As Trump reportedly plans to investigate alleged intellectual property and trade abuses, ex-adviser to Beijing warns of lawsuits and other forms of retaliation

This article is more than 3 years old

This article is more than 3 years old

China has “all kinds of weapons and ammunition” to fight back against Donald Trump’s “petulant” threat to investigate alleged Chinese intellectual property and trade abuses, a former trade adviser to Beijing has warned.

According to some reports, Trump will use a speech at the White House on Friday to announce a wide-ranging trade inquiry targeting Beijing – a move that has received the blessing of senior Democrats, in a rare show of bipartisan solidarity. “We should certainly go after them,” the Senate Democratic leader, Chuck Schumer, was quoted as saying by Reuters on Thursday.

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In a letter to the US trade representative, Robert Lighthizer, another top Democrat, the Oregon senator Ron Wyden, also backed the decision to tackle China on trade.

Wyden accused Beijing of placing “significant limitations” on the ability of US firms to compete there, and called for action “to counter China’s attempts to strong-arm US innovators into giving up their intellectual property and drive US firms further out of the Chinese market”.

Cheng Dawei, a former government trade adviser, said that with Trump’s anticipated investigation – and the tariffs or trade restrictions on Chinese goods that might follow – the US president would be “trampling on bilateral trade relations”.

Beijing had been trying to improve ties with the US, Cheng claimed, but the US now appeared to be stepping up its attempts to wreck the relationship. “I think the commerce ministry has all kinds of ‘weapons’ and ‘ammunition’ [to fight back],” she said. “They have been studying this, so they know very well when to fire which shell. The question now is how to use them.”

Cheng, an economics professor at Beijing’s prestigious Renmin University, said one possible means of retaliation might involve China suing the US for its “groundless accusations” and fighting the investigation at the World Trade Organization (WTO). “I think this is an opportunity for China to emphasise its role and take a stance at the WTO.”

Another possible method might be to launch an anti-dumping investigation targeting certain American products. “China [could] strike back by simply choosing some important goods to find flaws or stir up trouble with,” she said.

According to Bloomberg, Chinese officials have identified soybeans as one American import that could potentially be targeted. Cars, aircraft and rare-earth commodities might also face restrictions.

Last year, one state-run newspaper claimed Beijing would adopt a “tit-for-tat approach” were Trump to spark a trade war by slapping hefty tariffs on Chinese imports. “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted,” the Global Times predicted.

Ties between the world’s two biggest economies had seemed to be improving following the two-day Mar-a-Lago summit between Trump and China’s president, Xi Jinping, in April.

After that meeting, Trump publicly stated he would refrain from challenging Xi on economic or trade issues in order to secure his help reining in the nuclear ambitions of Kim Jong-un, the North Korean dictator. “He’s working so nicely [on North Korea]. China is trying to help us,” Trump told Fox.

“Would I want to start heavy, heavy trade or currency manipulation statements against somebody that is out there right now trying to stop what could be a very bad situation?”

However, the relationship has soured in recent weeks, with the US president venting his frustration at what he sees as Chinese inaction on North Korea in the wake of a second intercontinental ballistic missile (ICBM) test on 28 July.

“I am very disappointed in China,” Trump tweeted last weekend. “Our foolish past leaders have allowed them to make hundreds of billions of dollars a year in trade, yet they do NOTHING for us with North Korea, just talk. We will no longer allow this to continue.”

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Tensions could increase further this week, with Trump reportedly poised to punish Beijing by issuing a presidential memorandum which would cite Chinese theft of intellectual property as a problem. According to Reuters, a so-called “Section 301” case would then be launched by the trade representative, Lighthizer, allowing Trump to unilaterally impose tariffs or other trade restrictions designed to protect US industries.

Liu Ming, a North Korea expert from the Shanghai Academy of Social Sciences, said the inquiry was an attempt by Trump to “exact revenge” on China because of his gripes over North Korea.

Liu predicted that Beijing would adopt a “wait-and-see policy” until the nature of Trump’s initiative became clear but would be ready to respond to any “stern economic policies”.

“[China] has cards to play in its hand,” he said.



Additional reporting by Wang Zhen

