The Beneficial China's Lab-Made Bioweapon

Commerce Secretary Wilbur Ross says China’s coronavirus will help bring jobs back to U.S.
By Rachel Siegel

During an appearance on Fox Business on Thursday morning, Commerce Secretary Wilbur Ross said that the pneumonia-like virus would be taken into consideration by American businesses with supply chains in China.

Commerce Secretary Wilbur Ross said the Chinese coronavirus — which has killed 213 in China and infected more than 9776 people — could help to bring jobs to the United States because companies will be moving operations away from impacted areas.
During an appearance Thursday morning on Fox Business, Mr. Ross said that he didn’t “want to talk about a victory lap over a very unfortunate, very malignant disease,” and expressed sympathy for the victims. 

But he said the Chinese pneumonia-like virus would be a consideration for American businesses that are scrambling to determine how the outbreak will affect their supply chains. 

He pointed to the 2003 SARS epidemic, the “Chinese swine virus” and now coronavirus as “another risk factor that people need to take into account.”


Aaron Rupar
✔@atrupar
Secretary Wilbur Ross says coronavirus will be good for [checks notes] American jobs: "I think it will help to accelerate the return of jobs to North America."
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1:47 PM - Jan 30, 2020

“I think it will help to accelerate the return of jobs to North America, some to [the] U.S., probably some to Mexico as well,” Mr. Ross said. 

He then said Apple was “talking about figuring out how to replace some of the Chinese production.” 

“I think there’s a confluence of factors that will make it very, very likely more reshoring to the U.S. and some reshoring to Mexico,” Mr. Ross said.
The White House has been pressuring companies in China to move operations to the United States. President Trump recently signed a partial trade deal with China meant to create new incentives for U.S. companies.
But some health experts said Mr. Ross's message could incite China to suppress or falsify reports of new infections. 

Meanwhile, health officials are up against the spread of false information on social media, from conspiracy theories to deceitful claims of magical cures. 

White House officials so far have been careful in how they’ve talked about the economic implications of the health scare in China, and idiotic Trump has gone out of his way to praise Chinese dictator Xi Jinping.
Still, Mr. Ross has a history of breaking with Trump’s messaging. 

During the government shutdown last year, when some federal workers were resorting to food banks, Mr. Ross suggested they consider taking out loans from credit unions to pay their bills. 

Mr. Ross is a billionaire and longtime friend of Trump’s.
Total infections in mainland China have surpassed those of the SARS outbreak, and roughly 100 cases have been recorded in other parts of the world. 

Global businesses — from Starbucks to airlines to automakers — are increasingly scaling back or suspending their operations nationwide and, with an official lockdown affecting more than 50 million people, consumer spending has plunged.
China’s markets remain closed for the Lunar New Year holiday, but Hong Kong’s Hang Seng Index slumped more than 2.5 percent, and Japan’s Nikkei declined 1.7 percent. 

The Dow Jones industrial average fell nearly 150 points at the opening bell, but rallied later and ended the day up more than 100 points.
White House economic adviser Larry Kudlow told Fox Business on Thursday that the White House is not expecting coronavirus to deal a blow to the U.S. economy.
“We see no material impact on the economy,” Kudlow said. 

“The pandemic is, of course, in China, not the United States.”
Many Chinese factories have extended their customary closures beyond the end of the Lunar New Year celebration through at least the second week of February. 

Some of Apple’s Chinese suppliers are slated to stay closed until Feb. 10. 

And executives are waiting to see whether the Chinese virus sparks broader economic consequences, both within and beyond China, the longer the public health crisis persists.
Federal Reserve Board Chair Jerome H. Powell on Tuesday said he was “not going to speculate about it at this point.”
“The situation is really in its early stages. It’s very uncertain about how far it will spread and what the macroeconomic effects will be,” Powell told reporters.

National Security

Huawei, 70 affiliates placed on U.S. trade blacklist

By David Shepardson, Karen Freifeld

WASHINGTON/NEW YORK -- The U.S. Commerce Department said on Wednesday it is adding Huawei Technologies Co Ltd and 70 affiliates to its so-called “Entity List” -- a move that bans the telecom giant from buying parts and components from U.S. companies without U.S. government approval.
U.S. officials told Reuters the decision would also make it difficult if not impossible for Huawei, the largest telecommunications equipment producer in the world, to sell some products because of its reliance on U.S. suppliers.
Under the order that will take effect in the coming days, Huawei will need a U.S. government license to buy American technology.
Commerce Secretary Wilbur Ross said in a statement President Donald Trump backed the decision that will “prevent American technology from being used by foreign owned entities in ways that potentially undermine U.S. national security or foreign policy interests.”
The dramatic move comes as the Trump administration has aggressively lobbied other countries not to use Huawei equipment in next-generation 5G networks and comes just days after the Trump administration imposed new tariffs on Chinese goods amid an escalating trade war.
The Commerce Department said the move comes after the U.S. Justice Department unsealed an indictment in January of Huawei and some entities that said the company had conspired to provide prohibited financial services to Iran. 

The department said it has a reasonable basis to conclude that Huawei is “engaged in activities that are contrary to U.S. national security or foreign policy interest.”
In March 2016, the Commerce Department added ZTE Corp to the entity list over allegations it organized an elaborate scheme to hide its re-export of U.S. items to sanctioned countries in violation of U.S. law.
The restrictions prevented suppliers from providing ZTE with U.S. equipment, potentially freezing the Huawei rival’s supply chain, but they were short-lived. 

The U.S. suspended the restrictions in a series of temporary reprieves, allowing the company to maintain ties to U.S. suppliers until it agreed to a plea deal a year later.
In August, Trump signed a bill that barred the U.S. government itself from using equipment from Huawei and ZTE.
Senator Ben Sasse, a Republican, said “Huawei’s supply chain depends on contracts with American companies” and he urged the Commerce Department to look “at how we can effectively disrupt our adversary.”

President Trump Is Great Again

President Donald Trump approves tariffs on $50 billion worth of Chinese goods

By Pamela Brown and Julia Horowitz


President Donald Trump has given his approval for the United States to put tariffs on $50 billion of Chinese exports, according to a source with knowledge of the situation.
An official announcement is expected on Friday. 

The president's green light came after a meeting Thursday with top economic officials, including Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and US Trade Representative Robert Lighthizer.
The move represents a serious escalation of trade tensions between the world's two largest economies.
It was first reported by Bloomberg.
Beijing previously said it would respond to American tariffs on $50 billion worth of Chinese exports with retaliatory tariffs on $50 billion of US products such as cars, planes and soybeans.
For months, President Trump has slow-walked threats of tariffs against China as punishment for intellectual property theft.
He first announced that the United States would impose trade penalties on about $50 billion of Chinese goods in March.
"We have a tremendous intellectual property theft problem," President Trump said at the time. "It's going to make us a much stronger, much richer nation."
After China warned it would retaliate, Trump threatened tariffs on a further $100 billion of Chinese products.
In mid-May, both sides announced a ceasefire after two rounds of trade negotiations.
The countries said in a joint statement that China would "significantly increase" purchases of US agricultural and energy products to reduce the trade imbalance, a top Trump administration demand. Mnuchin subsequently declared the trade war "on hold."
Ten days later, the White House abruptly said it would proceed with the tariffs, along with new limits on Chinese investments in the United States.
The Trump administration said it would finalize the list of goods that would be subject to 25% tariffs by June 15, and that the tariffs would go into effect "shortly thereafter." 

