White House to probe China's trade practices: Sources

WASHINGTON • The White House is preparing to open a broad investigation into China's trade practices, said people with knowledge of the Trump administration's plans.

This comes amid growing worries in the United States over a Chinese government-led effort to make the country a global leader in microchips, electric cars and other crucial technologies of the future.

The move, which could come in the next few days, signals a shift by the administration away from its emphasis on greater cooperation between Washington and Beijing, in part because administration officials have become frustrated by China's reluctance to confront North Korea over its nuclear and ballistic missile programmes.

The probe will focus on alleged Chinese violations of US intellectual property, according to three people with detailed knowledge of the administration's plans, who spoke on condition of anonymity as the deliberations were not yet public.

Any move by the Trump administration to punish China over its trade practices would raise tensions within the world's largest trade relationship.

China's export sector still contributes heavily to its economic growth despite Beijing's efforts to diversify its economy, and the country represents a lucrative market for US automakers, technology firms like Apple, farmers and many others.

Still, China's industrial ambitions - and growing frustration among US companies doing business there - have become harder for US officials to ignore.

China's policy to become a leading manufacturer by 2025 in the fields of driverless cars, medical devices, semiconductors, artificial intelligence, robotics and many other technologies has caught the attention of officials in President Donald Trump's administration.

The policy, known as Made in China 2025, sets goals for China to be a global leader in 10 fields with the help of huge infusions of state money and the protection of those industries from US competitors.

At the same time, the Chinese government has demanded that US companies cut the licensing fees that they charge for key patents, and has insisted that companies set up joint ventures to do business in China. In recent months, citing cyber-security concerns, Chinese officials have said international technology companies like Apple, Amazon and Microsoft must set up China-based data centres if they want to do business there.

Chinese officials have also demanded that Western automakers move much of their research into electric cars to China if they want to qualify for large subsidies.

Chinese officials did not immediately respond to requests for comment. Mr He Weiwen, a former Commerce Ministry official and trade expert who is now a senior fellow at the Centre for China and Globalisation, a Beijing research group, said the Chinese government would study any US trade case before deciding how to respond and whether to seek intervention from the World Trade Organisation (WTO), which hears trade disputes.

"China thinks that the bilateral trade relation is governed by WTO rules, not American domestic law," he said.

NY TIMES

A version of this article appeared in the print edition of The Straits Times on August 03, 2017, with the headline 'White House to probe China's trade practices: Sources'. Print Edition | Subscribe