The U.S. Trade Protection Policy towards China

Сергей Каледин

The U.S. Trade Protection Policy towards China

1. The cause, history and current situation of Sino-US trade friction

1.1 Abuses of Sino-US trade friction

1. Surface reasons: Trade deficit

China is a big export country. Li Kuiwen, a spokesperson for the General Administration of Customs and Director of the Statistics and Analysis Department, stated that my country's total export trade volume reached 16.42 trillion yuan in 2018, an increase of 7.1% over 2017. China's high surplus corresponds to the huge deficit of the United States. According to data released by the US Department of Commerce, the US trade deficit in 2018 was as high as 621 billion U.S. dollars, of which the deficit with China accounted for 70%, reaching 419.2 billion U.S. dollars. According to customs statistics, China’s trade surplus with the United States reached RMB 2.14 trillion, an increase of 14.7%, setting a new record since 2006. As can be seen from the data released by the Evergrande Research Institute in the figure below, although the US trade deficit with China has declined slightly in some years, the overall trend is on the rise. Indeed, from the surface, the US trade deficit is indeed extremely extreme. To a large extent, it is related to China's trade. But in fact, such a large trade deficit in the United States is not caused by the Sino-US trade imbalance. This situation has existed since the last century. The root cause is the United States’ own economic structure and the United States’ special international status. The problems involved in many aspects cannot be easily solved through trade frictions. Therefore, the trade deficit is only the superficial cause of the Sino-US trade frictions, and there are deeper factors in between.

2. China is highly dependent on the United States

Although China is a leader among developing countries, it still has a large gap with developed countries, and has a high degree of dependence on the United States in trade exchanges. It is in a weak position in trade dispute negotiations and is restricted by many parties. Judging from the data in 2018, my country’s export trade to the United States reached US$478.4 billion, an increase of 11.3% year-on-year, accounting for nearly 20% of total exports. China’s high dependence on the US market is an indisputable fact. It is precisely because of this that the United States has the confidence to provoke trade disputes with a high profile and profit from the disputes. However, from a long-term trend, China’s dependence on the United States is showing a downward trend year by year. Therefore, the current economic advantage of the United States is only temporary.

3. International political and economic interests lead to the containment of Chinaby the United States

Due to the ideological gap, as the most economically powerful capitalist country in the world, the United States certainly does not want China to grow. Since the reform and opening up, the sustained and rapid development of China's economy has aroused the concerns of the United States. If the United States cannot contain China, it will be inevitable that China will become a regional hegemon with economic growth. The anti-China forces in the United States regard China as a potential enemy, and believe that the rapid development of China's economy around 2015 will pose a threat to the United States' economic and security interests in the Asia-Pacific region and the world as well as a challenge to the existing world structure. How to deal with China's rise has become one of the most serious challenges facing the United States in the early 21st century. Therefore, one of the purposes of the United States creating Sino-US trade frictions from time to time is to contain China's rapid development.

4. The economic downturn in the United States and the rise of new trade protectionism

The increase in Sino-US trade friction is directly related to the downturn of the US economy and the rise of new trade protectionism. The U.S. foreign trade policy has obvious two-sided characteristics. As long as the economy declines or the competitiveness of U.S. domestic industries declines, U.S. trade protectionism will re- emerge and trade frictions will be inevitable. In recent years, the economic downturn of the United States and China's "peaceful rise" have formed a clear contrast. Since the early 1990s, Sino-U.S. trade has shown an "one-sided" imbalance, and the U.S. has always been in a deficit position. According to World Bank statistics, from 1980 to

2000, China’s contribution to world GDP growth was 14%, while the United States was facing the pressure of weak economic growth and rising unemployment. Therefore, the United States adopts new trade protectionist measures to restrict imports and encourage exports, and frictions in Sino-US trade are inevitable.

5. China's technological advancement and rapid rise

Although China is in a weak position in trade negotiations with the United States, this does not mean that China does not have the capital and confidence to negotiate. On the contrary, as a powerful developing country, China has a strong momentum in exporting foreign trade, gradually expanding the coverage of export commodities, and increasing its technological content year by year. In recent years, China has even made major breakthroughs in the high-tech industries that the United States is proud of. The high-tech products of the United States are no longer the only one, and other countries in the world market have more choices. This is undoubtedly a threat to the United States, whose economic hegemony has been challenged unprecedentedly. In the trade frictions in 2018, the products that the United States decided to impose tariffs on China were mainly high-tech products in China's 2025 plan. It can be seen from this that in order to protect its key industries and maintain its economic dominance, the United States has carried out economic containment on China.

