Authoritative person: China can even fight the "national debt card" in response to the trade war

(Original title: Exclusive | Authoritative trade negotiations with the United States: Dealing with trade wars, China can even play "national debt cards")

Since the Sino-US trade war that last year was coming from the rain, I finally waited for the first boots to land.

In the early morning of the 23rd Beijing time, US President Trump signed a memorandum, announcing that it will impose tariffs on Chinese imports on a large scale, restricting Chinese companies from investing in US mergers and acquisitions, and resorting to relevant issues to the World Trade Organization (WTO) dispute settlement mechanism. The scale of Chinese goods involved in taxation can reach 60 billion US dollars.

A spokesperson for the Chinese Ministry of Commerce immediately made a speech on the US 301 investigation decision, saying that the Chinese side has clearly stated its position on the 301 investigation. China does not want to fight trade, but it is not afraid of trade wars. We have the confidence and ability to cope with any challenges. I hope that the US will be on the verge of a cliff and make careful decisions. Do not drag bilateral economic and trade relations into danger.

A number of 301 survey experts told the First Financial Reporter that the name of the Trump operation was to invoke the US 1974 Trade Act Article 301 to investigate China, including whether China infringes US intellectual property rights and enforces the United States. Technology transfer, etc., but did not point out specific cases, enterprises, valid evidence, "not professional practice."

Zhou Shizhen, a senior researcher at the School of International Studies at Tsinghua University, told the First Financial Journal that Trump is now hoping to push China into the wall with a trade war and pressure China to make concessions on economic and trade issues. China needs to argue on the one hand and ask the US to produce tangible evidence. On the other hand, it also needs to take countermeasures to "stop war with war."

Old 301 survey

Edward Alden, a senior fellow at the US Council on Foreign Relations (CFR), said in a keynote speech on "US Trade Policy and Impact on China" at the Globalization Think Tank (CCG) on the 22nd, in the eyes of Trump, the United States is against China. The trade deficit is serious. Moreover, China's rapid development and the government's protection of the domestic economy have brought challenges to US economic and trade development. The Trump administration’s trade initiatives do not target China’s single country, but reinvigorate US trade on a global scale.

Since Trump took office at the beginning of last year, his aides and his team have successively pulled out a series of dazzling and sloppy trade remedies that challenge the bottom line of the WTO to loosen the “legs” of the multilateral system, putting pressure on major trading partners. Finally, China officially made a big move for the 301 investigation.

A Sino-US bilateral negotiator commented on the First Financial Journal reporter that the old man of a community has responded to today's affairs with the methods of the 1970s and 1980s. History will prove that there are more market methods than the government.

Another person expects that Trump's focus may be on some areas of state-owned enterprise management that enjoy national industrial policy support. Of course, we must get 60 billion US dollars of Chinese imports, which will involve a wide range of issues.

Trump appointed US Trade Representative Robert Lighthizer to announce the types of products subject to import tariffs within 15 days.

Sun Yuanwei, executive director of the Asia-Pacific Law Institute and visiting professor at Peking University, said that the first financial report reporters must go through a 30-day announcement and consultation period before the list is issued. This means that the US has actually set up a 45-day negotiation time. The current situation is very similar to the re-enactment of the history of 1994-1995. So strictly speaking, this trade war is not really open for 45 days.

On August 18 last year, Wright Heze announced that he officially launched a 301 investigation against China. At that time, the US Trade Representative Office issued a statement saying that it would investigate whether the Chinese government's practices, policies and practices in the areas of technology transfer, intellectual property, and innovation are unreasonable or discriminatory, and whether it imposes a burden or restriction on US business. This behavior led to concerns about Sino-US economic and trade relations.

The so-called 301 investigation originated from Article 301 of the US Trade Act of 1974. The provision authorizes US trade representatives to initiate investigations into “unreasonable or unfair trade practices” in other countries and may recommend US Presidents to impose unilateral sanctions after the investigation, including the abolition of trade preferences and the imposition of retaliatory tariffs. Initiating the 301 investigation is a means of trade remedy and a unilateral trade retaliatory measure.

