China Slams Trump's "Trade War" Announcement, Says It Is A Distraction From "Domestic Turmoil" In The U.S.

Today at 3pm, President Trump will sign a memo addressing “China’s laws, policies, practices, and actions related to intellectual property, innovation, and technology” effectively launching the first shot in what many predict will blossom into an all-out trade war with China. As discussed over the weekend, administration officials said Saturday that memo will direct U.S. Trade Representative Robert Lighthizer to consider investigating China over its IP policies, especially the practice of forcing U.S. companies operating in China to transfer technological know-how.

Predictably, China is not happy. In an editorial published in the China Daily, the government lashed out at Trump, warning him that by “politicizing” trade, he risks “exacerbating” the US’s “economic woes,” and “poisoning” the relationship between the world's two largest economies.

Here's Reuters:

“In an editorial, the official China Daily said it was critical the Trump administration doesn't make a rash decision it will regret.


"Given Trump's transactional approach to foreign affairs, it is impossible to look at the matter without taking into account his increasing disappointment at what he deems as China's failure to bring into line the Democratic People's Republic of Korea," the English-language paper said.


‘But instead of advancing the United States' interests, politicizing trade will only acerbate the country's economic woes, and poison the overall China-U.S. relationship.’”

For those who’ve been too busy enjoying their August vacation to keep track of all the international conflicts flaring up around the globe, Trump is preparing to order US Trade Representative Robert Lighthizer to launch an investigation under section 301 of the Trade Act of 1974. The law, which was commonly used during the Reagan administration, has fallen into disuse since the launch of the WTO. It has more recently been used as a tool by trade unions.  The investigation should pave the way for the US to take potentially aggressive retaliatory actions against China, such as imposing tariffs on Chinese imports or rescinding licenses for Chinese companies wanting to do business in the US.

During the campaign, Trump’s rhetoric about “punishing” the Chinese for their unfair trade practices helped differentiate his message from milquetoast centrists like “low energy” Jeb Bush. But after triumphing over Hillary Clinton, and subsequently filling his administration with Goldman Sachs alumni like Gary Cohn, the president appeared to change his mind. However, according to media reports, he had yet another change of heart earlier this summer, when he started siding with Steve Bannon and the anti-globalist contingent of his advisers during discussions about trade.  

And after initially delaying the investigation two weeks ago on the advice of his new chief of staff, General John Kelly, it appears Trump is finally ready to disrupt one of the world’s most complex bilateral trade relationships. The editorial also pushed back against the notion that China is somehow responsible for Pyongyang’s actions.

“The China Daily said it was unfair for Trump to put the burden on China for dissuading Pyongyang from its actions.


‘By trying to incriminate Beijing as an accomplice in the DPRK's nuclear adventure and blame it for a failure that is essentially a failure of all stakeholders, Trump risks making the serious mistake of splitting up the international coalition that is the means to resolve the issue peacefully,’ it said.


‘Hopefully Trump will find another path. Things will become even more difficult if Beijing and Washington are pitted against each other.’”

The move against China over trade was also seen here as an attempt to distract attention away from Trump’s domestic problems. “Bashing China cannot solve U.S. economic problems, experts say,” the state-run Xinhua news agency proclaimed. The nationalist Global Times newspaper even tried to link developments to violence and “racial hatred” that broke out in Charlottesville at the weekend.

The source of “global instability may not be North Korea’s nuclear ambitions nor Europe’s regufee crisis, but the chaos in the US,” it wrote. “The public is also concerned that Trump is using international disputes to divert public attention away from the domestic turmoil.”

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That said, the argument that China doesn’t bear some responsibility for the North’s actions is refuted by simple economic staitstics.  China is North Korea’s most prominent benefactor, and its economic support has been a lifeline to the North’s government; without it, the Kim regime probably would’ve collapsed decades ago. China is responsible for 90% of North Korea’s foreign trade.

