In what some have seen as the first warning shot of retaliation against Trump's threats of protectionism and part of China's escalating trade war involving the auto industry, overnight China Daily reported quoting a senior state planning official that Beijing will soon slap a penalty on an "unnamed U.S. automaker for monopolistic behavior."
Investigators found the U.S. company had instructed distributors to fix prices starting in 2014, Zhang Handong, director of the National Development and Reform Commission's price supervision bureau, was quoted as saying. However, in the exclusive interview with the newspaper, Zhang said no one should "read anything improper" into the timing or target of the penalty, which likely suggests that there was nothing coincidental about the timing or the target of the penatly which comes at a sensitive time for China-U.S. relations after U.S. president-elect Donald Trump called into question a long-standing U.S. policy of acknowledging that Taiwan is part of "one China".
China, the world's largest auto market, has become crucial to the strategies of car companies around the world, including major U.S. players General Motors and Ford Motor.
For now, the two US auto giants stated on the record they were unaware of the Chinese decision: "We are unaware of the issue," said Mark Truby, Ford's chief spokesman for its Asia-Pacific operations. In a statement, GM said: "GM fully respects local laws and regulations wherever we operate. We do not comment on media speculation."
As Reuters adds, the penalty follows a government crackdown on what it has called monopolistic behavior by foreign automakers and dealers.
This would be the second penalty by the NDRC this month and the seventh fine issued to automakers since the commission began anti-monopoly investigations in 2011, China Daily reported. Previous targeted firms have included Germany's Audi, Daimler Mercedes-Benz and Japan's Toyota and one of Nissan's joint ventures.
In an attempt not to escalate the rising tension with the incoming administration, the NDRC's move was not directed against Trump's latest comments but to show it was not letting up pressure on price fixing behavior in the auto sector after a raft of fines last year, a source at a government-affiliated industry association said. "I don't think NDRC had only made a decision two weeks ago or a week ago. This is a long-term plan for them," the source said.
As Reuters also notes, quoting local media, NDRC officials had said a penalty would be levied against an international automotive firm this year prior to Trump's remarks on Taiwan, although they did not specify it would be a U.S. company. Then again, in 2011, China imposed duties of up to 22 percent on large cars and SUVs exported from the United States during a wide-ranging spat on trade and currencies that became a focus of criticism for U.S. presidential candidates.
* * *
In a separate editorial, the China Daily urged Trump to recognize the importance of close economic ties between China and the United States rather than "trying to gain an upper hand in what is essentially a win-win relationship". "History proves that what is good for Sino-U.S. relations is good for their economies," it said, noting that Chinese customers bought more than a third of the 9.96 million vehicles GM sold worldwide last year.
Meanwhile, suggesting that escalation between China and the US may already be a foregone conclusion, the head of the U.S. Pacific fleet was quoted by Reuters as saying on Wednesday that the United States is ready to confront China should it continue its overreaching maritime claims in the South China Sea, comments which further threaten to escalate tensions between the two global rivals.
The United States has called on China to respect the findings of the arbitration court in The Hague earlier this year which invalidated Beijin's vast territorial claims in the South China Sea. But China continues to act in an "aggressive" manner, to which the United States stands ready to respond, Admiral Harry Harris, head of the U.S. Pacific Command, said in a speech in Sydney.
"We will not allow a shared domain to be closed down unilaterally no matter how many bases are built on artificial features in the South China Sea," he said. "We will cooperate when we can but we will be ready to confront when we must."
Reuters notes that "the comments threaten to stoke tensions between the United States and China, already heightened by President-elect Donald Trump's decision to accept a telephone call from Taiwan's president on Dec. 2 that prompted a diplomatic protest from Beijing."
Asked about Harris's remarks, Chinese Foreign Ministry spokesman Geng Shuang said the situation in the South China Sea was currently stable, thanks to the hard work of China and others in the region.
"We hope the United States can abide by its promises on not taking sides on the sovereignty dispute in the South China Sea, respect the efforts of countries in the region to maintain peace and stability in the South China Sea region and do more to promote peace and stability there," he told a daily news briefing.
The United States estimates Beijing has added more than 3,200 acres (1,300 hectares) of land on seven features in the South China Sea over the past three years, building runways, ports, aircraft hangars and communications equipment. In response, the United States has conducted a series of freedom-of-navigation operations in the South China Sea, the latest of which came in October.
The patrols have angered Beijing, with a senior Chinese official in July warning the practice may end in "disaster". Harris said it was a decision for the Australian government whether the U.S. ally should undertake its own freedom-of-navigation operations, but said the United States would continue with the practice.
"The U.S. fought its first war following our independence to ensure freedom of navigation," said Harris. "This is an enduring principle and one of the reasons our forces stand ready to fight tonight."
With Trump unlikely to concede on either the growing trade spat or the rising territorial tensions, it is unclear what event will de-escalate the growing animosity between the two superpowers.