An initial list, which including items ranging from artificial teeth to flamethrowers, was released at the beginning of April.
A further round of trade talks in Beijing earlier this month failed to yield any breakthroughs. 

And the Chinese government warned then it wouldn't honor its pledge to increase purchases of US goods if tariffs were imposed.
The Trump administration last week cut a deal with Chinese telecommunications firm ZTE to end a crippling ban that prevented the company from buying American parts. 

ZTE's fate had become entwined in the trade talks. 

But the agreement to save the company has faced resistance from lawmakers in Congress, who argue the ban should stay in place because ZTE poses a security threat.
President Trump's decision to move forward with tariffs on China follows his recent imposition of steep tariffs on steel and aluminum imports from Canada, Mexico and the European Union on national security grounds.

Trade War

White House Moves Ahead With Tough Trade Measures on China

By Ana Swanson

Wilbur Ross, left, the United States commerce secretary, and Li Keqiang in Beijing last year. Mr. Ross is expected to return to Beijing on June 2 to continue trade talks.

WASHINGTON — The Trump administration said on Tuesday that it would proceed with plans to impose a series of punitive trade-related measures on China in the next month, intensifying pressure on Beijing as trade talks between the countries continue.
The White House said in a statement that the United States would move ahead with its plan to levy 25 percent tariffs on $50 billion of imported Chinese goods, despite recent remarks by Steven Mnuchin, the Treasury secretary, and other administration officials that the tariffs would be suspended while the countries continued their negotiations.
The administration had previously announced a list of goods that would be subject to tariffs, including flat-screen TVs and medical devices. 

It then held a series of hearings on the tariffs, giving the public a chance to influence the final list. 

The White House said it would detail the final list of goods that will be subject to the tariffs by June 15, and the duties would be imposed shortly after that, the statement said.
The White House said the Trump administration would also move forward with restrictions on Chinese investment and with stronger export controls meant to limit the access that Chinese people and companies have to American technology — a measure the administration said was for national security purposes.
Those restrictions will be announced by June 30 and adopted soon after that, the administration said, adding that the United States would also continue to pursue a trade case it has filed against China at the World Trade Organization involving intellectual property rights.
Trade talks between the two countries will continue, the statement said, and the United States has asked Beijing to remove “all of its many trade barriers” that prevent American companies from doing business in China, and has also said that “tariffs and taxes between the two countries be reciprocal in nature and value.”
The White House has planned to send Wilbur Ross, the commerce secretary, to China on June 2 to continue the trade negotiations. 

The last round of talks concluded on May 19 with the countries announcing little progress toward resolving a long list of complaints the American negotiators had previously identified. 

President Trump subsequently said he was not satisfied with the negotiations, and that they had a “long way to go.”
Mr. Trump has often talked about challenging what he has described as China’s unfair trade practices, but his advisers are deeply divided over the best course for doing so. 

Some, like Mnuchin, have focused on a potential compromise deal that would require China to buy huge amounts of American products while still forestalling the possibility of a trade war.
Other advisers have pushed for tougher action, demanding that China make substantial reforms to its economy to end the subsidies it provides to developing industries and to allow American companies equal access in the Chinese market. 

Those requests in particular have provoked a backlash from China, which has threatened its own potential set of tariffs on $50 billion in American goods.
On Friday, Mr. Trump said he had reached a deal that would allow the embattled Chinese telecom firm ZTE to remain in business, raising criticism and fears from Congress that he was backing off from his tougher promises on trade.
ZTE has been hit with tough sanctions by the United States, and its fate had become a bargaining chip in negotiations, with Xi Jinping appealing directly to Trump for help.

Bannon exit a reminder of China’s success in ‘containing Trump’

By Tom Mitchell in Beijing

Steve Bannon, who has been fired as White House chief strategist

Shortly after Donald Trump met Xi Jinping for the first time at his Florida resort, a senior Chinese government official wondered aloud if the US president’s most important domestic political adviser really saw Beijing as an enemy, let alone the enemy. 
“But Steve Bannon spent years [working] at Goldman Sachs,” the official protested in a conversation with the Financial Times.
“He also reads widely and understands history. I don’t think he will be that radical.” 
Last week the ruling Chinese Communist party had its answer.
In what turned out to be his swansong interview just before he was fired, Mr Bannon said the US was engaged in a winner-take-all “economic war” with China.
He added that he fought “every day” with another Goldman Sachs alumnus, White House economic adviser Gary Cohn, and other administration figures who sought a more moderate approach towards dealing with America’s principal geopolitical rival. 
Mr Bannon’s abrupt departure is a reminder that Beijing’s strategy for “containing Trump” has so far been a successful one.
But it is also a strategy that has benefited greatly from that most precious of commodities — luck.  As it stands, Chinese officials cannot believe their luck, beginning with Mr Trump’s decision to abandon the Trans-Pacific Partnership trade agreement on his first full day in office. 
The TPP would have locked the US and China’s largest Asian trading partners in a formidable economic block from which Beijing was initially excluded.
In the likely event that the Chinese government later applied for TPP entry, Washington would have had its best opportunity to pry open the China market since Beijing asked to join the World Trade Organisation in the late 1990s. 
As one disappointed US diplomat told the FT earlier this year: “We threw away our best leverage over China on day one.” 
A People’s Liberation Army general was as gleeful as the diplomat was deflated.
In a video of an internal talk that leaked online, Jin Yi’nan called the TPP decision a “grand gift, although [Trump] does not know it”.
In the months that followed Mr Trump’s TPP decision, Chinese officials breathed easier and easier as one threat after another melted away.  
Trump did not discard the long-standing “One China” as suggested by his unprecedented December phone call with Taiwan’s president, Tsai Ing-wen. 
He did not declare, as promised on the campaign trail, China a “currency manipulator”. 
And the deadline for a “100-day” trade and investment negotiation begun in Florida passed last month without a meaningful agreement. 
While Trump’s administration has just launched a probe into alleged Chinese theft of intellectual property, it will probably drag on for at least one year.
As a result Beijing has achieved its first objective vis-à-vis Trump: to avoid any economic disruptions with its most important trading partner ahead of a Communist party congress this autumn that will mark the start of Xi’s second term in office. 
Trump has, in other words, thus thrown out his second best piece of leverage over Beijing.  
China must still navigate difficult trade and investment negotiations with a US commerce secretary, Wilbur Ross, and a US trade representative who both understand that the Chinese Communist party’s unique brand of “state capitalism” poses challenges that the WTO is not equipped to handle. 
In his confirmation hearing in June, USTR Robert Lighthizer demonstrated that he understood the perils of Chinese state capitalism as well as Hillary Clinton did.
Mrs Clinton sounded her own alarm on the subject in a series of detailed speeches while secretary of state, and would probably have been laser-focused on the issue had she defeated Trump in last year’s presidential election. 
But Beijing’s showdown with Mr Ross and Mr Lighthizer will run for a year at least.
Xi can live with that, especially when pitted against an American president whose competence and authority waste further away with each passing week.

In rare bipartisan display, Democrats back Trump on China trade probe

By Ginger Gibson and David Lawder

Senate Minority Leader Chuck Schumer speaks during a press conference for the Democrats' new economic agenda on Capitol Hill in Washington, U.S., August 2, 2017.

WASHINGTON -- Three top Democratic senators, in a rare show of bipartisanship, on Wednesday urged U.S. President Donald Trump to stand up to China as he prepares to launch an inquiry into Beijing's intellectual property and trade practices in coming days.

