Despite the United States ramping up its ‘China-bashing’ ahead of the November presidential election, Chinese President Xi Jinping has been relatively quiet, refraining from potentially backlash-inducing responses, according to a Bloomberg analysis on the 21st (local time).
US President Joe Biden has criticized China for xenophobia and publicly pledged to triple the current tariffs on Chinese steel and aluminum products to around 25%. Additionally, the US Trade Representative (USTR) has launched an investigation into China’s unfair trade practices in the shipbuilding, maritime, and logistics sectors, causing a significant drop in the stock prices of Chinese companies in these industries. The House passed the Peace through Strength in the 21st Century bill, which includes the forced sale of TikTok, by a vote of 360 in favor and 58 against.
Nevertheless, China’s response has been relatively muted. Last week, China issued a preliminary anti-dumping ruling on US propionic acid (PA) in response to Biden’s tariff hike initiative. However, from the US perspective, the export volume of this product was only $7 million last year, which is seen as a symbolic measure rather than a full-fledged confrontation. Bloomberg reported that China is dismissing the investigation into shipbuilding and other sectors as motivated by US domestic politics.
Zhu Junwei, a former People’s Liberation Army researcher and now the US research director at the Beijing-based think tank Grandview Institute, analyzed that “China views US-China relations as not perfect but improving compared to last year” and that “China is learning to be more pragmatic and differentiate various areas.”
Bloomberg pointed out that China, grappling with a long-term real estate recession and sluggish domestic demand, has little motivation to heighten tensions with the US. China relies on exports to achieve its annual economic growth target of around 5%, and the US consumer market is the most active and significant export market in the world.
The recent US measures’ minimal immediate impact also influenced China’s moderate response. China exports little steel and aluminum to the US, and the shipbuilding investigation will take time. The TikTok forced sale bill still has to pass the Senate, and the company could take legal action to nullify the congressional decision.
While not all trade tensions between the two countries are due to the election, China perceives the recent US offensive as a ploy for election strategy. Donald Trump, the Republican presidential candidate and former US president, has promised to revive the trade war by imposing a 60% tariff on Chinese imports if he is reelected.
Larry Hu, Chief Economist at Macquarie Group, said, “The resumption of the US-China trade war next year is one of the biggest risks for China,” but added, “I don’t think that will happen this year.” Joseph Gregory Mahoney, an East China Normal University professor, explained, “China recognizes the ‘hawkish’ behavior that emerges every US election cycle.”
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