Last month China announced that imports from North Korea fell to $880 million in the six months that ended in June, down 13 percent from a year earlier. Notably, China’s coal imports from North Korea dropped precipitously, with only 2.7 million tons being shipped in the first half of 2017, down 75 percent from 2016. But a 29 percent spike in Chinese exports to North Korea — North Korea bought $1.67 billion worth of Chinese products in the first six months of the year — helped push total trade between the two countries up 10 percent between January and June, compared with the same period last year

China also harbors North Korea laborers whose remittances are another crucial source of foreign currency for the North’s economy. According to a recent poll, nearly two-thirds of US voters believe China should take a leading role in the de-nuclearization of the Korean peninsula.

As we wait for Trump to give the order, the only question left is will the US and China reach a last-minute deal to once again delay the investigation. It’s not out of the question: President Xi Jingping is hoping to tighten his grip on power at this fall’s National Congress of the Communist Party. In the meantime, maintaining economic stability remains paramount.


DaBears Putrid_Scum Mon, 08/14/2017 - 11:49 Permalink

Still remember the good old days when Yen is going to be the "death" of American dollar until Japan's real estate driven ponzi scheme collapsed. Yuan's hyper-inflation is much likely consider it isn't even a float currency and has to be fixed or defended using foreign currencies. Look at what happened to my beloved Ruble when mother Russia ran out of reserves to defend it few years back, it crashed by 50%. There is a reason why communist officials, insiders, family and friends are buying up foreign assets in places like Vancouver like insane clown zombies, they obviously knows more than you do, always follow the smart money.

In reply to by Putrid_Scum

NickyGall Mon, 08/14/2017 - 07:33 Permalink

Here is an interesting look at how little the current sanctions will impact the ties between China and North Korea:…
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The possibility that a collapse of the Kim regime could lead to hundreds of thousands of migrants crossing the North Korea - China border put significant pressure on China's ongoing willingness to blindly follow the United States lead when it comes to punishing North Korea.

Robert Trip Mon, 08/14/2017 - 07:44 Permalink

Order your Martin Luther King statues while you are still able to.This trade war could go South and fast.Keep in mind they are only available in white.

Iskiab Mon, 08/14/2017 - 07:43 Permalink

Yup, just as I thought. Trump's negotiating tactics are pretty transparent, he'll always be trying to renegotiate for a new advantage no matter what concessions china gives in to because he believes he's in the power position. Things will escalate but not quickly, they'll try and delay to minimize the damage hoping he doesn't get another term.

lester1 Mon, 08/14/2017 - 07:49 Permalink

Fuck communist China! They will collapse without access to US markets. We could survive without them and bring production back to America with common sense regulation and tax reform.

To Hell In A H… lester1 Mon, 08/14/2017 - 08:48 Permalink

This use to be an economics website, inhabited by people who understood economics within the constraints that it is not an exact science. Today ZH is inhabited by alt-right fruit-cakes, the average IQ and people who don't know the difference between Von Mises and the Chicago School.The American market is a semi-myth. It is reserve currency status, Petro-Dollar privilege, a whole host of commodities priced and sold in dollars, plus a USSA and UK based financial monopoly on money and the so-called "MARKETS".  This delusion of superior made American goods is just that. Just like Google, ZH has increasingly become an ideological echo-chamber of the Alt-Right and anything outside this view is down-voted, irrespective of the logic.The USSA makes nothing the world cannot source from somewhere else. The I-Phone? A Chinese HTC, or Huawei is a match and you can add Korea's Samsung. Motor cars? European and Japanese cars are vastly superior. Power tools? and the list goes on. What does the USSA design that is truly world beating and nobody else comes close and are these products absolutely revenue generators? If the answer is nothing, I guess my question is answered. 

In reply to by lester1

Xena fobe To Hell In A H… Mon, 08/14/2017 - 09:16 Permalink

There is more to it than that.  No one denies quality goods can be made elsewhere.It may be China has plans for its own SOEs to compete with the western multinational corporations.   It's fine when labor gets screwed but global monopolies will use the power of the military to defend their markets. If all was well with the western multinationals, this would not be an issue.

