Battered by a trade war that is negatively affecting its economy, China recently accused the United States of practicing “economic terrorism” against their country. Production centers are said to be shifting to other countries as companies seek to avoid U.S. tariffs on Chinese imports.
Beijing’s trade war
It was during President Xi’s recent visit to Russia that Vice Foreign Minister Zhang Hanhui pointed fingers at America, accusing the country of using tariffs, protectionism, and trade sanctions to “terrorize” the Chinese economy. Zhang added that everyone loses in a trade war and that China was prepared to fight America’s “economic bullying.”
“This trade clash will have a serious negative effect on global economic development and recovery… We will definitely properly deal with all external challenges, do our own thing well, develop our economy, and continue to raise the living standards of our two peoples… At the same time, we have the confidence, resolve, and ability to safeguard our country’s sovereignty, security, respect, and development interests,” he said in a statement (CNBC).
Interestingly, China also practices economic protectionism and even worse “economic terror” activities, like intellectual property (IP) theft. The trade war was triggered exactly because of such reasons. President Donald Trump asked China to stop stealing the intellectual property of American companies and open up their domestic economy for foreign businesses without any discriminatory policies.
The fact that China refuses to take steps in this regard and still points fingers at the U.S. for “economic terrorism” is ridiculous. Moreover, it seems as if Zhang overestimates China’s capability of surviving a trade war with the United States. Most Chinese business owners have a grim view of the domestic economy should the trade conflict continue unabated.
“Recently, I often chat with my classmates and clients who live and work abroad. We talk very carefully as we are afraid of our WeChat account being blocked because of any sensitive content related to trade war news… We used to think [a trade war] to be absolutely impossible. Now I start to fear there will be a devaluation of the [yuan] in the near future, and even a more horrible situation ahead if the two sides engage in a full-scale … I think I might need to make a contingency plan, like keeping a certain amount of either yen, U.S. dollars or Australian dollars in cash at home, only for emergencies in extreme situations,” an exporter from Guangzhou said to South China Morning Post.
Production moving to Vietnam
The U.S.-China trade war has forced several companies to shift production from China to other countries, like Vietnam. During the first four months of the year, imports from Vietnam have jumped 38 percent. Imports from Bangladesh are up by 13 percent, South Korea by 17 percent, and Taiwan by 22 percent. Trump had earlier warned China that this would happen.
“Many tariffed companies will be leaving China for Vietnam and other such countries in Asia. That’s why China wants to make a deal so badly!… There will be nobody left in China to do business with. Very bad for China, very good for USA! But China has taken so advantage of the U.S. for so many years, that they are way ahead (Our Presidents did not do the job). Therefore, China should not retaliate — will only get worse!” he said in a series of tweets.
Trump expects to meet Xi Jinping at the upcoming G20 meeting in Osaka later this month. If Xi does not agree to make a deal, Trump has warned that he will be slapping tariffs on more Chinese goods. At present, only about 35 percent to 40 percent of Chinese imports have been brought under tax. In a “no deal” scenario, the remaining 60 percent will also be subjected to higher tariffs.