Senate Democratic leader Chuck Schumer pressed the Republican president to skip the investigation and go straight to trade action against China.
"We should certainly go after them," said Schumer in a statement. 

Senators Ron Wyden of Oregon and Sherrod Brown of Ohio also urged Trump to rein in China.
Tensions between Washington and Beijing have escalated in recent months as Trump has pressed China to cut steel production to ease global oversupply and rein in North Korea's missile program.
Sources familiar with the current discussions said Trump was expected to issue a presidential memorandum in coming days, citing Chinese theft of intellectual property as a problem. 

The European Union, Japan, Germany and Canada have all expressed concern over China's behavior on intellectual property theft.
U.S. Trade Representative Robert Lighthizer would then initiate an investigation under the Trade Act of 1974's Section 301, which allows the president to unilaterally impose tariffs or other trade restrictions to protect U.S. industries, the sources said.
It is unclear whether such a probe would result in trade sanctions against China, which Beijing would almost certainly challenge before the World Trade Organization.
U.S. Section 301 investigations have not led to trade sanctions since the WTO was launched in 1995. In the 1980s, Section 301 tariffs were levied against Japanese motorcycles, steel and other products.
"This could merely be leverage for bilateral negotiations," James Bacchus, a former WTO chief judge and USTR official, said of a China intellectual property probe.

Senator Ron Wyden (D-OR) speaks to reporters ahead of the weekly party luncheons on Capitol Hill in Washington, U.S., August 1, 2017.

Some trade lawyers said that WTO does not have jurisdiction over investment rules such as China's requirements that foreign companies transfer technology to their joint venture partners, allowing sanctions to proceed outside the WTO's dispute settlement system.
But Bacchus argued the United States has an obligation to turn first to the Geneva-based institution to resolve trade disputes, adding: "There is an obligation in WTO to enforce intellectual property rights that is not fully explored."
Lighthizer and Trump's Commerce Secretary, Wilbur Ross, have complained the WTO is slow to resolve disputes and biased against the United States.

Sen. Sherrod Brown (D-OH) speaks with the media following the weekly policy luncheons on Capitol Hill in Washington, D.C., U.S., June 6, 2017.
The threat comes at a time when Trump has become increasingly frustrated with the level of support from Beijing to pressure Pyongyang to give up its nuclear and missile program.
Trump has said in the past that China would get better treatment on trade with the United States if it acted more forcefully against Pyongyang. 

Beijing has said its influence on North Korea is limited.
China counters that trade between the two nations benefits both sides, and that Beijing is willing to improve trade ties.
A senior Chinese official said on Monday there was no link between North Korea's nuclear program and China-U.S. trade.
Wyden, the top Democrat on the Senate Finance Committee, wrote to Lighthizer urging action to stop China from pressuring U.S. tech companies into giving up intellectual property rights.
Wyden's state of Oregon is home to several companies that could make a case regarding intellectual property rights and China, including Nike Inc and FLIR Systems Inc.

Chinese Peril

Ross: China is threatening US semiconductor dominance
By David Lawder
U.S. Commerce Secretary Wilbur Ross holds a news conference at the Department of Commerce in Washington.

U.S. Commerce Secretary Wilbur Ross sees the U.S. semiconductor industry as still dominant globally but said he is worried that it will be threatened by China’s planned investment binge to build up its own chipmaking industry.
Ross told Reuters in an interview this week that his agency is considering a national security review of semiconductors under a 1962 trade law because of their “huge defense implications” including their use in military hardware and proliferation in devices throughout the economy.
He has launched similar "Section 232" reviews of the U.S. steel and aluminum sectors, where a flood of imports especially from China has depressed prices, threatening the industries’ long-term health.
The probes could lead to broad import restrictions on the metals, and the Trump administration could potentially take similar actions based on the findings of a semiconductor investigation.
"Semiconductors are one of our shining industries, but they have gone from substantial surplus to the beginnings of a deficit," Ross told Reuters. 

"China has a $150 billion program to take that much further between now and 2025. That is scary."
The 79-year-old billionaire investor was referring to China’s plans for massive state-directed investments in semiconductor manufacturing capacity under its "Made in China 2025" program, which aims to replace mostly imported semiconductors with domestic products.
Ross’ predecessor at Commerce, Penny Pritzker, warned last November about looming market distortions if China builds too much semiconductor capacity.
Ross added that while he understands Beijing's logic in developing its domestic chip industry, "that’s going to be a struggle" from a U.S. trade standpoint.

INDUSTRY VIEW
U.S. semiconductor makers, meanwhile, have other ideas about how to secure their future. 

Their major trade group, the Semiconductor Industry Association (SIA), advocates open trade and increased access to international markets, which now buy 80 percent of U.S.-made semiconductors. U.S. chipmakers also depend on a complex global supply chain and have nearly half their production capacity located overseas.
"So while we fully support efforts to ensure trade in semiconductors is fair and market-based, we do not believe a Section 232 investigation is the right tool to be applied to our industry" SIA President John Neuffer told Reuters.
One area where there appear to be some differences is how to define the industry’s trade balance.
Commerce Department trade data showed that "Semiconductors and related device manufacturing” had a trade deficit of $2.4 billion in 2016, with exports of $43.1 billion and imports of $45.6 billion.
But that category includes rapidly growing imports of non-semiconductor devices including solar cells and light-emitting diodes (LEDs) as well as some raw materials.
In a new submission late on Wednesday to Commerce for a study on trade deficits, SIA said that excluding the non-semiconductor products shows the sector had a $6.4 billion trade surplus last year, with exports of $41.3 billion and imports of $34.9 billion.
Neuffer said the industry was ready to work with the Trump administration to find ways to persuade China to allow its semiconductor industry to develop in a market-driven way and not discriminate against foreign firms.
He added the government could make the United States a more competitive environment for semiconductor output through tax reform that does not penalize overseas earnings, immigration reform that allows the industry to attract new talent, improvements to U.S. education and more spending on basic research.
"The Chinese are determined to build a semiconductor industry," Neuffer said. 

"I think the strongest pillar of any strategy going forward has to be our government helping to create an environment where we can pedal faster and stay as far ahead as possible."

Cheap Chinese Aluminum Is a National Security Threat

The U.S. industry has been hollowed out. Just one remaining smelter can produce the material used in F-35s and F-18s.
BY BETHANY ALLEN-EBRAHIMIAN

Cheap Chinese steel has upset U.S. steel producers for years, as Chinese manufacturers have unloaded excess capacity on world markets at unbeatably low prices. 

The Trump administration has even invoked the supposed threat to national security from cheap imports to threaten trade restrictions on steel imports.
But the United States has plenty of steel-manufacturing capacity to meet its defense needs. 

What’s genuinely threatened, however, is another sector altogether: Aluminum. 

A glut of cheap Chinese aluminum has done more than hollow out that industry; it may also actually be jeopardizing national security.
Since China joined the World Trade Organization (WTO) in 2001, cheap Chinese aluminum has flooded American markets, closing factories and putting people out of work. 

The number of aluminum smelters in the United States has fallen from 23 to five in that time. 

Eight smelters have either shut down or scaled back operations since 2015, and about 3,500 aluminum jobs have disappeared in the last 18 months alone.
A bigger worry, however, is national security. 

High purity aluminum is used to make certain kinds of jets, such as Boeing’s F-18 and Lockheed Martin’s F-35, as well as armored vehicles. 

