Laura Bicker
Chinese correspondent
Reuters
Grosse cars are among the American imports that Beijing said it would tax
Beijing made its decision. After days of warnings of countermeasures and urging Washington to enter negotiations and to “meet China halfway”, he decided to retaliate-or at least threaten to retaliate with his own prices.
China said that it would implement a 15% rate on coal and liquefied natural gas products as well as a 10% price on crude oil, agricultural machines and large motor cars imported from states -Unis from February 10.
The date is important. This means that it is still time for the two biggest economies in the world to step back from the edge of a trade war.
The two leaders planned a call later this week, according to the White House, and there are signs, despite today’s announcement, that China is in listening mode and keeps the door open for discussions.
First, Chinese countermeasures are limited to Donald Trump tax by all Chinese products heading to the United States.
America is the largest exporter of liquid natural gas worldwide, but China represents only around 2.3% of these exports and its main imports of cars come from Europe and Japan.
This calculated and selective targeting of the goods can simply be an opening blow by Beijing, a way of gaining a negotiation and lever power above all talks.
China officials can be encouraged by the cordial start of the American-Chinese relationship since Trump took office.
The American president said that he had a “very good” telephone call with President XI a few days before his inaugural ceremony, who was assisted by the highest Chinese official to have been sent to such an event. He also suggested that he hoped to work with XI to resolve the Russian war in Ukraine.
President XI may not want to fight with Trump for the moment because he is busy trying to consolidate his own sick economy.
It is also a familiar territory for the two leaders – although they are not eager to relive the past. There was a honeymoon period in American-Chinoine relations during Trump’s last term, before the relationship was rising.
Face or not treat
It will also be much more difficult for Trump to conclude an agreement with China than with Mexico and Canada – and many will depend on what he wants from Beijing.
China is the main economic rival of Washington and the reduction of the country of major supply chains was the objective of the Trump administration.
If Trump requests too much, Xi might feel that he can move away and there will be limits how far he is ready to be pushed.
The American president is dealing with a much more confident China than he did at the time. Beijing has widened its global footprint, and it is now the main trading partner in more than 120 countries.
Over the past two decades, it has also tried to reduce the importance of trade for its economy and has increased domestic production. Today, imports and exports represent approximately 37% of China’s GDP, against more than 60% in the early 2000s, according to the Foreign Relations Council.
The 10% price will sting, but Beijing may think that it can absorb the blow – for the moment.
The fear will be that President Trump is serious to increase this percentage to the 60% he promised during his campaign or that he will continue to use the threat of prices as a recurring diplomatic tool to maintain XI heads.
If this happens, Beijing will want to be ready and it means having a clear strategy in case it intensifies.
Learn from the past
The last time the leaders signed an agreement, it did not end well.
The two countries have issued tit-for-tat prices over hundreds of billions of dollars in 2018 goods.
He lasted more than two years until China finally agreed to spend an additional $ 200 billion (161 billion pounds sterling) per year on American products in 2020.
Washington hoped that the agreement would reduce the huge trade deficit between China and the United States, but the plan has been derailed by the cocovated pandemic and this deficit is now 361 billion dollars, according to Chinese customs data .
There are also key challenges for China because he thinks of several steps in any negotiation.
Beijing always sells almost four times more goods in the United States than it bought – and during Trump’s first term, he lacked articles to target.
Analysts believe that China is now examining a range of measures wider than prices to retaliate if the trade war is accelerating.
The clock turns. It is not yet a complete trade war. Companies around the world will look to see if the two leaders can reach a kind of settlement later this week.
