China's state media warn of pain for Trump in trade battle

Shipping containers at Pier J at the Port of Long Beach wait for processing in Long Beach, California, on April 4, 2018.
Shipping containers at Pier J at the Port of Long Beach wait for processing in Long Beach, California, on April 4, 2018.PHOTO: REUTERS

SHANGHAI (BLOOMBERG, REUTERS) - Chinese state media hailed their leaders' quick counter-offensive in the brewing trade war with the United States and said America would learn a "painful lesson" by tangling with China.

The articles and editorials across the Communist Party's media stable emphasised that China was acting only in self-defence, and that the Trump administration's move to levy a 25 per cent tariff on about 1,300 types of Chinese imports was opposed by many in the US.

"As China deploys its counter-attack, the pleasure that the US achieved from those tariffs will now cause them suffering as their financial and political gains diminish to zero," the Global Times wrote in an editorial on Thursday (Apr 5). The paper, which sometimes takes more hawkish positions, has run five editorials on the trade issue since Monday.

China said on Wednesday it would levy an additional 25 per cent tariff on about US$50 billion (S$66 billion) of US imports, matching the scale of proposed US tariffs announced the day before. Beijing retaliated with a list of duties on key US imports including soybeans, airplanes, cars, whiskey and chemicals.

The US is allowing 60 days for public feedback, leaving room for talks. China has said its tariffs will take effect when the US ones do.

The People's Daily, the Communist Party's mouthpiece, hailed the quickness of China's reciprocal tariffs, saying "China showed its sword in less than 24 hours with a reaction that even the Americans must not have anticipated". It devoted three pages in Thursday's edition to coverage of the tit-for-tat tariffs.

It said that Sino-US ties were no longer that of David and Goliath, but of two equally matched giants, and that President Donald Trump's incitement of a trade war was out of step with global sentiment. The daily's correspondents based in the US filed an article about how businesses and consumers in the US opposed Mr Trump's tariffs.

 
 

The Global Times said China had many more weapons in its arsenal to deploy against the US in the event of a trade war. It could devalue its currency, or promote the yuan as an alternative to the dollar in the global financial system.

An editorial in China Daily said that Beijing has never ceased sending the message that there would be no winners if there should be a trade war.

"It is willing to talk, willing to strike a mutually agreeable balance in bilateral trade," the editorial said. "But Washington should not mistake that for weakness. (China) will continue trading blows if forced to do so."

Meanwhile, a small but vocal online community is calling for a boycott of US products.

"Counterattack in trade war" was the third most-read topic on China's Weibo microblogging platform on Wednesday, viewed about 230 million times, while an editorial published the same day in Global Times warning the US against an entering a trade war drew roughly 7,000 comments.

"The sons and daughters of China should unite and boycott US products, modern war is conducted by the people," said one Weibo user with the handle "Deanliu1314".

A person who commented on the Global Times article said that "if they resist Chinese products, the United States won't be able to find an alternative. But if we boycott all US products, China-made products can easily fill the gap".

Products that netizens called for boycotting included Boeing planes, Apple products, US soybeans and even American graduate schools, with others saying that they could repeat what Chinese shoppers had done to South Korea.

"I resolutely support all trade measures China is taking against the United States," said one netizen who said he would boycott US products. "It starts with me."

However, there was no evidence yet of an organised campaign to stoke anti-US behaviour, or that consumers were yet shunning US goods in any numbers.

Trade and business exchanges between South Korea and China turned chilly last year after South Korea deployed the US-made Terminal High Altitude Area Defence (Thaad) anti-missile system despite vehement objections from Beijing.

The Thaad disagreement prompted an undeclared Chinese boycott of products ranging from South Korean cosmetics to cars, and was estimated to have knocked about 0.4 percentage points off South Korea's expected economic growth in 2017.

Rabobank said that in the current trade tension between the US and China, if the US tariffs took effect, they would shave 0.25 percentage points off China's gross domestic product (GDP), and 0.13 points off the US GDP if the Chinese tariffs were actually carried out.

The 0.25 percentage point, however, is limited, Rabobank senior economist Hugo Erken told The Straits Times. This is because China's GDP is projected to grow by 6.5 per cent.

Mr Ben Cavender, an analyst at Shanghai-based China Market Research Group, said that while US businesses in China such as Starbucks are more firmly entrenched in the country, everyday consumption goods could nonetheless be hit.

"You can see consumers saying we're not going to buy a Ford, or a GM product, and we're going to buy a European product or a Chinese product instead," he said.

Already, China Jianyin Investment, the equity investment group spun out from China Construction Bank, said it will avoid the US market in its pursuit of overseas technology acquisitions.

Mr Kenny He Wenjin, chief executive of JIC Investment, a unit of Jianyin that focuses on investment in manufacturing businesses, said that Germany and other parts of Europe were its key target markets, the South China Morning Post reported on Thursday.