Rogue Nation

US business group urges Washington to 'use every arrow' against China

Reuters

The United States should "use every arrow" in its quiver to ensure a level commercial playing field in China, a U.S. business lobby said on Tuesday, warning that 2017 could be the toughest year in decades for American firms in the country.
China's policies designed to support domestic companies and create national champions have narrowed the space for foreign companies, the American Chamber of Commerce in China said in its annual business climate report.
The White House has said U.S and Chinese officials are fleshing out a pledge by Donald Trump and Xi Jinping for a 100-day plan to cut the U.S. trade deficit with China, which reached $347 billion last year.
But the chamber said it hoped more attention would be paid to market access for American firms in China.
"Right now basically we are recommending everything you have in your quiver -- please use every arrow possible," chamber chairman William Zarit said, referring to possible backlash from Beijing.
He was speaking at a briefing on the report.
U.S. business groups want U.S. officials to take measures against Beijing on market imbalances.
More vociferous complaints from the American business community mark a shift from years past, when many companies eschewed the idea of forceful action by Washington for fear of retribution by China.
Foreign technology companies, in particular, fear what they see as Beijing's plans to pump billions of dollars in subsidies into domestic competitors and push regulations that could force the surrender of key technology or hit competitiveness.
"With uncertainty stemming from political and economic transitions in both the U.S. and China, perceptions of a deteriorating investment environment for foreign companies in China, and a slowing economy, 2017 will likely be one of the most challenging years in decades for U.S. companies in China," the chamber said in its report.
U.S. business leaders also worry that Trump's focus on curtailing North Korea's nuclear and missile programmes could undercut U.S. commercial interests in China. 

Last week, Trump tweeted that Beijing would get a better trade deal if it helped resolve the U.S. problem with Pyongyang.
"I'm sorry to see there is a possibility we may lose some momentum on helping to level the playing field with China in our economic relationship, due to the situation in North Korea, if there is some kind of trade-off," Zarit said.

Here Are the Top China-U.S. Trade Flashpoints as Trump Readies Case

Wilbur Ross says more work needed before making announcement

Bloomberg News

With his commerce secretary sworn in, U.S. President Donald Trump is now in a position to carry out his trade threats against China -- should he decide to do so.
Specific measures against China will be announced “as soon as we have a proper case prepared,” Commerce Secretary Wilbur Ross said in a Bloomberg Television interview last week. 

The billionaire investor spoke just before Trump’s speech to Congress, which included promises to bring back "millions of jobs" and that "dying industries will come roaring back to life."
Since the election, Trump hasn’t specified his trade plans, but the U.S. Trade Representative has said the U.S. won’t be bound by World Trade Organization decisions, according to a document obtained by Bloomberg News that outlines the administration’s trade agenda.
For its part, China said it will "ensure foreign trade continues to pick up and register steady growth," in a government work report Li Keqiang delivered to the National People’s Congress on Sunday.

Here are five potential flashpoints should Trump’s team deliver on past threats to take on Chinese exports:

Steel and Aluminum
China produces about half the world’s steel and its exports have hit record levels in recent years. Ross, who amassed some of his wealth by buying and consolidating steel companies, said during confirmation testimony in January that the U.S. must focus on anti-dumping tariffs on Chinese steel and aluminum.
Chinese steel and aluminum represent a relatively small percentage of its shipments to the U.S. 

But Chinese exports have helped drive a global steel supply glut, fueling trade tensions and prompting dozens of its trading partners, including the U.S., to impose duties and other taxes on steel imports last year.
China will further reduce steel-production capacity by around 50 million metric tons this year, according to the work report delivered on Sunday.

Auto Parts
The U.S. has accused China of dumping cheap auto parts, and a trade spat over Chinese tires dates to 2009, when the Obama administration slapped a tariffs on them. 

But the U.S. International Trade Commission announced in February that U.S. competitors had not been hurt by imports of bus and truck tires from Chinese producers, which escaped anti-dumping duties of up to 23 percent.
The U.S. imported an estimated $1.07 billion of truck and bus tires from China in 2015, according to the commerce department.

Textiles and Apparel
No U.S. manufacturers have been hurt more by cheap imports in recent decades than producers of textiles, apparel and leather products, according to a Deutsche Bank report released in November. U.S. output met only just more than a third of domestic demand for these products in 2015, down from about two thirds in 1997, the bank said.
Growing dependence on imports could mean that shipments from China face restrictions rather than higher tariffs that would raise prices for U.S. consumers. 

If the U.S. restricted Chinese textile and apparel imports, other low-cost producers such as Vietnam and India could step in, Deutsche Bank said.
Furniture and toys
These two labor-intensive industries have also suffered significant job losses in the U.S., and Chinese producers make likely targets for import restrictions, according to a report last month from Goldman Sachs Group Inc.
About one-third of China’s exports of these products land in the U.S., Mizuho Securities Asia Ltd. said in February. 

But as with textiles, hitting China here likely won’t help the U.S. reduce its broader trade deficit, as other nations rich in cheap labor would step in to make up for lost Chinese supply.

Electronics, Electrical Equipment
Electronics, computers and electrical equipment account for a big chunk of the U.S. trade deficit with China. 

But electronic goods are often made in China for non-Chinese companies such as Apple Inc., and are merely the final products at the end of complex supply chains in which the U.S. is an important player, Oxford Economics Ltd. said in a February report.
In fact, China’s biggest imports from the U.S. are electrical machinery and equipment. 

So it could be a “lose-lose” if the White House decided to pursue aggressive action in this area.

Hitting Back
History shows that China is likely to retaliate in trade spats. 

It may choose to strike back at U.S. “soft spots” such as agricultural products, aircraft and cars, said Tu Xinquan, dean at the China Institute for WTO studies at the University of International Business and Economics in Beijing.
Beijing also may restrict U.S. companies operating in China and continue selling its holdings of U.S. Treasuries. 

But those steps would be costly for China as well, so would only be taken should Trump launch a full-on trade war, Shuang Ding, chief China economist at Standard Chartered Plc in Hong Kong, wrote in a recent note.