Trade War With China Today, Actual War Tomorrow Perhaps? Trump Signs Anti-Chinese Memorandum
On Thursday, in his exaggerated manner and in the light of television cameras, Donald Trump signed a memorandum on «Combating China's Economic Aggression» in big strokes. This is practically the declaration of a trade war with the most populous country in the world, whose economy is growing at a pace several times faster than the US's. Beijing hasn't experienced anything like this yet: sanctions. Now China will have the opportunity to feel what it's like to be in Russia's shoes. But China, due to the scale of its economy, can reply to this in many more ways.
Anastasiya Sahovskaya reporting from Beijing.
This headline is in every newspaper: here's a photo of how Trump is signing this very same memorandum. Chinese press' description of this action can be translated into Russian as «a strong hand move,» something like a lunge. China does not hide that it will defend itself, and can also strike back.
China can use the same tactic, raising tariffs on US goods. To them, the most vulnerable industry is food, at #1 in a list of potential «sanctions» published by the Chinese Ministry of Commerce. In a Beijing superstore, everything is well organized: here, for example, is wine from the US, nuts produced in Arkansas, but the label is in Chinese and clearly meant for export, US prunes; the US also delivers to China both dried and fresh fruit. Here, for example, are American apples. It says USA. They currently cost twice as much as the Chinese ones. With an increase in duties by another 15%, overseas product prices are at a risk of becoming sky-high. And it's unlikely that it will be difficult for China to find new suppliers there is no need to look far.
The US thoughtless actions give Russia an excellent chance, according to the Association for Development of Chinese Investments Abroad. While the US builds up trade barriers, Russia has time to increase production in the Far East.
He Zhenwei, General Secretary Association for Development of Chinese Investments Abroad: «The Chinese market is very large, we need 90 million tons of soybeans per year. If we don't Import from the US, if they raise tariffs, we will consider other countries. If I'm not mistaken, China imports about a million tons of soybeans from Russia every year. And I think it's necessary to make good use of the current circumstances to think about how to import more Russian soybeans into China since this is our closest neighbor.»
China consumes half of US soybean exports. One and a half dozen farms in the Midwest, who voted for Trump, are already protesting this: where else will they find such a market? And this is just one of the trump cards up China's sleeve.
Chen Fuli, Head of Treaties Department: «As soon as the takes US measures, China will react. The US says that China's actions do not comply with its internal laws, it's an obvious one-sided approach and trade protectionism. It is an insolent violation of the WTO rules».
Automakers are likely to «slow down». GM said that last year in China it sold a record 4 million cars, there a plenty of Cadillacs and Buicks on the roads.
Tesla may suffer a blow, since it has already opened 3 of the world's largest charging stations in China and has just received approval for the construction of a factory in Shanghai, and contrary to the usual rules it will be fully owned by the Americans. Last year Tesla sales grew with redoubled energy, with two billion dollars in revenue. Tesla has just reported that China has become its most profitable market. But it's clear that with the rapid development of its own electric car production, China now needs Tesla a lot less, than Tesla needs China.
What about such techno-giants such as Apple, who manufacture all of their products in China.
Every 4th Boeing is made for China. And those companies can cut its wings and turn to Airbus.
The American presence in Beijing is clearly visible: chain clothing stores in all major shopping centers, famous donuts, fast food, sandwiches, and coffee. Consumer products is one sector of the US economy where China could introduce retaliatory measures.
Overall, the annual volume of US exports to China is estimated at $140 billion. Soybeans alone are worth $14 billion. A $38 billion contract was signed with Boeing.
China's losses from the tariff increase are estimated at $60 billion by the US. With a half trillion dollar trade margin in favor of China, which Trump himself claimed this fall, when he verbally attacked China during his visit. By the way, he stayed at this hotel of a large American chain.
The media are reporting on the first official contact: Liu He, Vice Premier of the State Council and Chief Economic Adviser to the Chairman of China, spoke on the phone with the US Treasury Secretary Steven Mnuchin. Trump gave him two months to prepare proposals for limiting Chinese investments in the US. Can these measures stop the speeding train of the Chinese economy? Experts estimate that sanctions will only slow down its growth by 1/10th of a percent. But the US did not take into the account the strength of the economic boomerang.
Anastasiya Sahovskaya, Mikhail Artyhin. From Beijing, China — Vest, News of the Week.