In the 1980s and 1990s, the United States frequently launched 301 investigations against multiple trading partners including China. After China’s accession to the WTO, this approach has not been used until the WTO’s multilateral consultation mechanism.

The US practice is not professional

Liu Chuntian, dean of the Intellectual Property College of Renmin University of China, told the First Financial Reporter that from his decades of experience, the United States has never really penalized China’s intellectual property issues, especially the government’s sanctions. It is something that has not been experienced. On October 10 last year, China sent experts to the United States to participate in the 301 investigation hearing, as well as the defense session.

Liu Chuntian said that it must be acknowledged that China is not skilled in the operation of intellectual property protection. The United States is very advanced. This time it has no professionalism. There is no specific data on intellectual property issues, and it also directly produces an integer. "Professional practices need to be on the matter, come up with evidence, list them one by one, and make demands and demand compensation. Instead of a government directly initiating punishment for another government." Liu Chuntian said, "The problem can not be said to be hard. Rather, it needs strength, sincerity, and principle. Use business rules to solve business problems."

The statement issued by the China International Chamber of Commerce on behalf of the Chinese business community today confirms this. The statement said that the results of the 301 investigation published by the US Trade Representative Office were seriously lacking in factual basis and evidence support. The China International Chamber of Commerce represented the Chinese business community in the investigation and submitted nearly 1,000 pages of defense materials, proving that the relevant allegations could not be established. The technology transfer between Chinese and American enterprises is negotiated by the enterprise, decided independently, and paid for transactions. There is no government compulsory and intervention.

According to the statement, Chinese companies investing and acquiring in the United States are independent choices of enterprises in the context of global economic integration. They follow the principles of commercial considerations and marketization. The relevant transactions comply with US laws and create a large number of jobs for the United States. The Chinese government continues to strengthen the protection of trade secrets. In fact, there are no substantial evidence in the dozens of comments submitted by the US public to the US government to support allegations of so-called “compulsory technology transfer”. On the contrary, the vast majority of comments suggest that the state of intellectual property protection in China has been significantly improved.

"The aforementioned findings and the protectionist measures proposed by the US government are clearly in violation of the multilateral rules. China and the United States are both members of the WTO, and relevant economic and trade disputes should be properly resolved on the basis of multilateral rules in accordance with the provisions of the treaty. According to the WTO rules, the US There is no right to unilaterally determine the relevant economic and trade differences between China and the United States, and it has no right to impose unilateral measures such as additional tariffs to impose sanctions on China." The above statement stated that "China International Chamber of Commerce urges the US to assume the responsibility of the major powers to actual Action respects multilateral rules and the international rule of law."

Alden also believes that neither side will benefit from the "trade war", third parties may be damaged more, and consultation is the most reliable way to reach more new rules and agreements on trade relations. Promote economic cooperation between the two sides.

Agricultural products are the biggest weakness in the United States

For Trump's first precedent, you need to understand what the Trump team wants. On the other hand, you need to know what cards are available in China.

A spokesperson for the Ministry of Commerce said that the US side ignored China's facts of strengthening intellectual property protection, ignoring the rules of the WTO, ignoring the voices of the broad masses of the industry, and bent on its own way. This is typical of unilateralism and trade protectionism. China firmly opposes it. The US move is not conducive to the interests of the Chinese side, is not conducive to the interests of the US, is not conducive to global interests, and has set a very bad precedent. Under any circumstance, China will not sit idly by to protect its legitimate rights and interests. We are fully prepared to resolutely defend our legitimate interests.

Zhou Shizhen, who has many years of experience in negotiating with the United States, analyzed the first financial reporter. The most important goal of Trump’s move is the US mid-term election in November. If the Republican Party in the midterm elections falls, it will affect Trump’s 2020. Re-election. What he cares most is not to launch a trade war against China, but to show the Americans that he can do anything.

He said that China's approach has always been a post-production. At present, there are several types of products imported from the United States that are the next step that the Chinese government can take against.

