China will not back down in a trade fight with the U.S.

Open this photo in gallery:

Lu Shaye is China’s ambassador to Canada​

Not satisfied with imposing US$50-billion in tariffs on Chinese exports to the United States, President Donald Trump last week said he was considering new tariffs on an additional US$100-billion of Chinese goods.

This loony unilateral behavior is typical of U.S. trade protectionism, which wages war against global multilateralism and free trade. It not only undermines the interests of the Chinese people, it seriously violates World Trade Organization (WTO) rules, will shake the foundations of the multilateral trading system, disrupt the world’s economy and global trade, but will also backfire on the United States.

China has been prepared for these actions, and we can assure the United States that we will immediately, and without hesitation, fight back strongly, should the United States unveil a list of targets in an additional $100-billion in duties.

China will not wage a trade war, but it is also not afraid of a trade war imposed by others. If the United States wants a fight, we are prepared to stay with it until achieving a complete victory. All options will be on the table and we will not back down.

Our preference is to settle economic differences through dialogue and negotiations based on international law and trade rules, not based on domestic law and politics in the United States.

Parties who engage in dialogue and negotiation should treat each other with respect and equality, and demonstrate a mutual understanding and willingness to compromise. Instead, one party has issued condescending threats and unreasonable demands on the other.

Open this photo in gallery:

I would like to clear the air on several points.

First, who is the initiator of the current China-U.S. trade conflict? Obviously, it’s the United States. The United States is not only a saboteur of the multilateral trade mechanism and WTO rules, but it wants to aim a flamethrower at global economic development. China is a direct victim of this U.S. behaviour. By referring the United States to the WTO’s dispute settlement mechanisms and taking countermeasures, China is legitimately defending its rights and interests while safeguarding the multilateral trading system and WTO rules. China’s behaviour, which is in line with the interests of all trading countries, including Canada, is legitimate, reasonable and lawful.

Second, does the United States suffer losses in bilateral trade with China? Many in America say yes, but there are several reasons for China-U.S. trade imbalance. The first is the economic structure of the United States: The country saves less than it invests, and this is an important factor in its trade deficit. The second is the U.S. dollar, whose strength as the international currency of settlements is underpinned by a relatively large trade deficit. The third is U.S. export controls against China: What China wants to import is prohibited by the U.S. government to export. It doesn’t help that the United States continually emphasizes and exaggerates its trade deficit with China. Canada is probably very familiar with the similar tricks the United States uses when it portrays its bilateral arrangements with Canada.

Third, there’s no law in China that forces foreign companies to transfer technologies to their Chinese commercial partners. In China, any transfer of technology among the enterprises is in accordance with contracts and agreements based on voluntary deals by the market entities. In fact, many U.S. companies have benefited through joint ventures and patent sales in China. In many cases, profits earned in China by American companies surpassed those they earned in the United States.

Fourth, the Made in China 2025 program proposed by the Chinese government aims to provide strategic guidance and information for the upgrading of the Chinese manufacturing sector in an effort to strengthen China’s manufacturing capacity. It is beyond reproach, and meets China’s obligations under WTO rules. Made in China 2025 is transparent, open and non-discriminatory. Both Chinese and foreign enterprises, state-owned and private ones, can all take part in it. In fact, many countries — including the United States and many in the European Union — have similar guidance targets and plans. So, this is by no means a legitimate excuse for the United States to start the Section 301 investigation against China.

Both China and Canada are strong defenders of free trade, and both countries support the resolution of trade disputes through consultation within the framework of the multilateral trading system. China is willing to work together with Canada to curb the momentum of protectionism and safeguard the international multilateral trading system and free trade.