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China Looks To Call Bluff On Trump Trade Action

People in the US business community say this growing gulf in expectations between Washington and Beijing is fuelled in part by the dwindling frequency of talks on commercial issues.

BEIJING – As influential voices within the US business community warn China that US President Donald Trump is serious about tough action over Beijing’s trade practices, there is little sense of a crisis in the Chinese capital, where officials think he is bluffing.

In Beijing, many experts think Washington is unwilling to pay the heavy economic price needed to upset prevailing trade dynamics between the world’s two largest economies.

Hanging over trade relations are several inquiries into whether steel and aluminium imports – including those from China – are harming US national security, possible tariffs on imported solar panels, as well as an investigation into potential Chinese abuse of intellectual property.

“I think this might be a threat to ask for deals from China,” said He Weiwen, a senior fellow at the Center for China and Globalization, a government-affiliated research organisation in Beijing.

Results in most, if not all, of the investigations are seen as imminent. Trump warned in an interview with Reuters on Wednesday of potentially “big damages” against China as a result of the intellectual property inquiry under Section 301 of the Trade Act of 1974.

People in the US business community say this growing gulf in expectations between Washington and Beijing is fuelled in part by the dwindling frequency of talks on commercial issues. The resulting vacuum could set the two governments on a collision course over trade.

“Dialogue is a shadow, a shell, a trickle of what it was, particularly on the economic and commercial issues,” said one US industry source who accompanied a business delegation to Beijing last week to warn senior Chinese officials that time was running out.

The bipartisan group of mostly former senior US officials, including George W Bush administration veterans Stephen Hadley and Carlos Gutierrez, met with Wang Yang, a member of China’s ruling seven-man Politburo Standing Committee, and Liu He, an economist and ally of President Xi Jinping, among other senior Chinese leaders, the person said.

They delivered a message that trade frictions “are not under control” and that there was a high likelihood of “significant actions” coming soon, according the person who was present at the meetings.

“We hear everything from: both sides will lose, to you’ll lose more,” the person said, characterizing the reception the delegation received from Chinese leaders.

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