China is concerned with the possible trade tariffs that the Trump administration are likely to impose and are seeking strategic advice on how to combat it. America has a huge trade deficit with China and will look to trim it down with tariffs in industries where China enjoys a significant surplus such as furniture and steel.
According to the U.S. Commerce Department, China’s 2016 trade surplus with America decreased by $20.1 billion to $347 billion. China trade data puts the trade surplus at a lower amount.
Lester Ross, head of American Chamber of Commerce in China’s policy committee said, “To our knowledge, China is already preparing measures in the event of actions by the new administration… should they impose restrictions on trade and investment on China.”
Analysts suggest some of the countermeasures China can adopt include finding other suppliers of machinery or agriculture produce. They can also lessen its exports of consumer durables such as laptops.
Shen Jianguang, an economist based in Hong Kong, said that one way China can retaliate in a trade war would be to cut down imports from U.S. aviation, mechanical and hi-tech equipment. China can also choose to go to U.S. business rivals like Airbus.
Jianguang also suggested that China’s other options were to dump U.S treasuries or to have more investigations of anti-dumping launched against U.S. companies. However, Jianguang said, “But all these countermeasures have side effects for China. China is the largest overseas market for many U.S. companies, and China has room for negotiation.”
Other analysts suggest that China can limit U.S. access to its rapidly growing services industries. It can also impose more taxes and restrictions on U.S. multinationals operating in China.
Last week, China’s Premier Li Keqiang highlighted that Beijing does not want a trade war with America. U.S. Treasury Secretary Steven Mnuchin also said it does not want a trade war with China but emphasized that certain arrangements in the trade relationship between America and
China must be reassessed and reworked to make it fairer to America.
During Trump’s election campaign, Donald Trump repeatedly threatened to impose a 45% tariff on the exports of China and that he believes that China is a currency manipulator.
The U.S. Treasury uses three criteria to determine if a country is guilty of currency manipulation to get a trade advantage and based on it, China only qualifies under one of the criteria: a trade surplus of more than $20 billion.
Gao Hucheng, the former commerce minister, said that China does not fear a trade war but hopes to avoid such a scenario. Hucheng said, “We are willing to deal with it properly, but we are not afraid. Once the U.S. side takes certain measures, we will evaluate and analyze such measures, and take actions when necessary.”
When Chinese President Xi Jinping was in Davos, Switzerland for the World Economic Forum, he said that there would be no winner in the event of a trade war.
China’s President Xi Jinping will be visiting Trump next month.