Trump challenging China on trade would spark 'very aggressive' response, expert predicts - Guardian

Trump challenging China on trade would spark 'very aggressive' response, expert predicts

Moves by Donald Trump to confront China on trade would elicit a “very aggressive” response, a former top US trade negotiator has predicted, as Beijing said an upcoming visit from the US president would help “map out” the next half century of ties between the world’s top two economies.

There has been speculation since last week that Trump – who is due to travel to China this year – is preparing to launch a potentially incendiary investigation into its alleged abuse of intellectual property rights.

After China’s decision to back a UN security council resolution against North Korea on Saturday, some reports suggested that inquiry might have been put on ice. The Financial Times called the anticipated move “the trade diplomacy equivalent of a wooden club” and warned it could provoke “a full-blown trade war”.

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In an interview with the Guardian, Charlene Barshefsky, the US trade representative under Bill Clinton, agreed challenging Beijing could “engender a downward spiral” in relations.

“When China is displeased with US actions … you see China act in ways that are very aggressive, designed to intimidate, designed to force the US to back down,” said the veteran lawyer, who negotiated China’s 2001 entry into the World Trade Organisation (WTO) with its then premier Zhu Rongji.

“The US rarely backs down, which is absolutely correct – it should not. But this is China’s way: it bullies in situations like this.”

Barshefsky, who is now a senior international partner at the US law firm WilmerHale, said it was unclear what measures the Trump administration might take against Beijing but she did not expect the White House to cave in to Chinese pressure.

“Then the question is: ‘What is the next move?’ And, ‘How much more heated does this get?’ And, ‘Does it engender a downward spiral?’”

Charlene Barshefsky during her time as Bill Clinton’s US trade representative.

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Charlene Barshefsky during her time as Bill Clinton’s US trade representative. Photograph: Dan Levine/AFP

“We will have to see how this plays out. But there will be a lot of very heated and aggressive rhetoric on both sides, there is no question about it ... [And] China will likely not just talk the talk but they will begin to walk the walk, and before too long US companies will start complaining about being even further ill-treated in China. Not blocked; not retaliated against in any large sense. But the environment will become more and more difficult. And China will do that as a way of pressuring the US to back off.”

The warning comes after the US secretary of state, Rex Tillerson, said relations between the US and China – re-established by Chairman Mao and Richard Nixon in 1972 – had reached “a pivot point” after more than four decades of “no conflict”.

On Sunday, the Chinese foreign minister, Wang Yi, struck a similar note, telling reporters the most important task facing Chinese diplomats now was to be “well prepared” for Trump’s upcoming visit to China. That trip would help “to map out the relations of the next 50 years”, Wang said, according to the official Xinhua news agency.

Barshefsky said there was now widespread consensus in the US that Beijing’s “explicitly discriminatory” policies towards foreign firms had to be tackled.

China had spent the past decade attempting to cordon off large swaths of the Chinese economy for its own companies as part of an “indigenising” campaign that had intensified since Xi Jinping became the country’s top leader, in 2012.

As part of that push Barshefsky claimed China was “flouting international rules” by doubling down on intellectual property theft and the forced transfer of foreign technology while also pumping “massive subsidies” into Chinese industries to artificially increase homegrown competitiveness.

The [Chinese] state sector is becoming an increasing competitive problem and threat.

Charlene Barshefsky

“Foreign companies – both US and European – feel far less welcome [in China]. The business environment is far more difficult and discriminatory; the state sector is becoming an increasing competitive problem and threat … So this isn’t simply Trump administration perception – this is a widely shared view.”

Despite the worsening situation, Barshefsky said the Obama administration had “in many instances substituted dialogue – endless dialogue – for action”.

It remains unclear when, how or even if Trump will challenge Beijing but reports suggest he could instruct his trade representative to launch a so-called “section 301” case. That would allow the US to unilaterally impose tariffs or other trade restrictions aimed at protecting US industries.

Barshefsky predicted China would hit back by accusing the US of protectionism and claiming it was “the last man standing for an open global trading system”.

Retaliation was also possible: “This has serious repercussions: we are talking about two giants.”