The White House said President Donald Trump will announce Monday afternoon (EST) that the US will seek a Section 301 investigation into China’s trade practices, including the alleged forced technology transfer and intellectual property theft.
Section 301 was used to impose tariffs against Japanese motorcycles and steel in the 1980s. The US is also considering a probe of Asia’s “four little dragons,” namely Hong Kong, Taiwan, Singapore and South Korea, under Section 301.
Trump holds a simplistic view of international relations, especially China-US ties. He stubbornly believes that the US has suffered losses from the current international trade system while China has gained an advantage. The US’ overall trade deficit in 2016 was $502.3 billion, with its deficit with China exceeding $300 billion. Perhaps this has irritated Trump, making him impatient to grasp an accurate scenario of China-US trade.
But Section 301 is a US law and cannot regulate international trade. No US government likes to see a huge trade deficit. But the deficit keeps rising, which indicates domestic imbalance. Trump cannot use Section 301 at will as a lever against China, another trade giant.
Beijing does not need to be overly concerned with a trade conflict with the US. Smaller economies have resisted the pressures of Section 301, let alone the Chinese mainland which boasts of a huge trade volume.
Japan and Asia’s “four little dragons” depend on Washington politically and economically. Strategically, their prosperity is a by-product of US prosperity. The US has nothing to fear when it deprives these countries of their rights.
But the Chinese mainland is independent politically and economically. Once Section 301 is enforced, China is expected to retaliate. The Trump administration should have second thoughts about putting pressure on China on trade and avoid a full-blown trade war.
China should make use of the WTO mechanism to sue the US for trade protectionism. The trade policies of the Trump administration have been widely criticized. Although filing a lawsuit with the WTO is time-consuming, it is highly likely that China would win.
Washington is more experienced than China in trade wars. But US society and opinion can hardly bear their own losses. If a China-US trade war starts, many of those who now support a hardline stance toward China would turn against the Trump administration.
The US has linked the Sino-US trade issue with North Korea’s nuclear issue, which is illogical. A trade war between the two will affect the general climate of bilateral ties, but a trade war is far from the entirety of Sino-US ties. The two will continue to maintain their complex bilateral relations.
The US frequently sends warships to patrol the South China Sea, and now it’s ramping up trade pressure on China. China should turn its passivity around. China will not act as an aggressive provocateur, but we should make Washington realize that China is not the one to be messed around with.