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China is preparing a retaliatory strike for the United States

China is preparing a retaliatory strike for the United States

30.03.2018
Tags: China, USA, Trade, Economics, International Relations, Analytics, Politics

The Ministry of Commerce of China promised that the US "will succumb to a pit dug for others" if they continue the trade war with China. Beijing warns that "the US side will be forced to pay for its actions" - a list of retaliatory measures has already been published in case Washington's threats are realized. The most pessimistic forecast - the trade war may well grow into this.

A list of 1300 Chinese goods, whose imports can be restricted by the US authorities, did not remain unanswered. The Ministry of Commerce of China has submitted two lists of 128 already American goods, which are planned to impose increased duties. The first includes fruits, nuts, wine, modified ethanol, ginseng and seamless steel pipes, the second included pork (China is the world's largest consumer). In the first case, it is planned to raise duties by 15%, in the second - to 25%.

"We will develop a campaign and will fight to the very end," said Foreign Ministry Spokesperson Hua Chuning. According to her, the statements of the American side that it will be difficult for China to take retaliatory measures testify to the underestimation of the determination and possibilities of the PRC in protecting its legitimate rights and interests. And also - the price that the US side will have to pay for their actions.

In the case of American restrictions, we are talking about goods for a total of up to 60 billion dollars, in the case of Chinese it is only three billion, in 20 times less. But the space for maneuvers in the trade war in Beijing is really considerable. Formally declared measures of the People's Republic of China are held as a response to the previous series of American restrictions - on steel and aluminum. Further more.

The Revenge of the Communists

"China can strike back on such items of US exports as meat, grain, soybeans, fish," said Aleksey Bezborodov, head of the research agency InfraNews. "These are very large sales markets, and if the supplies to China are cut off for the Americans, they will have a hard time. For example, China's possible refusal to contract for a new crop of soybeans threatens about 20 million tons of products, and this is a huge amount. In addition, China buys an expensive salmon fish in the United States for a total of a billion dollars - this is also a very serious article. Also, retaliatory measures can be taken on steel and recycled materials, such as waste paper. "

Restrictions on imports of soybeans from the US have recently been actively discussed in the Chinese media. Kitaist Georgy Koshechkov notes the political aspect of these measures:

soybeans are grown mainly in those American states that voted for Trump.

"At the first stage, most likely, China's main direct response will be in the agricultural sector," Koschechkov told VZGLYAD. "But to compensate for the duties that Trump announced, agriculture is not enough." The next possible step is the imposition of restrictions on imports of industrial goods and services, for example, on airplanes (in China, about a quarter of all orders of Boeing), taking measures to reduce the flow of tourists from China to the US, and so on. Finally, as the US limits opportunities for China's direct investment, blocking mergers and acquisitions, there may be reciprocal restrictions on US investment. "

At this stage of the confrontation, the expert believes, China is able to use measures similar to those used in the recent conflict with South Korea around the US missile defense system THAAD: "Without the formal introduction of trade restrictions, the Chinese counterpart of Rospotrebnadzor may be activated to search for all sorts of diseases. In addition, security checks and the like can begin at economic facilities in China owned by US companies, with a gradual increase in the degree of "zakoshmarivaniya" American business. "

In the event of further escalation of the trade war, China could sharply discard US state debt bonds and impose an embargo on exports of rare earth metals needed for the production of modern electronics - China accounts for more than 90% of their global production.

"The leadership of the PRC hardly believes in the possibility of an agreement with America. Rather, they hope to wait for Trump's administration and, if possible, "help" her to leave quickly, "Koshechkov sums up.

Si focuses

Toughening of US trade policy should be considered against the backdrop of recent transformations in the top leadership of the PRC. In early March, the National People's Congress approved a series of amendments to the country's constitution, one of which abolished the limitation of the powers of the chairman and vice-chairman of the PRC for two five-year terms. Meanwhile, acting chairman Xi Jinping, along with Mao Zedong and Deng Xiaoping, became the third leader of the country in the history of the PRC, whose name was included in the text of the constitution (previously it appeared in the charter of the Communist Party of China).

The sharp strengthening of C's position after last year's congress of the CCP allowed him to continue promoting his people to key positions in the Chinese leadership. In particular, in mid-March, the post of vice-premier of the State Council in charge of economic policy was received by Li's chief economic advisor Liu He, who was entrusted at the beginning of the year to head the Chinese delegation at the World Economic Forum in Davos.

