Prof. ST Hsieh
Director, US-China Energy Industry Forum
626-376-7460
May 28, 2023
Despite the recent encounters of US and Chinese officials around the world, and the observation that the US-China relation is “thawing”, the trade war between the world top two economies will not see a break anytime soon.
A major reason is that trade is practically the most significant and quantifiable national interest. Full scale trade war against China initiated by President Trump is easy to start but it is not easy to win or conclude.
However, it is interesting to note that China’s government dominated economic model, which is the major complain by the west as a non-market mechanism and not acceptable, is now being broadly adopted by the west. See for example the headline “U.S. ‘won’t tolerate’ China’s ban on Micron chips-Raimondo.”
Per the comments by the US readers:
Is this any different than the US sanctioning Chinese chip manufactures?????? Or,
Did I miss something? We banned advanced chip sale to China, and China banned buying US advanced chips. Aren’t on the same page?
It is obvious that trade is only one part of the US-China bilateral relation. It is an important part, but the US and China are now competing for global dominance! To the extreme, it is a full court press game and only the winner takes all!
US review of China tariffs won’t depend on trade ‘breakthrough’-Deputy USTR
David Lawder
Sat, May 27, 2023 at 11:38 PM PDT
DETROIT (Reuters) -The United States is taking an analytical approach to its review of whether to keep tariffs on Chinese goods in place and will not base outcomes on any “breakthrough” in U.S.-China trade relations, Deputy U.S. Trade Representative Sarah Bianchi told Reuters.
The Biden administration is not assuming any such breakthrough will happen, but will continue dialogue with China at various levels, Bianchi said in an interview on Saturday as a ministerial meeting of the U.S.-led Indo Pacific Economic Framework talks wrapped up.
“We are conducting the review from an analytical perspective. We’re not base-casing any breakthrough in the trade relationship” with China as part of the review, Bianchi said. “We’re not assuming that that will happen.”
Instead, USTR is continuing to study industry and stakeholder comments on the duties consulting with the U.S. Commerce Department, the Treasury and other agencies to determine which categories make strategic sense, she said.
“We’re taking a look at what’s economically sound,” added Bianchi, who oversees USTR’s engagement in Asia.
Former U.S. President Donald Trump imposed the tariffs in 2018 and 2019 on thousands of imports from China valued at some $370 billion at the time, after a “Section 301” investigation found that China was misappropriating U.S. intellectual property and coercing U.S. companies to transfer sensitive technology to do business.
The duties currently range from 7.5% on many consumer goods to 25% on vehicles, industrial components, semiconductors and other electronics. Among the major categories that escaped tariffs were cellphones, laptop computers and videogame consoles.
The review was required by Section 301 of the Trade Act of 1974 four years after the tariffs were first imposed and it started with initial notification steps in May 2022. Bianchi declined to say when the review would be completed, but added that this was “reasonable” by the end of 2023.
INFLATION ARGUMENTS
As the review got underway last May, some Biden administration officials argued in favor of lifting some of the tariffs as the Biden administration struggled to contain high inflation.
U.S. Treasury Secretary Janet Yellen that eliminating “non-strategic” tariffs would reduce costs for specific goods, while Trade Representative Katherine Tai argued that the duties represent “significant leverage” over China.
Chinese Commerce Minister Wang Wentao raised objections the Section 301 tariffs as an issue of concern during a meeting with Tai in Detroit on the sidelines of an Asia Pacific Economic Cooperation trade meeting.
Wang’s meeting with Tai and Commerce Secretary Gina Raimondo the day before were the first cabinet-level exchanges between Washington and Beijing in months amid a series of trade and national security setbacks, including the U.S. downing of a Chinese spy balloon that transited the continental U.S.
Bianchi said it was important to the global economy for the U.S. and China to maintain a healthy dialogue, even if they disagree.
“These are the two largest economies in the world and we need to be talking at different levels, even if they’re difficult conversations,” she said.
“On trade right now, there aren’t many similar perspectives,” she said of the U.S. and China. “I’m not sure where it will lead, but I think the conversations will continue to be a difficult, but I think it’s important that we have them.”
U.S. ‘won’t tolerate’ China’s ban on Micron chips-Raimondo
David Lawder
Sat, May 27, 2023 at 10:40 AM PDT
DETROIT (Reuters) – The United States “won’t tolerate” China’s effective ban on purchases of Micron Technology memory chips and is working closely with allies to address such “economic coercion,” U.S. Commerce Secretary Gina Raimondo said on Saturday.
Raimondo told a news conference after a meeting of trade ministers in the U.S.-led Indo-Pacific Economic Framework talks that the U.S. “firmly opposes” China’s actions against Micron.
These “target a single U.S. company without any basis in fact, and we see it as plain and simple economic coercion and we won’t tolerate it, nor do we think it will be successful.”
China’s cyberspace regulator said on May 21 that Micron, the biggest U.S. memory chip maker, had failed its network security review and that it would block operators of key infrastructure from buying from the company, prompting it to predict a revenue reduction.
The move came a day after leaders of the G7 industrial democracies agreed to new initiatives to push back against economic coercion by China — a decision noted by Raimondo.
“As we said at the G7 and as we have said consistently, we are closely engaging with partners addressing this specific challenge and all challenges related to China’s non-market practices.”