China Lashes Out as Retaliatory Moves Fail to Stop Trump Trade Actions
By Saibal Dasgupta August 06, 2018
Chinese state media are reacting to U.S. President Donald Trump's trade actions against China in diverse ways. While denouncing the U.S. leader's actions, Beijing is also using its media to calm markets and express concern about the impact on the Chinese economy.
An editorial in the Communist Party's People's Daily said that by raising tariffs and then offering negotiations, the Trump administration is trying to use "carrot-and-stick diplomacy to bully China into unilateral trade concessions." The paper went on to say "China will eventually defeat the trade blackmail of the U.S. and it is impossible to force China into surrender to the U.S. coercion."
However, a Chinese senior official attached to the country's Supreme Court recently expressed worry that the trade friction with the U.S. would result in bankruptcies for state-owned companies.
"It is hard to predict how this trade war will develop and to what extent," Du Wanhua, deputy director of an advisory committee to the Supreme People's Court said in an article also in the People's Daily.
"But one thing is sure: if the U.S. imposes tariffs on Chinese imports following an order of $60 billion, $200 billion, or even $500 billion, many Chinese companies will go bankrupt," he said.
Beijing recently slapped additional duties ranging from five to 25 percent on $60 billion worth of American goods. This was in response to Trump administration's proposal of a 25 percent tariff on $200 billion worth of Chinese imports.
Experts said China has realized that retaliatory action would not persuade the U.S. President to stop his trade actions.
"They switched gear a bit because, I think, they realized that they have the weaker hand here in terms of their ability to retaliate, partly because they import far less from the U.S. than the U.S. imports from China, but also [because] a portion of [goods] they import from the United States is, you know, high-tech that are quite difficult to import from elsewhere," Julian Evans-Pritchard, senior China economist at Capital Economics told VOA.
Washington says its actions are aimed at correcting the level playing field because the U.S. suffers from a severe trade deficit in its business with China.
Chinese officials are trying to reassure markets and the local population that the U.S. moves would have little impact. Huang Libin, a spokesman for the Ministry of Industry and Information Technology recently said there has not been any significant impact on industrial output.
"We hear complaints from [Chinese] companies that U.S. clients have requested a suspension of orders and deliveries, but so far it has had only a limited impact on the industrial sector," he said.
The state-run Global Times, responded to White House economic adviser Larry Kudlow's remarks that China should not underestimate Trump's resolve, saying that China was not afraid of "sacrificing short-term interests". "China has time to fight to the end. Time will prove that the U.S. eventually makes a fool of itself," the paper said.
The official China Daily has joined government officials in an effort to reassure the market. "Market participants foresee a relatively stable Chinese currency in the near term, without fear of impacts from the U.S.-China trade dispute. They expect solid economic growth momentum amid policy fine-tuning," it said.
"Leading China's economy on a stable and far-reaching path, we have confidence and determination," another commentary in the main edition of the People's Daily said.
Another reason China is worried is because Washington's actions have come when the domestic Chinese economy is going through a bad time. The last three months have seen a series of corporate defaults besmirching China's reputation for many fewer loan defaults as compared to most developed countries.
"[The] economy is now slowing and balance sheets are coming under strain after they tightened monetary policy last year and pushed up borrowing costs. This is the main reason why we are seeing this uptrend in bankruptcies and uptrend in corporate bond defaults," Evans-Pritchard said. "I think the main driver is domestic. Obviously, the U.S. tariffs won't help and they are going to cause some damage," he said.
In its latest report, Capital Economics said that it would be naive to dismiss the possibility of financial instability given the rapid rise in debt levels in the country over the past decade. Chinese banks face the grave emerging scenario of bad loans and non-performing assets weighing heavily on their balance sheets, it said.
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