Beijing
At the World Economic Forum in Davos this week, Chinese President Xi Jinping warned that a trade war would benefit nobody, but at home, his government is quietly getting ready for just that.
“China is threatening to, and is preparing to, take steps in retaliation,” said Lester Ross, chairman of the policy committee of the American Chamber of Commerce in China at a news conference on Wednesday to launch the group’s annual survey of business conditions.
Publicly, China’s Ministry of Commerce has responded calmly to Trump’s repeated criticism of the two countries’ relationship, with its spokesman Shen Danyang insisting last month that the transfer of power in Washington won’t change ties, which he described as “interwoven,” “interdependent” and “mutually beneficial.”
But behind the scenes, the ministry is not standing still.
Ross cited a decision announced last week by China’s Ministry of Commerce to raise duties on distillers dried grains — a byproduct of ethanol production used as animal feed — from the United States.
The Commerce Ministry raised an anti-dumping tax of between 42.2 and 53.7 percent, as well as an anti-subsidy tax of 11.2 to 12 percent, on imports from the United States, an increase on the provisional duties already announced last September.
Other anti-dumping duties are on the verge of being institutionalized, Ross said.
Mei Xinyun, a researcher with China’s Ministry of Commerce, said China had refrained from engaging in a war of words with Trump over trade, but said it won’t be bullied and he drew attention to the recent anti-dumping measures.
“This is a way of saying ‘we don’t want to get into a row with you, but we will take action,’ ” he said. “Trump will need to pay the price should he want more trade friction.”
AmCham China’s Ross said some of the anti-dumping measures might have happened anyway but added: “It is not as though China is without an arsenal of actions that it could take in response to actions by the United States.”
For its part, the Obama administration has frequently imposed its own anti-dumping penalties on China, including very stiff duties on certain types of steel, although nothing that amounts to a trade war.
On Jan. 12, the administration announced it had brought a new challenge against China at the World Trade Organization for “unfair” aluminum subsidies, the 16th such challenge it has brought against China.
In fact, Trump will be wading into what is already a trade relationship bubbling with discontent.
Four out of five U.S. companies in China surveyed by AmCham say they feel less welcome here than before, citing unclear laws with inconsistent enforcement as well as rising protectionism and restrictions on foreign investment in many sections of the economy.
AmCham China Chairman William Zarit said the chamber had previously recommended to both U.S. presidential candidates that they take a “stronger stance” in trade and investment negotiations with China, given what he described as an increasingly unfair playing field for U.S. companies.