BEIJING: American businesses in China are gearing up for a possible retaliation from the Chinese government if US President Donald Trump follows through on his pledge to take strong action against what he regards to be Beijing’s “unfair trade” practices. This was revealed by the American Chamber of Commerce in China (AmCham China) ahead of Trump’s first State Of The Union address scheduled for Tuesday morning.
A senior state administration official said in Washington that the US president will be “emphasising the fair and reciprocal nature of trade” during his speech. He has provided ample evidence of his plans by slapping harsh measures against Huawei, the Chinese telecom equipment maker, and manufacturers of solar panels and washing machines in China in the past two weeks. “I have been told by certain officials (in China) that yes, definitely there will be retaliation,” said William Zarit, chairman of AmCham China at a press conference on Tuesday. “And what we’ve been telling our interlocutors is that if there is some kind of tariffs and if the Chinese do want to retaliate, they do so maturely and with precision so as to not to actually adversely affect their own economy,” he said.
The Chinese government will carefully plan its retaliation and target sectors of US economy that are politically sensitive. A possible measure will be blocking imports of soya beans, affecting vast masses of American farmers and eroding Trump’s support base. AmCham China’s vice-chair Lester Ross said it “is be likely that they (Chinese) will target sectors that have political resonance in the US, and particular products or commodities”.
Chinese retaliation would mean a trade war that might prove costly for business. “I don’t think any company wants to absorb or make a sacrifice on behalf of trade relations, but I think some companies will inevitably suffer some repercussions if there are trade frictions between the two countries,” Ross said.
Chinese retaliation would mean a trade war which might prove costly for business. “I don’t think any company wants to absorb or make a sacrifice on behalf of trade relations but I think some companies will inevitably suffer some repercussions if there are trade frictions between the two countries”, Ross said adding, “They (US companies) have to consider that possibility”.
Among different measures, the US is preparing to announce results of an investigation into whether Beijing improperly pressures companies to hand over technology, Ross said during the release of AmCham’s business climate survey. The survey showed showed that three out of four US companies feel they are less welcome in China. Beijing’s regulatory barriers and unfair treatment of foreign companies were some of the reasons cited by respondents in the survey.
Most foreign companies consider the central government and regulatory agencies a bigger challenge than tackling production and marketing issues in China. A high 78 per cent of the respondents in the Amcham study said that positive relations between the US and China is extremely important or very important in 2017, compared with 64 per cent in 2015.