In reply to by To Hell In A H…

Warren Platts Xena fobe Mon, 08/14/2017 - 10:12 Permalink

Free trade only works when there is balance and reciprocity and similar wage, working conditions, and environmental regulations. A free trade country going up against a flat-out mercantilist nation will lose every time. Von Mises and Chicago schools are chumps. No nation ever became the number 1 economy on the planet by practising free trade. China has been playing us for chumps ever since Nixon. They are laughing all the way to the bank as we hand them the world's largest economy on a silver platter, courtesy of the US working class.

In reply to by Xena fobe

RawPawg Mon, 08/14/2017 - 07:52 Permalink

this is what your POTUS does when even he knows it's just a matter of time when China will be the new "Big Dawg" in world influencefront run with all the ammo you got leftwith nothing to lose

reformed_optimist Mon, 08/14/2017 - 07:57 Permalink

Whether this is being initiated to pressure China or not, IP theft is an endemic problem/ concern for those considering manufacturing in China, selling into China or partnering with Chinese companies. For example, my (software) company has been directly approached by Chinese electronics manufacturers that were building product for our US customers - basically they wanted to cut our customer out of the loop. Another electronics company I worked for was manufacturing in China, their manufacturing package was stolen and used to build identical copies; when they took the clone manufacturers to court, the court told them to stop, imposed a fine (which went to the Chinese government) and provided no compensation to the US company.  I also heard of Chinese companies that had to change business model/ market due to software copying by other Chinese companies.The Chinese government is also insisting that software companies selling into China provide access to their source code. While we can understand that this could help to prevent security problems it also leaves the door wide open for software theft.It would be disappointing if this investigation is "only" occurring because of the North Korea situation - it needs to happen 

Anonymous_Bene… reformed_optimist Mon, 08/14/2017 - 08:37 Permalink

We custom design and build driveway gates in the US. Every day or two we get emails from Chinese manufacturers offering to fabricate our products and ship here. They even tried duplicating one of the our custom tree designs but the gate looks like typical cheap Chinese shit so I'm not too concerned about it. Luckily many people still prefer quality over price. 

In reply to by reformed_optimist

Xena fobe reformed_optimist Mon, 08/14/2017 - 09:01 Permalink

I discovered two versions of an automotive a/c tool being sold on Amazon.  One is half the price with bad reviews.  The other all good reviews.  The legitimate product can not be shipped to me in California.  The knock off can be shipped to me.   Supposedly same manufacturer and model number.There is no legitimate product that has not been copied.

In reply to by reformed_optimist

lester1 Mon, 08/14/2017 - 08:08 Permalink

What could China possibly do to us in a trade war? Not much. There is  nothing  left to take from us. President Trump holds all the cards here and he knows it. Trade war my ass. We have been in a trade war for the past 30 years and getting our asses kicked. Time for that to change and reverse!And If China wants to dump US Treasury debt the Federal Reserve is right there to buy them out !

wwxx Mon, 08/14/2017 - 08:30 Permalink

The tweetdistractionNchief, is exactly where he wants to be, and he will eventually say 'I did it with my wit, the good of the country & world even, never entered into it'.  hahahaharofl

Posa Mike Masr Mon, 08/14/2017 - 09:04 Permalink

Thios is the formal end of the short-lived American Empire... good riddance... the Sino-Russa axis is about business and development not global supremacy and mega-larceny... maybe the US Imperialists will now retreatv to the North Ametrican home base and take care of growing the US economy not a global army of blood thirsty gangsters

In reply to by Mike Masr

TheSilentMajority Mon, 08/14/2017 - 08:28 Permalink

Better late than never.

China should have been kicked out of the WTO many years ago for IP theft on everything they manufacture there, and for not allowing foreign companies to have reciprocal access to their domestic market.

goldoverbtc Mon, 08/14/2017 - 08:36 Permalink

China and India are about to be in a fight of their own.  Everyone knows that China steals IP from countries.  They stole from many European companies on the promise they would be entering the Chinese market and that hasn't happen.  They are likely stealing IP from Elon Musk and Tesla right