Inkstone
    Mar
    23
    2018
    Mar
    23
    2018
    How a little-known campaign started a US-China trade spat
    How a little-known campaign started a US-China trade spat
    BUSINESS

    How a little-known campaign started a US-China trade spat

    Triangle 4
    arrow left
    arrow right
    Subscribe to the Inkstone newsletter
    By registering you must agree to our T&Cs

    “Made in China” has been a byword for cheap, poorly made items.

    But the Chinese government doesn’t think so, and neither does Donald Trump.

    When Trump announced about $60 billion worth of tariffs on Chinese products, he cited the country’s unfair economic practices.

    Here’s a summary:

    Group 27@1x
    Subscribe to the Inkstone newsletter
    By registering you must agree to our T&Cs

    Made in China 2025

    Explaining the tariffs to reporters, White House trade advisor Peter Navarro said the US was targeting key categories named in the Chinese government's “Made in China 2025” initiative.

    “[China] told the whole world that it’s going to dominate technology and intellectual property as a way of making China prosperous and doing it through a variety of industrial policies, many of which are anathema to a free market global trading system," he said.

    What is this little-known policy that’s triggered a possible all-out trade war?

    Unveiled three years ago, “Made in China 2025” is part of a strategy to make China the world’s leading manufacturer of telecommunications, railway and electrical equipment by 2049, the 100th anniversary of the founding of the People's Republic of China. The Chinese government wants to reposition its companies as innovators.

    It is pouring hundreds of billions of dollars into the initiative. The eastern city of Ningbo is the pilot city in the campaign, and $15.8 billion has been pledged to improve its infrastructure over the next three years.

    China has made significant advancements in technology since embarking on economic reforms in the late ’70s. For example, C919, China's first passenger plane, made its maiden flight in Shanghai last May.
    China has made significant advancements in technology since embarking on economic reforms in the late ’70s. For example, C919, China's first passenger plane, made its maiden flight in Shanghai last May. Photo: Bloomberg

    James Wang, a professor of economics at the City University of Hong Kong, says the US is clearly taking the “Made in China” initiative seriously. “I was surprised [by the mention of the initiative]. Not everybody outside of China is a believer in ‘Made in China 2025’.”

    He says there are doubts over whether these ambitious goals can be achieved by China under its own steam.

    The US, he believes, thinks China will resort to unfair measures in order to meet its stated goals.

    “In order to achieve grandiose goals such as in ‘Made in China 2025’ a certain level of coercion and other forms of intellectual rights infringement need to be involved,” Wang says.

    Group 5
    The US moves could slow [China], but they won't stop it
    -
    Simon Baptist, Economist Intelligence Unit

    The Trump administration argues that American companies have a history of being forced to form joint ventures with local firms in order to gain access to the potentially lucrative Chinese market.

    Administration officials believe this has eventually resulted in the transfer of proprietary technologies to Chinese competitors.

    Intellectual property rights

    The issue is a long-standing one and has been simmering for decades.

    The newly announced tariffs mark a departure from previous, lower-profile efforts to address allegations of intellectual property theft by China.

    Photo: AFP

    William Zarit, chairman of the American Chamber of Commerce in China, tells Inkstone in an interview that Trump has opted to change tactics, due to a lack of progress.

    Group 27@1x

    In theory, intellectual property disputes can be resolved through the World Trade Organization (WTO), to which China was admitted as a member in 2001.

    But Wang of City University says the WTO’s efforts at conflict resolution have been protracted and inadequate.

    In response to the tariffs, China has imposed its own countermeasures of $3 billion worth of tariffs on US imports.

    It hasn’t directly addressed Navarro’s remarks about the Made in China initiative.

    Some critics believe the US tariffs are intended to halt Chinese advances in research and technology.

    “China is going to be a giant in the technologies of the fourth industrial revolution such as AI [artificial intelligence], robotics and automation. The US moves could slow that, but they won't stop it,” Simon Baptist, global chief economist at the Economist Intelligence Unit, he says in a statement.

    He adds that China may retaliate further, beyond the immediate countermeasures, against US firms wanting to expand in China.

    As for President Trump, he says these tariffs are just the beginning. The US-China trading relationship may continue to heat up.

    Grace Tsoi
    arrow rightarrow right
    Grace is a senior multimedia producer at Inkstone. She was previously a senior producer for BBC Chinese.
    Grace Tsoi
    arrow rightarrow right
    Grace is a senior multimedia producer at Inkstone. She was previously a senior producer for BBC Chinese.
    arrow right
      Rotate the screen
      Please rotate for best experience.
      Your privacy is important. We wish to inform you what data we collect from you and how we process such data. Our Privacy Notice aims to comply with all relevant data privacy and protection laws. You should read the Privacy Notice in full here.