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China, US Ratchet Up Dispute Over Certain Goods
China said Sunday that it would review complaints about U.S. exporters of chicken and auto products following Washington's decision to impose punitive sanctions on Chinese tire imports, raising tensions in a trade dispute ahead of two planned meetings between the countries' leaders.
While some observers here say that overall, ties between China and the U.S. should remain unharmed, the measures add to worries about trade protectionism amid rising unemployment around the world.
The Obama administration said Friday that it would slap stiff tariffs on Chinese-made tires for the next three years. Citing a jump in Chinese imports, the administration invoked a rule China agreed to when it joined the World Trade Organization in 2001. The effect, experts say, is likely to wipe out Chinese tire exports to the U.S. during this period.
China responded quickly. Sunday, the Ministry of Commerce said it was starting so-called antidumping procedures against U.S. exporters into China of chicken and auto products. It said it had received complaints from local producers that the U.S. products were being dumped in China at below-market prices. The ministry denied that the move was protectionism.
'China has consistently opposed trade protectionism, and the country's actions since the financial crisis have reflected this stance,' a statement on the ministry's Web site said. 'China is willing to continue to act in accordance with countries around the world to push forward the world's economic recovery.'
The announcement doesn't mean sanctions will be invoked. It didn't specify the timing or the exact kinds of goods involved.
The choice of the two export categories -- chicken and auto products -- could also be a sign that China's response is likely to be measured. Both have been part of a battle between China and the U.S. in which both sides have already instituted trade-restricting measures, so the new actions may not measurably hurt exporters. China has already effectively blocked U.S. exports of poultry products in retaliation for a similar U.S. block of Chinese poultry. And earlier this year, China raised tariffs on imported auto parts.
Still, Sunday's actions were a clear sign of Chinese displeasure. Earlier over the weekend, the government-run Xinhua news agency said in a commentary that the U.S. sanctions were political pandering by a president trying to secure union votes in his battle for a health-care overhaul. 'It is a huge regret that crucial China-U.S. trade relations are once again disrupted by [domestic] political disputes,' the agency said.
People close to the government said China will have to slap tariffs on the U.S. goods. Mei Xinyu, a researcher at a think tank that reports to China's Ministry of Commerce, said China has historically avoided taking countermeasures in trade disputes but that it shouldn't be shy now.
'China should bring into effect retaliatory measures this time, such as high punitive import tariffs on American imports,' Mr. Mei said. He also said China should avoid taking the issue to the WTO because such complaints take years to resolve. 'America will achieve its goals if China tries to resolve this dispute through the WTO,' he said.
Foreign business leaders in China said the U.S. decision almost invited Chinese retaliation. James Zimmerman, a Beijing-based American lawyer, said politics and trade can't be separated but that 'overt political posturing welcomes a like response. We can expect the tit-for-tat political posturing going forward and in a way that may be damaging to U.S. commercial interests.'
Foreign businesses operating in China have argued, however, that China is itself engaging in protectionism. The European Union Chamber of Commerce in China recently released a catalog of business complaints chronicling a deteriorating atmosphere for foreign enterprises operating in China. The country's recent stimulus package, for example, in some cases favored domestic manufacturers, the EU Chamber said.
The dispute isn't likely to prevent Chinese President Hu Jintao from meeting U.S. President Barack Obama later this month at an economic summit in Pittsburgh. Mr. Obama is set to visit China in mid-November to discuss the economy as well as climate change and controlling North Korea's nuclear ambitions.
Chinese officials 'are definitely going to do something to express their dissatisfaction, but it won't be serious,' said Yan Xuetong, director of Tsinghua University's Institute of International Studies. 'The two sides need each other.'
