Days after the US announcement, Treasury Secretary Janet Yellen called on the Group of 7 developed economies to build a “wall of opposition” against Beijing’s industrial policies, while noting that she was not asking that they copy the US tariffs or closely coordinate their trade policy responses.
02:22
US Treasury chief Janet Yellen leaves China after ‘difficult conversations’, overcapacity gripes
US Treasury chief Janet Yellen leaves China after ‘difficult conversations’, overcapacity gripes
According to a Dalian Infobank report, the latest US tariff package might be followed by more as the US presidential race heats up, a time when candidates are usually prone to taking a harder line on Beijing.
“[The question is] whether it will expand comprehensively and lead to a full decoupling,” he told a virtual seminar marking the release of the report on Friday.
Dalian Infobank’s clients include the Chinese commerce and agricultural ministries and customs authorities.
The report noted that more countries had taken to slapping additional duties on Chinese products, a move framed by Zhang as a trend in the making.
China has officially rejected accusations of state-funded “overcapacity” keeping export prices low, the main reason cited by the US and EU for their tariff actions.
However, it was a “fact” that other countries had also expressed concerns about the negative effects of massive Chinese imports, including neighbours such as Thailand, Zhang said. The kingdom is one of China’s close trading partners.
“While we don’t have the overcapacity issue by definition, the impact on other countries is there,” he said. “Whether it will result in some worldwide restrictions and changes for us [is] still worth … some in-depth research.”
Kriengkrai Thiennukul, president of the Federation of Thai Industries, has raised concerns about the influx of cheaper Chinese products amid Beijing’s reduced market access to the US and EU.
“China is overproducing and turning to Asian and Asean markets, including Thailand,” he told Thai daily The Nation last month.
This was one of the key factors behind growing production line closures in Thailand, Kriengkrai said.
Earlier in the year, he also flagged the impact on Thai industries of the “dumping and spillover of Chinese structural steel”, prompting demands of import restrictions.
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02:03
Chinese-made electric vehicles face additional EU import tariffs of up to 38%
Chinese-made electric vehicles face additional EU import tariffs of up to 38%
Indonesia, the largest economy in the 10-member Asean, is also poised to raise import duties amid concerns about a flood of Chinese-made products.
Announcing the plans on Friday, Indonesian trade minister Zulkifli Hasan said the trade war with the West was causing oversupply in China, forcing it to redirect exports to other markets such as Indonesia.
According to Indonesia’s Antara news agency, Hasan also pledged duties of 100 to 200 per cent on products ranging from footwear to ceramics, mainly imported from China, Vietnam and Bangladesh.
Still, the new US tariffs carried more “symbolic significance” than a risk of considerable shock to the Chinese economy, according to the Infobank report, which said one of the core aims of President Joe Biden’s move was garnering more votes in the US “rust belt” in his re-election bid.
Steel and EVs, the two main Chinese products targeted by the new US duties, are crucial to the economies of the key swing states of Pennsylvania and Michigan, which are part of the manufacturing heart of the United States.
Zhang said that, in contrast with Trump-era practices, the Biden administration had done “sufficient expectation management” before announcing its tariff hikes and “carefully selected” the products to be covered.
The value of the Chinese imports in Biden’s tariffs package, estimated by Dalian Infobank at US$18.9 billion, is dwarfed by the US$370 billion targeted by his predecessor, Donald Trump. It is also only a fraction of China’s overall annual exports to the US, which crossed US$500 billion last year.
“The size [of the new US tariffs] is small and the risk is manageable,” Zhang said.
The US would also have to bear some “pain” over the increases, he said, as its economy was “highly dependent” on imports from China with regard to permanent magnets, natural graphite, lithium batteries and personal protective equipment like face masks – all targeted by the latest measures.
