Trump applies new tariffs as China facing problems

Dean Cheng reports in War On The Rocks,

The November 2018 letter from the U.S. Trade Representative’s office outlining why the United States was preparing to impose additional tariffs listed four key complaints. First, China uses foreign ownership restrictions, such as joint venture requirements, as well as administrative processes to compel U.S. companies to transfer technology to the People’s Republic. Second, U.S. companies seeking to license technologies to Chinese firms must often transfer key information and processes. Third, Chinese technology acquisition includes unfair methods such as access to the state banking system for funds. Finally, China engages in a variety of cyber economic espionage activities. This last element contradicts a commitment made by Xi to President Barack Obama in 2015, in which both sides agreed not to engage in economic cyber espionage. While China appears to have reduced the level of such actions, it has certainly not suspended them, a point made clear in the 2018 National Counterintelligence and Security Center report.

The Chinese have offered, in response to Trump’s pressure, to address the trade deficit. China has floated, at various points over the past two years, increasing purchases of American goods by $200 billion to $1 trillion. But Beijing has been far less forthcoming on the issue of intellectual property, as the U.S. Trade Representative letter notes.

In the last several weeks, the Chinese have taken an increasingly hard line. American officials claim that China was reversing changes it had previously agreed to implement, effectively overturning the results of months of negotiations. Trump promptly applied new tariffs to a variety of Chinese goods, elevating them to 25 percent, effective May 10. Chinese officials in turn have now raised the possibility of embargoes on rare earth exports and blacklisting American companies like FedEx.

…Unfortunately, Xi is now confronted with a double-barreled threat. First, fall armyworm has arrived in China. Since it was first detected in January, the pest has spread across some 8,500 hectares of Chinese grain production areas, affecting six provinces mostly in southern China. The U.S. Department of Agriculture worries that this voracious creature may affect staple crop production such as corn, rice, wheat, and sorghum, as well as others to include soybeans and cotton. “Experts report that there is a high probability that the pest will spread across all of China’s grain production area within the next 12 months.” There is no natural predator in China that feeds on the fall armyworm, nor are there any registered pesticides in China to counter it.

At the same time, African Swine Fever is now threatening China’s pigs, spreading across the country since the first confirmed case in northeast China last year. Cases of this disease have now been reported in every province. As the world’s largest producer and consumer of pork, African Swine Fever is a direct threat to the livelihood and diet of a substantial portion of China. Unfortunately, there is no cure; the only solution is to cull herds, impose quarantines on affected farms, and hopefully halt the disease from spreading.

…In a year that marks both the 70th anniversary of the founding of the People’s Republic of China and the 30th anniversary of Tiananmen Square, Xi may yet regret assuming the mantle of concentrated power.

Read more here.