But the United States now has just one domestic manufacturer of high purity aluminum left — Century Aluminum’s Hawesville, Ky. plant, which is currently operating at 40 percent capacity amid dropping prices.
The prospects for importing high purity aluminum, from a geopolitical risk standpoint, aren’t friendly; only a few smelters in the world produce it, and those are located mostly in Russia, the Middle East, and China.
The situation prompted the Trump administration to launch a probe into aluminum imports on April 26, after launching a similar probe on steel earlier in the month.
“It’s very, very dangerous, obviously, from a national defense point of view, to only have one supplier of an absolutely critical material,” said Secretary of Commerce Wilbur Ross at an April 26 press briefing.
The probe invokes a portion of a Cold War-era law, known as section 232, which permits special protections for smelting in industries key to national security. 

The investigation would determine whether or not the United States produces enough high purity aluminum to meet its needs during wartime.
“You’re really left with just a kernel of the industry,” Jesse Gary, executive vice president and general counsel for Century Aluminum, told Foreign Policy. 

“Century Aluminum is only running at 40 percent capacity. As Secretary Ross mentioned, we truly are on the precipice of losing that smelter.”
Punitive tariffs of more than 370 percent have previously been levied on aluminum imports from China. 

In the past year, the Departments of Justice, Commerce, and Homeland Security have coordinated multiple investigations into U.S. companies suspected of illegally dodging tariffs on aluminum.
Relief under section 232 could be broader than tariffs, possibly including quotas or some other kind of remedy. 

But it still wouldn’t address the source of the problem — Chinese overcapacity. 

In fact, Chinese supply-side growth has continued unabated; it manufactured a new record of 2.95 million tons of aluminum in February.
That overcapacity results from Chinese subsidies to major industries, including not just aluminum but also steel, cement, solar, and glass. 

As the Chinese export-based manufacturing model of economic development has run out of steam over the past decade, the government has feared the loss of jobs and potential unrest that might result if major industries fail. 

As a result, it has provided subsidies to keep factories in production and workers at their jobs.
Chinese aluminum companies could not continue to operate at the size and scale they do without these subsidies.

In fact, that China has an aluminum industry of such gargantuan size in the first place — it currently produces more than half the world’s supply — is something of an anomaly. 

Aluminum production is hugely energy intensive, and so is heavily dependent on access to cheap electricity. 

Iceland, for example, with its abundant geothermal energy, is one of the world’s leading producers of aluminum. 

But the market price for electricity in China is significantly higher than in the United States or Europe; big state-owned smelters in China benefit from subsidized electricity.
Aluminum producing countries have been slow to mobilize. 

Steel production is spread out around the world, as many countries have their own steel industries, so a glut of Chinese steel affects a larger number of countries. 

But aluminum production is concentrated in just a few countries, those with cheap sources of electricity.
“Steel has been much more vocal on this issue. We’ve been a step behind,” said Gary. 

“But the decline of the U.S. aluminum industry has been more steep than anything you’ve seen in steel. The expansion of the Chinese industry and the decline of the U.S. aluminum industry has been much more rapid.”
But the U.S. seems to finally be getting serious about addressing the problem. 

In addition to Trump’s recent probe, in January the Obama administration launched a complaint to the World Trade Organization against Chinese aluminum subsidies. 

It’s the first such complaint filed to the WTO that addresses the root cause of Chinese overcapacity, rather than aiming to apply a band-aid like anti-dumping duties. 

Other aluminum-producing countries, including, Russia, Canada, Japan, and the European Union, have all asked to join that WTO request for consultation.
On March 9, the Aluminum Association submitted a complaint to the World Trade Organization (WTO), requesting that anti-dumping duties be levied on aluminum foil imported from China. Representatives from the China Trade Taskforce, founded in 2015 with members including Aluminum Extruders Council, United Steelworkers Union, and Century Aluminum, traveled to London last week to lobby Britain and the EU for their support.
“It does go to show that this problem is affecting all aluminum producing nations,” said Gary.

Lighthizer vows to crack down on unfair China practices

Pick for US trade representative says Trump is committed to getting tough with Beijing 
By Shawn Donnan in Washington

Robert Lighthizer: 'I don’t believe that the WTO was set up to deal effectively for a country like China'
Donald Trump’s pick as US trade representative has vowed to find new ways to crack down on unfair trade practices by China, suggesting that the World Trade Organisation is ill-equipped to deal with Beijing’s industrial policy.
Addressing a Senate confirmation hearing on Tuesday, Robert Lighthizer said Mr Trump, who railed against China throughout last year’s presidential campaign, remained committed to getting tough with Beijing and using a “multi-faceted approach” to crack down on trade abuses.
 “I believe [Mr Trump] is going to change the paradigm on China and, if you look at our problems, China is right up there,” Mr Lighthizer told senators.
Asked how he planned to address Chinese overproduction of steel and other products, the former Reagan administration official said he believed that dealing with Beijing called for creative new US approaches outside the WTO.  
“I don’t believe that the WTO was set up to deal effectively for a country like China and their industrial policy,” he said.
“We have to use the tools we have and then I think we have to find a responsible way to deal with the problem by creating some new tools.”
Tuesday’s hearing marked the public debut of a man expected to play an important role in delivering the president’s “America First” trade agenda.
It also demonstrated why many expect Mr Lighthizer to do so by testing the bounds of global trading rules.
He has a reputation as a brash lawyer with an ego to match the president’s.
People who have visited his home report encountering a towering — some say “life size” — portrait of him for visitors to admire.
“He’s no shrinking violet,” said one Washington trade lawyer who has worked with him.
Mr Lighthizer is also known as a ferocious political operator and negotiator.
A close aide in the late 1970s and early 1980s to Bob Dole, the former senator and presidential candidate, Mr Lighthizer rose rapidly through the staff ranks on Capitol Hill before joining the Reagan administration as deputy US trade representative while still in his 30s.
In that job he went toe to toe with Japan and other countries to negotiate “voluntary export restraint” agreements on steel and other products.
In private practice since the 1980s, Mr Lighthizer, 69, has become renowned as a representative for US steel and one of the most aggressive users of the US’s anti-dumping laws to block imports from China and other countries.
Alan Wolff, chairman of the National Foreign Trade Council and a prominent Washington trade lawyer who has worked alongside Mr Lighthizer on cases, said the incoming USTR had long been focused on defending America’s heavy industry.
His view of the importance of manufacturing to the US economy aligned both with Mr Trump and others brought in to deliver on the president’s campaign promises to bring back industrial jobs.
“I don’t think there’s a lot of daylight between him and [new commerce secretary] Wilbur Ross. They care about the industrial base. That’s always been their view on trade,” Mr Wolff said.
But it is his views on the WTO and China that may be most likely to prove important in the years to come.
In 2010 testimony to a congressional commission he called for the US to be more belligerent in its approach to China and the WTO. 
For too long, American governments had observed “an unthinking, simplistic and slavish dedication” to WTO rules, particularly with regard to China. 
“Derogation may be the only way to force change in the system,” he wrote.
That attitude and a sceptical view of the WTO’s dispute settlement system was on display in a March 1 report to Congress setting out the administration’s trade agenda.
The latter, said Mr Wolff, was drawn from repeated rulings rejecting some US anti-dumping practices.
“It’s not just one case. It’s a string of cases,” he said.
In other written pieces Mr Lighthizer has argued more broadly for the Republican party — and its presidents — to embrace the protectionism of their elders and the aggressive negotiating tactics of Ronald Reagan.
Faced with an administration engaged in its own internal trade war, some pro-trade Republicans also have hopes for Mr Lighthizer.
They see him as far less likely to blow up the system than potential internal rivals such as Peter Navarro, head of Mr Trump’s National Trade Council.
Mr Lighthizer’s nomination has been held up by a debate over whether he needs a congressional waiver to overcome a legal ban on US trade representatives having worked for foreign governments. Democrats insist that he does because of work he did for Brazil and China in the late 1980s and early 1990s.
They are also seeking to use this as leverage to push through other legislation.
But Republicans who see him as a potentially moderating force in an administration lacking in nuance on trade are eager to see Mr Lighthizer installed quickly.
“He’s got a great deal of experience — and there’s a lot of people in the administration who don’t have very much,” Charles Grassley, the Iowa senator, said ahead of the hearing.