Initially, Liu He was named as the new chairman of the People's Bank of China in the light of the long-planned resignation of 70-year-old Zhou Xiaochuan who chaired the Chinese Central Bank for a decade and a half and had a reputation as a globalist and supporter of neo-liberal doctrines. However, this combination was not realized: his first deputy, Gan, was appointed to succeed Zhou. Nevertheless, Liu He did not remain without a high post, and his new classmate became his classmate Liu Kun, who previously held the post of deputy minister.

All these rearrangements in the financial elite of the PRC in the context of the aggravated trade war are extremely important. "The clash between China and the United States is objectively inevitable, and it's not about Trump's character or the ambitions of C's chairman. The main conflict is developing not even in the sphere of production, but in the sphere of finance, where China, if it does not throw a direct challenge, makes it clear about the possibility of its own offensive actions, albeit reciprocal. It is in the financial sphere that China is actually implementing the same policy (for example, credit in relation to a number of regions) as the collective West. The threat to the United States in the current system of globalism is not represented by Chinese producers and brands, but by the challenge of the American financial monopoly, "said Pavel Rodkin, an associate professor at the Higher School of Economics in the newspaper VZGLYAD.

The Taiwan factor

Given that Si and his entourage have come close to absolute domination in Chinese politics, the PRC's actions in the trade war with the US can go far beyond purely economic measures. And formal reasons for this have already appeared.

Not so long ago, recalls George Koschekov, in America, the so-called Taiwan Travel Act was approved, allowing official visits between the US and Taiwan, which the PRC considers its territory. This event in the Chinese media until recently was not very active, but in the future the "Taiwan act" will become a simple way to stir up anti-American sentiments in the country.

"The question of Taiwan for the Chinese is very painful - just about the question of Crimea for us," Kosachekov emphasizes. - By this act, the United States actually violated the principle of "one China", which is the base for establishing PRC diplomatic relations with all countries. For a combination of reasons, the consequences in the long term may also be such that the trade war does not remain commercial. Chinese society is less interested in foreign policy than, for example, Russian, but its active part is already quite excited. Official "hawks" from the Global Times - the "daughter" of the main party newspaper "People's Daily" - write about their readiness to teach the lesson of the US and take all possible measures, including Taiwan's armed annexation. And also that in response to the trade war, Americans will face a "people's war", that is, a boycott. "

The probability of a military invasion of the Chinese army in Taiwan is now much higher than before the rise of Xi Jinping to power, insists the Sinologist. In the law enforcement structures, C's positions have also recently become sharply strengthened. In particular, at the beginning of the year, the troops of the Armed People's Militia re-subordinated to the Central Military Council of the People's Republic of China, which is tightly controlled by the Sea. After that, the Chinese Minister of Defense appointed his protege - Col. Gen. Wei Fenghe, who had previously commanded the country's missile forces.

Chance for the Far East

But there are less alarmist scenarios. "The economies of China and the US are too dependent on each other to start something flamboyant. Now Trump is testing China's reaction, but the fight is likely to be positional. Without such heat, as in the case of Russia and the West, "believes Alexei Bezborodov. In his opinion, Trump is unlikely to touch the most principled positions in Sino-US trade, like last year's mega-contract for the supply of several hundred Boeing to China, since everyone will suffer from this. The strong devaluation of the yuan is unlikely, as it is very dangerous for the world economy as a whole.

At the same time, the aggravation of trade relations between China and the United States opens up opportunities for the Russian economy. "Usually in a trade war, the one who does not participate in it wins the most. Such a country has the chance to benefit from the results of the restrictions imposed on both sides of the conflict. For us, the most obvious possibility is the growth of soybean exports to China from the Far East, especially from the Amur Region, which is the largest Russian producer of this culture, "said Moses Furshchik, managing partner of FLC (Financial and Organizational Consulting) to the newspaper VZGLYAD.

Chances are also growing that China will finally open its market for Russian pork to compensate for the drop in supplies from the US.

Finally, the restrictions on the supply of Chinese equipment promised by the Americans can lead to a reduction in its value. And this is very useful in the light of the implementation of investment projects, which are now being launched in the Russian Far East.

Michael tumbling
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