by
Nick Beams
China
has ruled out any further trade talks with the United States as long
as the Trump administration continues to threaten and impose further
tariffs on its exports.
The
latest round of measures—the imposition of a 10 percent tariff on
$200 billion worth of goods, set to escalate to 25 percent next
year—came into effect on Monday. Just an hour after the new tariffs
were enacted the official Xinhua newsagency published a white paper
setting out Beijing’s position.
“The
door for trade talks is always open,” it stated, “but
negotiations must be held in an environment of mutual respect” and
could not be carried out under the threat of tariffs.
In
addition to the escalation of the latest tariffs to a rate of 25
percent, Trump has also issued a threat to strike levies on an
additional $267 billion worth of Chinese goods, meaning that, if
implemented, all of China’s exports would carry some form of
tariff.
Tensions
have been further heightened by the imposition of sanctions by the
State Department on a Chinese military agency for its purchases of
equipment from Russia in defiance of a unilateral ban imposed by the
US over Russia’s alleged interference in the 2016 presidential
election.
Speaking
to Fox News last Sunday, Secretary of State Mike Pompeo made clear
that the US intends to escalate its actions, saying that Trump was
not starting a trade war but engaging in one that was already
underway. The Trump administration considers that since China joined
the World Trade Organisation in 2001 it has benefited to the
detriment of the US.
“The
trade war by China against the United States has been going on for
years,” Pompeo said. “To the extent one wants to call this a
trade war, we are determined to win it.”
US
Trade Representative Robert Lighthizer is on record as saying that
the US decision to support China’s accession to the world trade
body was a mistake.
The
escalation of the conflict and the growing recognition that it is not
a temporary spat, able to be solved through negotiation, has led to
expressions of concern in sections of the financial media.
In
a comment piece, Financial
Times columnist
Rana Foroohar wrote that while it would be easy to see the latest
round of tariffs as just another provocative shot fired off by a
president in need of overseas distractions, that would be wrong.
“In
fact, far from being an ill-advised and hasty policy decision
emanating solely from Donald Trump’s White House, this latest
tariff round represents something much more dangerous and lasting: a
true reset of economic and political relations between the US and
China, and the beginning of something that looks more like a cold war
than a trade war.”
Foroohar
went on to point out that the “reset” is supported by sections of
the political establishment extending well beyond Trump, including
the Pentagon and what she called the “labour faction of the
progressive left”—that is, the trade unions. To this list could
be added the Democrats who are just as bellicose towards China as
Trump, if not more so.
“They
have different agendas, but coalesce around the idea that the US and
China are in a long-term strategic rivalry, and that, as a result, US
trade policy and national security policy should no longer be
separated,” she wrote.
This
connection has already been made clear in the latest National Defense
Strategy issued by the Pentagon in January which labelled China a
“strategic competitor” of the US using “predatory economics”
to advance its regional and global position.
Viewed
in this context, to label the conflict with China as simply the start
of a “cold war”—drawing a parallel with relations between the
US and the former Soviet Union—is misleading. The US never regarded
the USSR as an economic threat that could undermine American
hegemony. But that is a central concern of the anti-China hawks in
the administration and their supporters in the wider political
establishment.
They
fear that the tides of economic development, which has seen the rapid
expansion of China, especially since its entry into the WTO, are
moving against the US, threatening its economic and ultimately
military dominance. This must be prevented by all means necessary.
China’s
entry into the WTO was promoted by the Clinton administration and
carried through in 2001. The view at that time was that the low-cost
manufacture and assembly of consumer goods by China, which had proved
very beneficial to the US during the 1990s, would continue, and that
China would remain at the bottom of global value chains.
However,
capitalist economy has its own inherent objective logic and China has
not remained in that position. It continues to supply cheaper
consumer products, but the past decade and a half has seen it move
rapidly up the value chain.
China
overtook Germany as the world’s top exporter of goods in 2009 and
its share of global manufacturing exports has expanded from 12 to 18
percent over the past decade.
Xu
Bin, a professor at the China Europe International Business School
told the Financial
Times: “Chinese
companies are abandoning low-end goods to move to middle-range goods,
it’s actually a very fast change.”
The
newspaper reported: “China is now the dominant producer in medium
high-tech industries, with its global share nearly tripling in the
past decade to 32 percent, according to the US National Science
Board, surpassing the US in the late 2000s, and the EU this decade.”
Telecommunications,
transport equipment and auto parts have grown as a proportion of
China’s exports to the US, while the share of textiles and footwear
has contracted. According to the World Bank, China’s share of the
global capital goods market rose from 5 percent to 20 percent between
2007 and 2016.
The
trade war launched by the US is driven by a determination to halt the
next stage of China’s economic expansion as it moves to expand its
industrial and technological base under the “Made in China 2025”
plan.
The
official position of the White House was set out by White House
deputy press secretary Lindsay Walters in a statement last Saturday
as the latest trade measures were due to go into effect. “We remain
open to continuing discussions with China, but China must
meaningfully engage on unfair trading practices,” she said.
Such
“meaningful” engagement goes far beyond any action by China to
reduce its trade deficit with the US. China has already advanced
proposals to increase its exports from the US but they have been
rejected as inadequate.
The
central demand of the US administration is that China ceases its
alleged theft and acquisition of intellectual property—a practice
no doubt engaged in by China as it has been by other capitalist
powers, including the US—and ends state subsidies to key
industries, via the promotion of “national champions” and other
so-called “market-distorting” policies: in other words, that
Beijing essentially scraps its central economic strategy.
At
this point, China still lags behind the US and other major powers in
the next stage of technological development. However, on the basis of
the vast changes over the past decade and a half, the fear is that
this situation could rapidly change and pose a direct threat to US
economic dominance.
This
is the essential driving force of the US trade war which it intends
to prosecute by all means at its disposal, both economic and, if
necessary, military.
This
article first appeared on World
Socialist Web Site (WSWS)
on
26
September 2018,
and was republished with permission.
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