The first is American agricultural products. This is the biggest weakness of the US economy. The United States has a large area of ​​cultivated land, and its population is only one-fifth of that of China. It has excess capacity and relies heavily on overseas markets. China is the largest export market for US agricultural products. In 2016, China imported US$21.4 billion worth of agricultural products from the United States. The US ambassador to China, Branstad, previously served as governor of Iowa, a major producer of soybeans, corn, and pigs in the United States. The products that China can counteract are the first to be American soybeans. Chinese southerners mainly eat rapeseed oil, while northerners consume peanut oil and sunflower oil. Soybean oil is not irreplaceable. Other soy products, such as high-grade soymeal, can be imported from Brazil, Argentina, etc. Now the order is placed, and soon it is the planting season.

Sun Yuanzhen added that these agricultural products mainly involve eight states in the Midwestern United States, almost all of the Republican Party’s “world”, which is Trump’s important “ticket position”, which can intensify the Republican Congress and Trump. The contradiction between. The agricultural sector has always had a strong policy influence in the United States, and may allow farmers' groups to continue to exert pressure on the White House and the Congress to avoid more subsequent policies that are not conducive to them.

On February 4 this year, the Ministry of Commerce of China issued a notice saying that since 2013, the US’s exports to China’s sorghum have increased substantially and prices have continued to fall. This has caused damage to China’s sorghum industry and decided to start importing sorghum originating in the United States. Anti-dumping and countervailing investigations.

In addition to agricultural products, the second is rare earths. The dependence of emerging industries on rare earths is gradually increasing, while China supplies 85% of the world's rare earth raw materials. Supply disruptions in previous years have led to the suspension of the Japanese automotive and electronics industries and have affected the global manufacturing industry that relies on rare earth resources.

The third is the aircraft. China imports more than 100 aircraft each year, making it the second largest aviation market in the world. Boeing is one of the leading exporters in the United States, and its biggest competitor is Airbus in Europe.

The fourth is beef products. In 2003, China banned American beef from entering China due to "mad cow disease". After 14 years, on June 23 last year, the first batch of imported American beef qualified by Chinese official inspection and quarantine was cleared at the Beijing Tianzhu Customs Inspection Center. This is the Sino-US economy. The implementation of the early harvest of the Hundred Days Plan (hereinafter referred to as the “Hundred Days Plan”).

Zhou Shizhen said: "Australian and New Zealand beef can replace US beef imports."

Finally, the reduction of US Treasury bonds. On January 10, local time, due to news, as the biggest buyer of US bonds, China may reduce the speed of purchasing US bonds and even stop buying US bonds. On the same day, the market reaction was very strong. The US dollar fell to a six-week low against the yen and fell against a basket of major currencies. The three major US stock indexes closed lower and intraday trading oscillated; gold prices rose, hitting the highest in nearly four months. The Dow Jones Industrial Average closed down 16.67 points; the S&P 500 closed down 3.06 points; the Nasdaq index closed down 10.01 points.

Now that US Treasury bonds are being sold at a record rate by global central banks, this trend is becoming more and more obvious. In August 2016, the Fed data showed that the number of US Treasury bonds held by foreign institutions fell rapidly, with a decline of more than 17 billion US dollars, totaling 2.871 trillion US dollars, the lowest level since 2012. A month later, the data showed that foreign central banks accelerated the liquidation of US Treasury bonds, and the total amount fell to 2.83 trillion US dollars, once again refreshing the new low since 2012. On February 14 this year, the results of the Bank of America Merrill Lynch survey showed that the proportion of bonds allocated by the fund managers was 60%, which is the lowest level since the record was recorded in the 20-year period.

Zhou Shizhen also suggested: "Now the United States needs to worry about who the national debt is to sell to. Now is a good time for China to reduce its holding of US Treasury bonds, and it can increase its holdings of gold, oil reserves, copper and aluminum and other large mineral resources."

Taking oil as an example, according to the Medium and Long-Term Plan of the National Petroleum Reserve approved by the State Council, before 2020, China will successively build the second and third phases of the national oil reserve, forming a total reserve equivalent to 100 days of net oil imports. scale.

Source: First Financial Daily Responsibility Editor: Wang Xiaowu _NF