China 'must resolve trade issues now' to prevent escalation of trade war with US

Workers help to dock a cargo ship at a port in Qingdao, Shandong province, China. PHOTO: REUTERS

BEIJING - Trade relations between the United States and China are at an inflexion point and problems have to be resolved now to prevent the current trade skirmish from expanding further with profound consequences, the president of the US-China Business Council has said.

Noting that some of the problems - such as inadequate access to the Chinese market - have been around for a long time, Mr Craig Allen said: "We cannot carry on as we had in the past, so we encourage our Chinese colleagues to address the concerns positively, proactively, constructively and in a timely manner."

He said his organisation - which counts 205 US firms as members, most with a presence in China - is looking for agreements that will gain good market access, expand intellectual property rights protection, address concerns of technology transfer and accelerate market-oriented reforms in China.

Mr Allen told the Foreign Correspondents Club of China his organisation does not support the use of tariffs as they are a tax on Americans and can have unintended consequences. However, he said he was hopeful the new approach by US President Donald Trump would lead to results that the US has not yet been able to achieve.

The Trump administration since early this year has imposed several rounds of tariffs on Chinese imports to force the Chinese to deal with not only the huge trade imbalance - the US had a trade deficit of US$375 billion ($514b) with China last year - but also what it says is China's improper acquisition of US intellectual property through theft and forced technology transfer as well as the unequal treatment of US firms vis-a-vis Chinese ones.

These tariffs include levies on washing machines and solar panels imposed in January this year and on steel and aluminium in March. China retaliated with tariffs on US$3 billion worth of US goods.

In July, the US imposed tariffs of 25 per cent on US$34 billion worth of Chinese goods with another round on US$16 billion of goods due to kick in on Thursday. The Chinese responded with equivalent tariffs.

Last month, Mr Trump proposed tariffs of up to 25 per cent on another US$200 billion worth of Chinese goods, the public hearing for which has begun on Monday.

While previous rounds of tariffs targeted goods like machinery and electronic components, this round targets consumer products including Chinese seafood, furniture, plastics, bicycles and baby car-seats.

Already, US firms are warning that this round of tariffs could hurt Americans by forcing them to pay more for goods.

In more than 1,400 comments submitted to the US Trade Representative, most businesses argued that the tariffs will cause harm and higher costs, reported Reuters. It added that a small number praised the tariffs or asked that they be extended to other products.

"USTR's proposed tariffs on an additional $200 billion of Chinese imports dramatically expands the harm to American consumers, workers, businesses, and the economy," Reuters quoted the US Chamber of Commerce as saying in written testimony for the hearing.

A Chinese delegation led by Vice-Commerce Minister Wang Shouwen is due in Washington for talks on Wednesday (Aug 22) and Thursday.

"We hope that this round of negotiation will lead to some agreement," said Mr Allen, adding that "we want market access for our companies, we want increase in US exports".

Join ST's Telegram channel and get the latest breaking news delivered to you.