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.

China Quietly Abandoning Bid for ‘New Model of Great Power Relations’ With U.S.

Beijing long sought a rhetorical reboot in bilateral ties. Now it’s talking differently.
BY DAVID WERTIME

China’s long love affair with a curious phrase appears to be ending. 

For years, Chinese bureaucrats have dutifully parroted a phrase near and dear to Xi Jinping’s heart: “A new model of great power relations,” or “新型大国关系” in Chinese. 

It was never clear exactly what it meant — the Obama administration was loath to use it, meaning its details were never fleshed out — but it appeared to imply some sort of parity, equality, and shared responsibility between the United States and China. 

Now, after years of regularly appearing on the lips of Beijing apparatchiks, the phrase appears to be fading into history.
For several years, promise of a “new model” was nearly impossible for a consumer of Chinese media to avoid. 

On the eve of Xi’s September 2015 state visit to the United States — the last time China’s president set foot on American soil — Chinese state outlets, bureaucrats, and Beijing-approved analysts flooded media with mentions of the term. 

Days before the visit, Cui Tiankai, then as now Chinese ambassador to the United States, used the phrase twelve times in a single editorial in mouthpiece People’s Daily.
It turns out that Xi’s visit was the beginning of the end. 

The “new model” notion was duly flogged during and after his visit, but has petered out since. 

Following the U.S. presidential election, Chinese-language mentions of the “new model” have fallen still further, according to trend data from Qihoo, a search engine. 

According to Chinese-language readouts, when Xi spoke with President Trump during their delayed and much-scrutinized Feb. 10 phone call, the phrase did not come up, nor did it during Chinese foreign minister Yang Jiechi’s Feb. 27 meeting with the U.S. President.
The absences have been notable enough that on Feb. 10, a reporter asked foreign ministry spokesperson Lu Kang whether China had “given up on building a new model of great power relations after Trump took office.” 

Kang, whose ministry has largely avoided criticizing Trump directly, said there had been no change to policy.
The term’s evident demise is somewhat ironic, given that during the presidential campaign, Trump called for a new approach to the relationship — at least, he did so implicitly, by criticizing virtually every major aspect of the Obama administration’s approach to Beijing. 

A Feb. 9 analysis in Global Times, a popular outlet that’s sanctioned by Beijing but often more nationalistic than the official line, insisted that Trump’s campaign slogan, “America First,” was “perfectly understandable” given that Beijing had its own “China first” policy. 

That article compared Trump’s exhortation to “make America great again” with Xi’s favored promise, “the great rejuvenation of the Chinese nation,” and concluded that only a “new model of great power relations” would allow for both to remain true.
Yet some of the hotter rhetoric aimed at Beijing appears to be giving way, as U.S.-Sino relations slowly re-normalize. 

After much criticism of China during his campaign, Trump pledged as President-elect to revisit the one-China policy, which Beijing considers sacrosanct, only to recognize the policy within weeks of being inaugurated. 

Economic advisor and Death By China author Peter Navarro has taken a senior White House role, but may end up being less influential on China policy than senior advisor Jared Kushner, whose family firm has business ties to Chinese insurance behemoth Anbang, and recently-confirmed Wilbur Ross, the billionaire Commerce Secretary who, prior to the presidential campaign, frequently expressed admiration for the country and its culture. 

Trump’s White House currently looks as likely to find entente with China as it does to enter a trade war.Whatever understanding Beijing and Washington ultimately reach, they will both have to find something else to call it.

Trump’s commerce pick faces questions over China ties

Wilbur Ross still holds investment with Beijing-backed fund in oil tanker company 
By James Fontanella-Khan in New York and Shawn Donnan in Washington

Donald Trump (left) and Wilbur Ross, his choice for commerce secretary

Wilbur Ross, Donald Trump’s incoming US commerce secretary, is facing questions over potential conflicts of interest stemming from his business ties to China’s largest sovereign wealth fund.
The billionaire investor and China Investment Corp (CIC), the state-controlled fund, were part of a consortium that invested $1bn in Diamond S Shipping, an oil tanker business, in 2011.
The company is one of the few that the financier-turned-politician has decided not to sell to join the government, according to disclosure documents. 
CIC, which owns about 9 per cent of the company, has been one of Beijing’s main overseas investment vehicles, and Ross is set to be one of China’s leading interlocutors in the new US administration on matters of trade and investment once he is confirmed by the Senate. 
Their ties could affect the ability of one of Trump’s top economic advisers to deal with Beijing. 
Ross’s Commerce Department oversees the prosecution of anti-dumping and other trade enforcement cases and has in past administrations played a broad role in trade negotiations and other issues between the US and China, including internet privacy.
Kathleen Clark, a Washington University law professor, said Ross’s ties with CIC raised questions about his impartiality. 
“By reason of that type of co-investor relationship, Ross’s impartiality in handling a Commerce Department proceeding involving CIC could reasonably be questioned, so he should recuse [himself] from any proceedings involving CIC,” she said.
Richard Painter, a former White House ethics lawyer under George W Bush, said that by keeping a 32 per cent stake in Diamond S Shipping, Ross would also have to recuse himself regularly from broader trade policy discussions, given the direct impact these could have on his transoceanic oil tanker business. 
Another top lawyer, who asked to remain anonymous as he is working with several Trump administration nominees seeking US Senate confirmation, said an ethics agreement signed by Mr Ross in which he revealed he would hold on to his shipping stake was worded in a way that could expose the commerce secretary to legal attacks.  
A spokesman for Mr Ross said he had been willing to divest his stake in Diamond S Shipping but had been told he could keep it by government ethics officials who saw no potential conflicts of interest. The spokesman also noted that CIC was “a passive minority investor” in Diamond S Shipping and that the structure of his own stake once he entered government meant Ross would have no control over the company’s business decisions.
“Mr Ross has committed that, if confirmed, he will faithfully execute the law and the commitments in his ethics agreement, and will follow the advice of the department’s ethics officials with respect to any matter about which they advise him that a conflict of interest would arise,” the spokesman said.
“The department’s ethics officials are career staff with extensive experience, and together with Ross are committed to serving the public and faithfully executing the law,” he added.
Scrutiny of Mr Ross’s potential conflicts of interest could have implications for the Trump administration as the 79-year-old former investment banker has been identified as one of the central figures steering the new US trade policy, which aims to put “America first” by renegotiating deals with partners across the globe.
Mr Ross, who has agreed to divest most of his holdings and business interests, has been cleared by the Office of Government Ethics over potential conflicts. 
He told the Senate Commerce Committee in January that “I intend to be quite scrupulous about recusal in any topic where there’s the slightest scintilla of doubt”.
Charles Borden, an Allen & Overy lawyer who has taught classes on government ethics at Harvard Law School, said the fact that OGE and Commerce Department officials had approved Mr Ross’s ethics agreement indicated they did not think his shipping interests were likely to create concerns under federal conflict-of-interest laws. 
Mr Borden noted that many aspects of trade policy are too general to give rise to legal violations, but cautioned Mr Ross could face legal exposure if he participated in “particular matters” relating to his shipping business.  
Nowhere in the ethics agreement approved by OGE is the CIC co-investment mentioned, raising questions over whether the body reviewing conflicts of interest is aware of Mr Ross’s connection to the Chinese state-backed fund. 
OGE and CIC declined to comment. 
Throughout his career in business Mr Ross has had an ambiguous relationship with Beijing, shifting from China-basher to China-lover depending on circumstances. 
Since Mr Ross became a close aide to Mr Trump during the 2016 election campaign he has repeatedly criticised China, labelling it “the biggest trade cheater in the world”.
But in 2012 he was defending China’s reputation, arguing “China-bashing” in the US was “wildly overdone”. 
His Commerce Department will also have a key role in scrutinising Chinese acquisitions of US assets under the Committee on Foreign Investment in the United States. 
Chinese companies, which have been on a buying spree in the US in recent years, have been subject to more reviews of deals for national security reasons than any other country’s companies in recent years, US Treasury data show.
Mr Ross decided not to sell Diamond S Shipping because at present market valuations he would have exposed himself to a substantial financial loss, said two people who are familiar with his thinking. The financier tried to take Diamond S Shipping public in March 2014 but at the last minute decided to kill the initial public offering after the market pointed to a lower valuation than he had expected. Other investors in Diamond S Shipping include the investment arm of agribusiness giant Cargill and First Reserve, an energy-focused buyout group. 
Theodore Kassinger, a lawyer at O’Melveny & Myers who advised Mr Ross on his ethics agreement, declined to comment.

