On Wednesday, commentary from the Communist Party of China’s mouthpiece the People’s Daily talked of “deep structural changes” coming to the US-China relationship. But the author, senior government adviser Long Guoqiang, was not talking about the kind of changes that the White House is trying to bring about through tariffs.
Instead, the changes he expects amount to a new normal that sees the US continue a strategy of protectionism and containment, while China takes advantage of its economic strengths to protect its own national interests. It is not time to kowtow to American demands, he argues; rather, it is time for strategic “confidence” and “endurance.”
To respond properly to the trade friction, Long says, China must focus on “reform, development and stability,” citing China’s “industrial advantages and market advantages.” His words, to the extent they represent the actual views of leaders in Beijing, can put to rest any speculation that China is ready to scale back the industrial policies that the Trump administration is ostensibly targeting in its trade offensive.
China, Long urged, must adhere to its stance that it “does not want to fight, is not afraid to fight, and will fight if it must.”
Judging from recent comments coming out of the US administration, it is ready to call Beijing’s bluff, and President Donald Trump suggested as much on Thursday.
After news reports that Trump was going to pull the trigger on a US$200 billion tranche of tariffs as soon as next week, America’s commander-in-chief did all but confirm it.
The reporting is “not totally wrong,” Trump told Bloomberg with a smile, during an interview in the Oval Office.
Next week, the public-comment period for the new round of tariffs will come to an end, and sources reportedly said the tariffs could be announced as soon as then. Previous rounds of tariffs took effect several weeks after announced.
The news follows weeks of public hearings before trade officials, during which businesses and trade groups had an opportunity to plead – it appears futilely – with the administration to grant exemptions for Chinese imports that are used in a wide range of US industries.
Tariffs now affecting $50 billion worth of Chinese imports to the US – along with matching retaliatory duties – have been shrugged off by markets as having little material impact and as being largely a negotiating tactic, rather than a long-term protectionist strategy.
With Beijing unwilling to bow to US demands, and many analysts saying that a Chinese economy less reliant on exports than in the past will weather the storm, there is little reason to expect this will pass quickly.