up the value chain.
Despite higher education being an area where the US actually runs a surplus with China – Chinese students account for about one-third of the 1 million foreign students enrolled at US schools – Washington seems willing to cut off its nose to spite its face, concerned that they will somehow gain access to secrets that will give China a helping hand in knocking the US off its high-tech pedestal.
This shows how hard it will be for China to satisfy the US’ demands without doing itself harm. However, it should continue to do what it can to convince the US that confidence should not become recklessness and a trade-off is in the interests of everyone.