If Necessary, China Has A Strategic Plan For A Trade War With The U.S.

Mar 22, 2018
Originally published on March 22, 2018 8:03 am
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China says it is prepared to strike back. That is if, as expected today, the Trump administration hits Chinese imports with billions of dollars in tariffs. Though NPR's Anthony Kuhn reports from Beijing that while China has plenty of options for retaliation, it doesn't seem terribly keen to use them.

ANTHONY KUHN, BYLINE: Trade war? Let's make trade, not war. That seemed to be Premier Li Keqiang's message in his annual press conference on Tuesday.

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LI KEQIANG: (Through interpreter) So what we hope is for us to act rationally instead of being led by emotions. We don't want to see a trade war.

KUHN: That doesn't mean China will just turn the other cheek. Tu Xinquan, a trade expert at the University of International Business and Economics in Beijing, explains.

TU XINQUAN: (Speaking Chinese).

KUHN: "China's government will have to make a strong response," he says, "one that's similar in strength to the U.S. measures. It won't be as mild as Premier Li suggests." China's economy is big enough to withstand the shock of a trade war, Tu argues. And he says the U.S. tariffs may hit American companies as hard as Chinese ones.

TU: (Speaking Chinese).

KUHN: "Half of China's exports are actually for multinational corporations," he says, "which manufacture their goods in China and then export them." By that, he means products like Apple's iPhones or Nike's sneakers. He adds that if a trade war with the U.S. causes layoffs in Chinese factories, that's unlikely to cause political problems for Beijing.

TU: (Speaking Chinese).

KUHN: "They can just pin the blame on the U.S. government," he says. "Given how high nationalistic sentiments are running here, the government may actually score political points, not lose them." More importantly, China is trying to pull off a historic shift from manufacturer to consumer, and the tariffs may actually help that trend. Exports as a part of the Chinese economy are already decreasing in importance as the country moves up the value chain into more profitable high-tech goods and services. At the same time, as millions of Chinese move into the cities and the middle class, they're making China into the world's biggest consumer, so it exports less and imports more. Huang Weiping, a trade expert at People's University in Beijing, says that China's trade surplus with the U.S. will naturally decrease over time.

HUANG WEIPING: (Speaking Chinese).

KUHN: "It's very hard for a huge nation to maintain a trade surplus over the long run," he says. "That's an economic rule." Beijing University international relations expert Zha Daojiong says that, sure, China could inflict plenty of pain on U.S. politicians by slapping tariffs on exports from their states or districts. But he says that in the long run, that's not in China's interest.

ZHA DAOJIONG: The real rationale ought to be what's good for the Chinese consumer, rather than what can hurt a politician’s prospect in the United States.

KUHN: He adds that instead of subsidizing its exports, China now has more important things to do with its money, such as cleaning up its environment. Anthony Kuhn, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.