1.2 History

The trade friction between China and the United States should start before the founding of New China. Britain grabbed a lot of benefits from China through the Opium War. Then the United States also took advantage of the danger and signed the "Treaty of Wangsha" with the Qing government, which opened up China and the United States. The prelude to unequal trade relations, and this relationship will continue to deteriorate in the next few decades of trade, and it reached its peak during the War to Resist US Aggression and Aid Korea. The United States contained China’s export industries, and Sino-US trade relations became stiff until China and the United States established diplomatic relations. It gradually recovered afterwards. After China formally joined the WTO in 2001, foreign trade has been in full swing, trade with the United States has also been gradually promoted, and the scale of trade has gradually expanded. Although Sino-U.S. trade is gradually picking up, it is inevitable that the two sides have disputes from the perspective of maximizing their own economic interests. With the advent of the 2008 financial crisis, many collisions occurred in Sino-U.S. trade exchanges, covering a wide range of agricultural products, steel and iron. A variety of industries, including the service industry, have increased the uncertainty of China’s financial market, especially after Trump took office, he held a strong negative attitude towards free trade, pursued trade protectionism, and formally launched a deal with China in 2018. The trade war has led to greater downward pressure on China's economy.

1.3 Current situation

In the face of China's peaceful rise, the United States has never given up its Cold War mentality and has adopted various measures to contain China. There are both military mandatory containment, various frictions in the economic and trade fields, and even public opinion. Entering 2010, China-US relations have experienced major twists and turns, the Google incident, arms sales to Taiwan, Obama’s meeting with Dalai, pressure on the RMB exchange rate, multiple military exercises between the United States and foreign countries... Catalyzed by a series of issues, Sino-US relations have revived. Waves. However, the two countries have many common interests on a series of global issues such as climate change, nuclear non-proliferation, and counter-terrorism. In the face of challenges and tests, the two countries have conducted multi-level dialogue and consultation. Especially the many meetings between the heads of the two countries. Sino-US relations are moving forward amidst twists and turns, returning to the track of healthy development. This reflects the complex relationship between China and the United States in which consensus and differences are coexisted, and competition and cooperation coexist.

Obama once said: "the rise of a strong and prosperous China will become a source of strength for the international community." He believes that although the United States and China cannot reach agreement on all issues, the United States will focus on partnership rather than confrontation in its contacts with China. The United States and China share many important common interests, and their common ground far exceeds their differences and differences. It seems that the honeymoon of the two countries has arrived.

However, since the second half of 2009, the United States has repeatedly attacked China: Sino-US trade frictions have intensified, arms sales to Taiwan, Obama’s meeting with the Dalai Lama, the Google incident, and pressure on the appreciation of the renminbi. A series of incidents reflect the delicate and complicated Sino-US relationship. . Especially after Trump took office, he has repeatedly set up obstacles to the normal development of relations between the two countries on the Taiwan issue and economic and trade issues. U.S. experts said that the "marriage breakdown" of Sino- U.S. relations.

Since 2018, the trade conflict between China and the United States has expanded to all areas, including trade, technology, finance, diplomacy, geopolitics, international public opinion and international rules. The United States is trying to gain tariff advantage through the trade war and return manufacturing to the United States. At the same time, the United States uses technological warfare to contain China's innovation, uses financial means to crack down on China's economy, uses geopolitical warfare to destroy the peaceful and stable development environment in and around China, and disrupts the people of the world through public opinion. The most fundamental and important reason for this is to contain China’s rise and maintain US hegemony.

The purpose of this round of trade war launched by the United States in 2018 is very obvious. First of all, it is hoped that China will obey the instructions of the United States, stop exchanging market for technology, reduce the export of products to the United States, and purchase American goods, so that the United States can reduce its annual surplus of $100 billion. The second is to open up the financial market, let the Americans own the majority of shares, restrict Chinese banks and intervene in China's wealth. Finally, let China abandon the "made in China 2025" power strategic plan, and China has compromised some conditions before.

