World|politics|July 12, 2018 / 09:22 AM
China switches strategy to deal with Trump tariffs

AKIPRESS.COM - China is taking an unusual approach with its response to the escalating trade battle with the US, ripping up the playbook it has relied on in other economic disputes as it seeks allies in Europe, Asia and within America itself, Financial Times reports.

Previous trade fights with Japan, France, the Philippines and most recently South Korea have been accompanied by a ramping up of hostility in China’s state-run media and bruising “ boycott diplomacy” against those nations’ corporations.

This time, however, China has cautiously parried the US measures as it seeks instead to present itself as an attractive investment destination, while President Donald Trump’s administration pressed ahead with tariffs on $34bn in goods. The US this week released a fresh list of $200bn in goods that could face tariffs in two months’ time.

China’s calm response stems from the importance of its bilateral trade and investment from the US — the two countries’ economies are entwined. “The US is larger-scale, and a different kind of economic power than Japan or Korea. That makes this quite unique,” said Max Zenglein, senior economist at the Merics Institute in Berlin. China’s trade surplus with the US limits its ability to impose tit-for-tat tariffs, he noted.

"When dealing with the US it is clear they [China] are more vulnerable and so that forces them to take a different approach.”

With this in mind, Chinese trade negotiators, led by Liu He, have focused on finding potential allies, including pro-business officials in Washington, who they hope can be won over with investment concessions.

Instead of targeting American companies directly — as it did with Korean supermarket chain Lotte — Beijing has offered better market access to their competitors. Chinese officials are pushing European and Japanese corporations to take advantage of a raft of long-promised reforms rolled out earlier this year, in a reminder to US companies that Beijing can divvy up the vast Chinese market as it pleases.

An offer of $15m in aid to the Palestinians was made at a recent summit in an attempt to woo Arab leaders. Even relations with Japan and South Korea have improved. Beijing has refused to link the trade dispute with Mr Trump’s nuclear negotiations with North Korean leader Kim Jong Un.

“The challenge the Chinese are going to have is there is not much more room to respond in terms of tariffs,” said Kellie Meiman, trade expert at McLarty Associates in Washington.

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