“Don't listen to what Xi Jinping says, but look at what he does

The EU Calls on Xi Jinping to Put His Words into Action
Reuters

The European Union urged China on Wednesday to make "concrete progress" in opening its markets to global investment, after Xi Jinping decried protectionism in a speech at the recent World Economic Forum in Davos, Switzerland.

"A speech is a speech and actions are actions," said Hans Dietmar Schweisgut, EU Ambassador to China, adding that he would be "surprised" if Xi was able to translate words into action.
At Davos last week, Xi called for "inclusive globalization" and for global unity, saying "self-isolation will benefit no-one," two days before the inauguration of U.S. President Donald Trump.
During that week, China's cabinet issued measures to further open the economy to foreign investment, including easing limits on investment in banks and other financial institutions.
No further details were provided, nor a timetable for their implementation.
So far, the EU has not seen "sufficient signs that China will be willing to grant reciprocity of market access to European companies," Schweisgut told reporters in Beijing.
In June 2016, the European Chamber of Commerce in China warned that foreign companies face an increasingly hostile environment in China, with fewer than half its members saying they planned to expand operations in the world's second-largest economy.
Billionaire investor Wilbur Ross, Trump's choice for commerce secretary, has called China the "most protectionist" country in the world, and said China's officials "talk much more about free trade than they actually practice."
Trump has previously criticized China's trade practices and threatened to impose punitive tariffs on Chinese imports.
China has said it is confident it can resolve trade disputes with the new U.S. government, though some state media and government advisors have warned that U.S. aircraft manufacturers, automobile companies and agricultural products could be caught in the cross-fire of increased trade tensions.
When asked whether Europe saw any opportunities in China's warnings of punitive measures against the U.S., Schweisgut said this was "interesting speculation" but that he did not know enough about Trump's trade policy plans to comment.

Sina Delenda Est

Making America Great Again Without China

By Alex Capri

President Donald Trump

Speculation on the topic of President Donald Trump's trade policies has been widespread. 

On one extreme, observers claim that Trump’s threats are more bark than bite: the real goal is to force America's trading partners to the negotiation table, where, when confronted by a superior bargaining position, they would quickly fall into line with the “America First” agenda. 

On the other extreme, alarmists are predicting trade wars, an unraveling of the American-led international trading framework and, ultimately, geopolitical upheaval. 

It seems nothing can be ruled out. 

Remember, all of this began with the very unlikely possibility of a Trump candidacy, followed by an even more outlandish election.
So how should stakeholders prepare for the uncertainty of the Trump Trade Doctrine?
The answer: first, look at who President Trump has anointed as his most trusted trade advisers, and, secondly, look at what they have written about trade policy.

Professor Peter Navarro — dubbed Trump’s “Trade Czar” — has established himself as an outspoken anti-China academic and is spoiling for a fight with the Chinese Communist regime. 

The Trinity

Three experts will have an inordinate amount of power to influence White House trade policy and to shape the landscape of international trade: Peter Navarro, the head of the newly established White House National Trade Council; Wilbur Ross, Trump’s nominated Secretary of Commerce; and, Robert Lighthizer the newly appointed United States Trade Representative (USTR).
All three are card-carrying economic nationalists with strong leanings toward protectionist and interventionist policies. 

This is a clear signal that Trump’s election season hyperbole should be taken seriously.
Professor Peter Navarro — dubbed Trump’s “Trade Czar” — has established himself as an outspoken anti-China academic and is spoiling for a fight with the Chinese Communist regime. 

Wilbur Ross, a billionaire investor, holds equally strong opinions and regards China as the world’s most egregious trade-cheater and free-rider. 

He, too, is primed and ready to take action. 

Robert Lighthizer is the only inner circle appointee with previous government experience, having served in the USTR office during the Reagan era. 

Lighthizer established his credentials by aggressively prosecuting a campaign of voluntary restraint agreements, countervailing duties and anti-dumping duties against Japanese imports during the 1980s, at a time when Japan was enjoying its economic heyday as Asia’s top exporter.

Overview of the Trump Trade Doctrine
A brief paper written in September, 2016, entitled “Scoring the Trump Economic Plan,” by Peter Navarro and Wilbur Ross, is the primary road map for Trump’s policies. 

It sets out the cornerstones of Trumpian Trade Policy and the rationale behind a new hard-line approach to managing global trade. 

Below are the highlights from the paper.

The Great American Bargaining Chip
The United States boasts the largest and most advanced economy in the world. 

Quite simply: the world needs America more than America needs the rest of the world. 

But American leadership has failed to leverage this unique advantage when negotiating free trade deals and other international agreements.
Instead, in exchange for trading and operating in the U.S. economy, U.S. leadership should extract tangible concessions from allies and trading partners— similar to what China has done during its rise as a major power.
The U.S. must put America's self-interest first. 

This starts by “renegotiating” existing trade deals and scrapping all bad ones. 

Trump and his team have already said “no” to the Trans-Pacific Partnership (TPP), shrugging off the collateral damage this has inflicted on American prestige and influence in Asia. 

They have said they will go after the NAFTA and other FTAs as well, and renegotiate them under an “America First” agenda.
Even America’s membership in the WTO should be reconsidered.

One particularly glaring injustice is that the majority of WTO member countries assess import and export valued added taxes (VAT) in addition to customs duties against U.S. products, while the U.S. does not assess VAT against any imports. 

But if the U.S, as the world's largest economy, threatened to pull out of the WTO, this would spell doom for other trading nations and they would quickly acquiesce to the Trump White House.

Trade is a Zero Sum Game
If America runs a trade deficit, in any sector, it’s losing in the trade game. 

America must re-balance and redistribute these deficits by imposing tariffs against any products that threaten a trade imbalance. 

