Lift and aim, but just don't pull the trigger

LU Xiankun China Plus Published: 2018-04-06 11:29:16
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By LU Xiankun

Shortly after April Fools' Day, trade relations between the US and China faced turbulence with a possible trade war on the horizon. Many leaders and experts have expressed concern that the tariffs being suggested by Washington, which have forced Beijing to respond in kind, will not help the economies on either side, nor will it be beneficial to the world's multilateral trading system.

After the Trump administration announced its Section 232 tariffs on steel and aluminum imports in March, but then exempted many countries excluding China, Chinese officials announced retaliation on April 3rd by ending tariff concessions on 128 products from the US worth 3 billion dollars. On that same day in April, the office of the US Trade Representative unveiled a proposed list of the Chinese products to be affected by tariffs. The 1,300 products named have a combined annual value of 50 billion US dollars and they would be subject to a 25 percent tariff. The next day, the Chinese Ministry of Commerce issued a list with 106 products imported from the US, also totaling 50 billion US dollars and facing a tariff of 25 percent. 

A man chooses bananas near imported apples from the United States at a supermarket in Beijing, Monday, April 2, 2018. [Photo: AP/Andy Wong]

A man chooses bananas near imported apples from the United States at a supermarket in Beijing, Monday, April 2, 2018. [Photo: AP/Andy Wong]

The situation is unfolding very much like the conflicts I remember from childhood. The quarrel escalates with words before one side threatens the other with a stick. When the second boy gets a stick to retaliate, the first boy reaches for a bigger stick, and so forth. The end result is often a deadlock, with each side unsure of how to deescalate the situation. And in the meantime, much damaged has been done to both sides, and possibly to others who could do little more than watch the spectacle helplessly.  

But China-US trade is not a game, and this isn't a pushing match or a fight with sticks or stones. This is business and business has already suffered under the current tit-for-tat manoeuvres initiated by Washington. Stock Markets in the US and in Europe have experienced sharp declines in recent days, with share prices for major companies including Boeing and Tesla falling just hours after China's announcement of its tariff retaliation plan. US soybean farmers lost an estimated 1.7 billion US dollars on Wednesday morning alone as soybean futures tumbled. 

On the Chinese side, while playing tit-for-tat to defend its interests, its reaction in general has been responsive and measured, in proportion to the magnitude of measures by the Trump Administration. Beijing has resorted to the World Trade Organization Safeguards Agreement to request consultations to solve the trade issue. China, from the very beginning, also repeatedly emphasized that the door for negotiation "is always open," including the most recent statement by Wang Shouwen, Vice Minister of Commerce of China, on April 4th at a briefing with reporters that Beijing doesn't want a trade war but will fight one if forced to.

On the US side, Trump Administration also seemed to soften its tone. President Trump, on Twitter, tried to play down the concerns of an imminent trade war by announcing that the US is "not in a trade war with China." US Commerce Secretary Wilbur Ross also urged calm, saying that trade measures by the two countries are just "a fraction of 1% of both economies."

Most importantly, the trade measures announced by both countries are still on paper only, and there is a short window of opportunity. The US has announced an extended review period of 60 days while China specifically declared that whether it will apply the announced measures "depend on whether the US governments will apply additional tariff on Chinese products." Reports also say that the two governments are already sitting down to negotiate with each other for a non-confrontational resolution. Let's keep our fingers crossed that they will calm down and reach a rational agreement within that window of opportunity.

In conclusion, the China-US relationship is the very relationship that will continue to shape the global political and economic landscape for the long-term future. If anything goes wrong between these two, the repercussions would be global. While recognizing that playing games with trade threats is part of the political reality, nobody, neither the international community nor domestic voters, would want a real trade war. So, a word for the US and China negotiators: you may lift and aim, but don't pull the trigger. You may end up not only shooting yourselves in the foot but also causing collateral damage to many others. 

(Professor LU Xiankun is former senior trade diplomat of China and now Emeritus professor of University of International Business and Economics and Wuhan University of China. He is also Managing Director of LEDECO Geneva and Senior Vice President of Shenzhen UEB Technology Co. LTD.)

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.