Snipe and clam fight, fishermen profit, Vietnam announced at the end of March 2019, the GDP of the first quarter increased by 6.79% year-on-year, of which exports to the United States increased by 26% year-on-year, a huge increase, and the export of clothing products increased significantly. Vietnam has gained considerable economic benefits from this Sino-US trade friction and has become one of the biggest beneficiaries of the Sino-US trade friction. This is not the purpose of the US to provoke the dispute, nor is it the result that China and the US hope to see. A new round of negotiations is the right way to settle this trade dispute and promote mutual benefit and win-win results.

Xu Shanian said at the Boao Forum for Asia on the morning of March 27, 2019: "in the current global trade friction, China's tolerance is beyond the imagination of the world." From the perspective of different interests, trade disputes are inevitable in the trade with other countries. However, China's import and export goods come from all countries in the world and do not completely depend on a specific country or region. The source of goods is replaceable and will not cause serious damage to its economy because of the trade conflict with a certain country. The trade friction between China and the United States will not change China's trade surplus, and China has begun to take the new era diplomatic strategy of uniting Russia against the United States in politics and Europe against the United States in economy, and the negotiation conditions have gradually improved. In the United States, on the other hand, trump has already made a lot of trouble in repairing the wall of 5 billion yuan with Congress, and the big trade war has also caused complaints from domestic enterprises. It can be seen from this that the Sino US trade negotiations will be reached, but it is only a matter of time.

2. U.S. main trade protection policies towards China

2.1 Tariff limits

U.S. tariff quotas mainly involve agricultural products and textiles, such as milk and cream (without concentration), sugar-free, sugar-free supplements, agricultural products with 1% to 6% fat, airtight containers, tuna, plateau plants, sorghum And some olives. As for the import of textiles into the United States, the United States controls the upper limit of each country's textile exports to the United States in accordance with bilateral agreements reached between it and the exporting countries. If the upper limit is exceeded, the quota will be restricted. Currently, this bilateral agreement controls approximately 75% of US textile imports.

2.2 Mark of Origin

The United States requires imported goods to indicate their source, otherwise the customs authorities have the right to request amendments and levy a 10% statutory tax. As for textiles and clothing, the United States revised the rules of origin, replacing the textile origin standards with the specific production procedures of the raw material producing countries, and changing the origin standards of garments from the cutting place to the final sewing place. Because European and Southeast Asian countries import grey fabric from China, it is processed into garments and then exported to the United States. Therefore, grey cloth exports account for a large part of China's textile trade. According to the US revised textile origin standards, these garments processed and produced in China will occupy the US quota for importing Chinese garments. On the other hand, according to the clothing origin standards adopted by the United States, mass production of clothing in China will account for a large part of China’s clothing export quota to the United States. Therefore, the United States has amended the rules of origin for textiles and clothing, which has a negative impact on China’s exports of textiles to the United States.

2.3 Discriminatory government procurement

Discriminatory public procurement means that the state has passed laws and regulations stipulating that public procurement must first purchase domestic goods, and then exclude imports. For example, in the United States, the "Purchase of American Goods Act" stipulates that some state agencies cannot purchase abroad, and local authorities can set local special standards. There are also flexible regulations in terms of actual implementation. For example, raw materials purchased by the government must be produced in the United States, and finished products must account for 50% of local products. The U.S. government can reject foreign bidders based on national interests or defense security reasons. In order to support small businesses, government procurement must provide small businesses with specific procurement contracts. This reservation accounts for approximately 30% of federal procurement or loan expenditures. According to state laws, local governments also have a large number of "local sources" requirements for the purchase of steel, coal, automobiles, printing materials and related services.

2.4 Safeguard measures

Safeguard measures mean that in the WTO agreement, importing countries can restrict imports when the number of importing countries increases sharply and severely damages their own industries. It is also called "safety valve". In 2002, the United States lifted quotas on gloves, bathrobes, knitwear, and textile bags from China to the United States. In the first half of the same year, China’s exports of these five commodities to the United States increased by 119%. On September 5 of the same year, the American Textile Manufacturers Association filed an application with the American Textile Executive Committee to require selective safeguard measures for these textiles, on the grounds that the exports of these five commodities to the United States have increased significantly and their prices have fallen. This has affected the export of textiles from China to the United States to a certain extent.