In this vein, the White House must punish unpatriotic American firms (like Apple) that move production abroad. 

This will involve “border tax” against imports on foreign made articles, arriving back into the U.S. from cross-border value chains.
Trump’s high-profile corporate welfare program, which has already featured the public spectacles of the Ford Motor Company and Carrier Corp’s capitulating on where to locate manufacturing operations, is a taste of things to come.

China is Already in a Trade War With America
Beijing has been in a trade war with America — by its own design — since China joined the WTO in 2001, but American leadership has been too passive or too naive to acknowledge this fact. 

It’s time to hit back hard.
China Inc. has been gaming the rules-based trading system by surreptitiously subsidizing and dumping its exports, selectively blocking trade in strategic goods, systematically stealing intellectual property and cleverly circumventing rules of origin.
Ross and Navarro will steer a Trump White House into confronting the Chinese, and, if push came to shove, Beijing would have more to lose than Washington.

Protectionist Tariffs Must be Implemented
To execute the “Make America Great Again” agenda, the Trump Trade Doctrine calls for a 45% tariff against Chinese products and 35% tariff against goods from Mexico, as well as a swath of tariffs against currency manipulators.

Together, these countries constitute the majority of America’s top trading partners. 

All would eventually bend to the will of the President, or reach a mutual compromise before things got out of hand.

Disrupted Supply Chains Will Adjust
In the long-term, protectionist tariffs would have a relatively minor impact on the overall U.S. economy, due to the percentage of U.S. jobs that are tied directly to exports—about 10% of GDP or about 11 million jobs out of a workforce of 124 million. 

China’s export sector accounts for 23% of its GDP; and, for Mexico, it’s as high as 35%.
Yes, there would be supply chain disruptions and job losses, with a manageable impact on the economy, but these would be short-term, as supply chains adjust and reconfigure and more firms begin to leapfrog over import tariffs by relocating operations within the U.S. 

They point out that this is precisely what happened in the 1980s when the Reagan administration pounded Japanese automakers and steel producers into submission with a series voluntary restraint agreements and anti-dumping and countervailing duty initiatives.

How Will It All Play Out?
There is little reason to doubt that a Trump Administration would follow through on all of its clearly stated trade strategy. 

However, no one can realistically predict how far this will go.

What’s clear is that firms, governments and other stakeholders need to get ready for uncertainty and disruption on an epic scale.

Change is coming fast.

Xi Jinping At Davos, World's Most Powerful Beggar

By Gordon G. Chang

Xi Jinping will address the World Economic Forum on Tuesday in Davos, the first time a Chinese leader has done so.
Chinese state media tells us he will speak strongly in favor of globalization. 

That message will be difficult to accept, however, as his country is closing off its market, restricting outbound capital flows, and delinking from the world.
Yet there is a more important storyline about the trip to the Swiss Alps. 

Xi will be begging for foreign investment. 

His country needs cash.
Xi, according to Chinese officials in Geneva, will advocate “inclusive globalization.” 

Jiang Jianguo, the chief of the State Council Information Office, said Xi hopes for “a human community with shared destiny.” 

As People’s Daily said Saturday, he “will present a confident, open, responsible, and positive Chinese voice to the world.”
Xi may be “confident,” “responsible,” and “positive,” but “open” he most certainly is not. 

He has, after all, been closing off the Chinese economy with enhanced state subsidies, unnecessarily restrictive national security rules like last November’s cyber security law, and highly discriminatory prosecutions of multinationals. 

His tenure has been marked by the increased favoritism toward state enterprises.
Xi’s general approach is embodied in his signature phrase, “Chinese dream.” 

That dream, unfortunately, contemplates a state-dominated society, and a state-dominated society does not sit easy with the notions of an open economy. 

Call it China for Chinese competitors only.
Moreover, since the fall of 2015 he has informally restricted outbound transfers of cash. 

Last fall, Xi began applying those restrictions in earnest to foreign companies. 

For instance, multinationals can no longer “sweep” $50 million worth of currency out of the country using expedited procedures. 

The limit for this popular procedure is now only $5 million.
The concern in the foreign business community is that Beijing will further restrict cash transfers, and this, of course, discourages not only inbound money transfers but also additional foreign investment.
This is a particularly bad time for Xi to do that. 

Last year, foreign direct investment, which for decades has powered the Chinese economy, increased only 4.1% in yuan terms. 

When measured in dollars—what really counts—FDI fell. 

The renminbi in the onshore market last year plunged 6.95% against the greenback.
Continued depreciation of the “redback” is another significant disincentive to invest in China, of course.
And while China’s leader talks about globalization in Davos, his economy is in fact de-globalizing. 

In 2015, China’s two-way trade fell 8.0%. 

Last year, exports tumbled 7.7% and imports fell 5.5%.
The decline in imports could have been even more severe last year because the Chinese have been using fake import documentation to smuggle cash out of the country. 

Net capital outflow might have increased in 2016 from the year before.
For 2015, the highest estimate of outflow was Bloomberg’s $1 trillion. 

So far, the biggest number for last year comes from Christopher Balding of Peking University’s HSBC Business School. 

He has gone on record saying there may have been $1.1 trillion of outflow in 2016.
The only significant sign of China’s increasing integration with the world is outbound investment, but acquisitions of foreign assets, it appears, are primarily driven by a desire to minimize in-country risk. Many of the deals suggest money is permanently leaving China.
So outflows are increasing while inflows are decreasing. 

No wonder Xi Jinping is going to Davos. 

Like all Chinese leaders, he wants others to come to him, a sign of strength. 

So he surely thinks that his going to the foreign gathering is a humiliation, especially because he is on the hunt for cash.
The good news about Beijing’s new mindset is that the central government is being forced to grant market access, unilaterally. 

At the end of December, the powerful National Development and Reform Commission promised to liberalize rules for foreign participation in the financial, gas, and infrastructure sectors. 

The pledge followed a State Council announcement on increased access to certain types of manufacturing.
Yet it is not clear who would want to invest even if Beijing makes good on its market-opening pledges. 

For one thing, there is the slowing economy. 

The National Bureau of Statistics on the 20th of this month will report something like 6.7% growth for 2016, but in reality China was expanding in the low single digits. 

Slow growth poses the risk of a systemic financial crisis because China is now accumulating debt at least five times faster than GDP.
Moreover, China investments carry far higher political risk these days. 

For one thing, Xi Jinping’s Beijing is generally threatening to use its economic might to achieve expanding geopolitical ambitions. 

That jeopardizes China’s hard-won reputation for being a reliable member of global supply chains.
And then there is Donald J. Trump. 

The president-elect has announced the appointment of trade hawks—most notably Peter Navarro as the chief of the newly formed National Trade Council, Wilbur Ross to head the Commerce Department, and Robert Lighthizer as U.S. Trade Representative—signaling a far tougher line on China’s mercantilist practices. 

Beijing is bound to react poorly, and it has, according to a Bloomberg report this month, already threatened to scrutinize the business dealings of American multinationals, looking especially for tax and anti-trust violations.
Yet China is already doing that. 

On December 23, the Shanghai Municipal Development and Reform Commission announced it had imposed a fine of 201 million yuan ($28.9 million) on SAIC General Motors Corp., the joint venture of General Motors and Shanghai Automotive Industries Corp. 

The alleged sin? 

Setting minimum prices for dealer sales of Cadillacs, Chevrolets, and Buicks.
So someone at Davos should ask Xi, once he utters his last generalization on globalization, to explain why anyone should invest in his country.
Xi may look powerful, but he is going to Davos as a beggar—and he’s got a lot of ‘splainin to do.

