China sharpened its rhetoric over the Trump administration efforts to investigate its trade practices on Thursday, vowing to use any means necessary to defend the country and its companies.
While analysts don’t believe a trade war between the world’s two largest economies is imminent, China’s harsh words underline a recent fraying of the relationship between Beijing and Washington over trade and North Korea.
On Wednesday, China’s Foreign Ministry demanded the United States “immediately” withdraw unilateral sanctions against several Chinese companies and individuals it accused of illegally trading with the Pyongyang regime.
Trump initially said he would set aside trade disputes with China to get Beijing’s cooperation in reining in North Korea, but reversed course earlier this month by calling for a probe into the theft of intellectual property by Chinese companies.
Experts say the administration may now be coming to terms with the limits of Beijing’s willingness to put pressure on Pyongyang, and wants to demonstrate it is taking steps to bring down the trade deficit, a key campaign promise.
On Monday, the Chinese Commerce Ministry had called Trump’s move on trade “irresponsible” and “protectionist,” and arguing it ignored the rules of the World Trade Organization.
On Thursday, it upped the ante, saying the decision had “poured cold water” on efforts to improve trade relations between the two countries.
“We are strongly discontented with this unilateralism and protectionism, and will take all the necessary measures to resolutely defend the legitimate rights and interests of the Chinese side and Chinese enterprises,” Gao Feng, spokesman for the Ministry of Commerce, told a news conference, calling it a “violation” of the international trade system.
Nevertheless, experts think a trade war between the two countries remains an unlikely and distant prospect, mainly because it would be damaging to both sides.
“If Trump initiates sanctions against China, especially the Section 301 investigation, it would be like killing 10,000 enemies at the cost of losing 8,000 of its own troops,” said Wei Jianguo, vice chairman of the China Center for International Economic Exchange and former vice commerce minister. “It’s really unnecessary and it would cause grave losses to both sides.”
Although the United States runs a $310 billion trade deficit with China, Wei said American exports to China were substantial and growing fast.
The inquiry into the theft of U.S. intellectual property could take months before reaching a conclusion. In the meantime, China will want to keep relations on an even keel, ahead of a key Communist Party Congress in the fall and ahead of a planned visit by President Donald Trump later this year.
Shortly before he left the White House, Trump strategist Stephen Bannon had argued in an interview that the U.S. government should be “maniacally focused” on the economic war that China is already waging on the United States.
But while business leaders in the United States want to avoid a trade war, the idea that the United States should get tougher with China has many supporters.
Indeed U.S. trade groups have become increasingly vociferous in recent years about growing Chinese protectionism and barriers to investment, and broadly welcomed Trump’s Aug. 14 order.
More than 20 percent of 100 American companies that responded to a survey by the U.S.-China Business Council said they were asked to transfer technology within the past three years as a condition of market access
Beijing requires automakers and some other foreign companies in China to work through joint ventures, in which they often are required to give technology to partners that might ultimately become competitors.
China agreed this month to a package of stricter sanctions on North Korea at the U.N. Security Council, but there are limits to the pressure it will put on Pyongyang because it is unwilling to do anything that might bring down the regime.
Wei welcomed the fact that Bannon had left the White House, but called Trump’s move on trade the product of a “Cold War mentality.”