Are China and West hurtling toward trade war?
Source: Sputniknews 11.1.2024 Author: Oleg Burunov
Washington and Brussels loath witnessing China take the lead when it comes to cutting-edge technologies, Dr. John Gong, professor of economics at the University of International Business and Economics in Beijing and a China Forum expert, told Sputnik.
The Chinese government’s shift toward pumping money into manufacturing as property-related activity threatens to further fuel global trade tensions and even result in a trade war, between Beijing and the West, the US-based news agency has reported.
Part of this policy pertains to the so-called new three items, namely, electric vehicles, solar panels, and renewable batteries, which are becoming the new growth drivers for China's exports, Bloomberg added.
Whether a trade war between China and Western countries will happen or not depends on the trade balance, Dr. John Gong, professor of economics at the University of International Business and Economics in Beijing and a China Forum expert, told Sputnik.
He pointed to the vast trade disparity between China and the US, and the PRC and the EU.
"China needs to work with the US and the EU to make trade more balanced over the long run. But the solution should be increasing their exports to China, whether being goods or services, as opposed to curtailing back China's exports to these countries," Gong pointed out.
Gong recalled that about 40% of China's exports are actually associated with foreign companies operating in the PRC, which could be wholly owned subsidiaries or joint ventures.
“So it is not just China exporting its output. American companies in China are also exporting,” the pundit clarified.
The professor also singled out Washington’s and Brussels’s concerns over China's manufacturing growth, which he said "also has a competition on technology perspective." Gong contended that the US and the EU loath seeing China take the lead in cutting-edge technologies, such as electric cars, batteries, and solar panels, something that he highlighted was "all about dominance in high-tech."
The remarks come after the US and the EU stepped up warnings over China’s overcapacity, with US Treasury Secretary Janet Yellen cautioning that this oversupply "could arise in the future in industries that China is investing in very heavily." EU Commission chief Ursula von der Leyen, for her part, claimed that China’s "overcapacities in protected industries are flooding global markets and can undermine our industrial base."
The EU Commission has also directly launched a probe into Chinese EVs — a rare move, as such investigations are normally requested by industry. In November, Ursula von der Leyen said that China’s "overcapacities in protected industries are flooding global markets and can undermine our industrial base."
This came on the heels of the Chinese Foreign Ministry saying in a statement that the EU must lift its export restrictions against China in order to eliminate the imbalance in trade with the PRC.
"The EU restrictions on export of high-tech products to China in recent years directly limited the EU’s ability to tap the potential of export to China and led to unbalanced trade between the two sides. If the EU truly wants to address this issue, it needs to lift export control against China, rather than putting the blame on China," the statement pointed out.
In a separate development, Chinese Foreign Ministry spokeswoman Mao Ning earlier said that China's export restrictions are significantly different from those imposed by the US, since they do not target any particular country or company.
In August 2023, Beijing imposed export controls on such rare earth metals as gallium and germanium to protect national security. Later on, in October, the Chinese Commerce Ministry also announced that starting from December 1, all graphite exports would need official approval. In December, the Chinese authorities introduced export restrictions on a number of technologies related to the mining and processing of rare earth elements.
In October 2022, the United States restricted the export of specific advanced semiconductor manufacturing equipment and items to Chinese companies. A year later, in October 2023, the US further expanded these export restrictions on advanced semiconductors. Beijing has repeatedly accused Washington of exploiting control measures in order to overburden Chinese firms.
US-China relations have been under strain for a considerable period due to mounting limitations on the export of US goods and services, the continuation of import duties on Chinese products, the rise of global trade conducted in yuan, and the diminishing influence of the US dollar worldwide.