Robert Lighthizer vs. China’s unfair trade practices

“To attack a problem as large as our trade deficit with China, U.S. officials must be prepared to consider very aggressive positions at the W.T.O.” -- Robert Lighthizer 

By KEITH BRADSHER

A container port in Qingdao, China, in December. China consistently sells $4 worth of goods to the United States for each $1 of imports. 

SHANGHAI — As a top trade official, he limited the Japanese cars and steel coming into the United States. 

He halted talks with China on a deal that would encourage investment between the two countries. 

And he tried to give American exporters an edge with special tax breaks.
When it comes to problems troubling working-class Americans and manufacturers, Robert Lighthizer, President Donald J. Trump’s nominee for trade representative, has historically blamed the United States’ trading partners, advocating aggressive retaliation for widespread abuses of free-trade rules.
It is a philosophy that he developed in the 1980s as a deputy United States trade representative and fine-tuned in the decades-long career that followed as the main trade lawyer for the American steel industry. 

Now he appears ready to train that focus sharply on China.
“It seems clear that the U.S. manufacturing crisis is related to our trade with China,” Mr. Lighthizer said in testimony to a congressional commission in 2010.
Over the years, Mr. Lighthizer has consistently taken the position that foreign countries are subsidizing their exporters while quietly but systematically blocking imports to protect jobs in their own countries. 

His answer is to pursue a long list of trade measures limiting America’s imports — even if those actions may be barely permissible, if at all, under World Trade Organization rules.
“To attack a problem as large as our trade deficit with China, U.S. officials must be prepared, at a minimum, to consider very aggressive positions at the W.T.O.,” he said.
The choice of Mr. Lighthizer leaves China in a difficult spot. 

He is part of a group of Trump trade appointees with close links to exactly the kinds of metal-bashing old-economy industries in which China faces the greatest overcapacity, and the toughest choices about how to close factories and lay off workers. 

Restrictions on exports to the United States will make those choices even harder for China.
Wilbur Ross, the billionaire investor who is Mr. Trump’s choice to become commerce secretary, made large chunks of his fortune in steel and auto parts, two huge industries that in China are ramping up exports. 

Peter Navarro, the head of the new White House office overseeing trade and industrial policy, is a brilliant critic of globalization who said that American purchases of imported goods at Walmart are helping China pay for nuclear-tipped missiles aimed at the United States.
The timing is bad for China.
The Chinese economy is slowing despite vast amounts of fiscal and monetary stimulus. Big manufacturers in most industries are struggling with overcapacity, pushing them to sell goods overseas at cut-rate, even money-losing prices, just to cover their operating costs. 

Mr. Lighthizer has argued for years that the United States should keep out goods made with government subsidies or sold below the full cost of making them.

DOCUMENT

What Trump’s Nominee for Trade Representative Has Said About China and the W.T.O.

We annotated testimony that Robert Lighthizer gave to Congress in 2010 about China, the W.T.O. and trade with the United States.

“Trump naming him makes me worry the U.S. will carry out more rigid measures on trade and investment,” said Wei Jianguo, a former vice minister of commerce.
Exports are important for China. 

It consistently sells $4 worth of goods to the United States for each $1 of imports. 

That mismatch has produced a bilateral trade surplus for China equal to about 3 percent of the country’s entire economy, creating tens of millions of jobs.
The benefits to China from that surplus have been increasing rapidly in the past few years. 

Many exporters have stopped importing components and switched to increasingly capable local suppliers for everything from high-quality steel to advanced computer chips. 

Multinationals have moved entire supply chains to China, and transferred the technology to run them.
Many Democrats and many economists have also become increasingly disenchanted with the effect on American workers and the American economy. 

The Obama administration filed a long series of trade cases at the W.T.O. against China, although they involved fairly narrow policies and limited categories of goods. 

It has been preparing more, filing the latest trade case on Thursday over Chinese subsidies to aluminum producers.
If Mr. Trump goes even further in that direction, Mr. Lighthizer will bring a long background in such actions.
When he was in the Reagan administration, Mr. Lighthizer was the deputy United States trade representative overseeing industrial policy in old-economy industries like cars and steel. 

Since then, Mr. Lighthizer has mainly been filing anti-subsidy and anti-dumping trade cases against imports on behalf of the American steel industry.
“He’s the best negotiator I’ve ever worked with on policies involving trade or tax policy,” said Timothy Regan, Mr. Lighthizer’s chief of staff in the Reagan administration and now the senior vice president of global government affairs at Corning.
Mr. Lighthizer led successful efforts in the 1980s to force Japan to accept curbs on exports of cars and steel to the United States. 

Both were bold moves, particularly given that President Reagan at times espoused free trade. 

But when the W.T.O. was created the next decade, member nations agreed, with a few exceptions, to renounce imposing such export limits on other countries.
The auto industry could be ripe for action again. 

China is an enormous exporter of auto parts to the United States. 

Under Obama, trade tensions over automotive trade have already risen, and the Obama administration has won two W.T.O. cases. 

The cases forced China to abandon certain anti-dumping and anti-subsidy taxes on American autos and to dismantle a few, fairly narrow subsidies.

Barges in China with ore to be used in the manufacturing of steel. Robert Lighthizer, the Trump administration’s choice for trade representative, had a decades-long career as the main trade lawyer for the American steel industry. 

“He was squarely in the trade talks with Japan,” said He Weiwen, a former commerce ministry official who is now a senior fellow at the Center for China and Globalization, an influential Beijing research group, “so maybe Donald Trump wants him to do something similar on China.”
The intersection of tax and trade is a specialty of Mr. Lighthizer, who was an architect of a Reagan administration initiative to cut corporate taxes for exporters. 

He was previously chief of staff at the Senate Finance Committee, overseeing tax policy.
In the Reagan administration, he pushed the limits of what is permissible under international trade rules. 

His plan allowed many American exporters to reduce their taxes by setting up overseas companies to manage their foreign sales. 

But the W.T.O. eventually torpedoed the effort after a challenge by the European Union in the late 1990s.
Republicans now appear to be taking a similar — albeit more ambitious — tack. 

They are exploring how to raise corporate taxes for importers and use the extra revenue to reduce taxes for all other companies.
China, as the biggest exporter to the United States, would face a major blow. 

But it would also affect American retailers, electronics companies and other multinationals that depend on supplies from anywhere overseas.
A big obstacle for Republicans is whether the W.T.O. would declare such a tax to be a trade barrier. China and Europe effectively penalize imports by imposing a type of national sales tax, an approach the W.T.O. has approved. 

It is a steep 17 percent in China.
But House Republicans, leery of imposing any new national taxes, want to change existing corporate tax laws instead. 

W.T.O. rules discourage, although they do not necessarily prohibit, modifying corporate taxes in ways that penalize imports.
The W.T.O. review process, though, is lengthy. 

So Mr. Lighthizer and Congress could well go ahead with the tax plan, lightening the tax burden for American manufacturers as well as inflicting plenty of damage on China and the global supply chain.
And the W.T.O.’s response — if it found the plan invalid — would not have much heft. 

Mostly, the global trade group could authorize Beijing to impose trade restrictions on the United States’ much smaller exports to China.
That prospect does not scare Mr. Lighthizer very much, as he made clear in his 2010 testimony.
“W.T.O. commitments are not religious obligations,” Mr. Lighthizer said, and violations “are not subject to coercion by some W.T.O. police force.”