China’s weapons in the duel against Trump

Access Archive

How China can fight

Just after we sent our newsletter yesterday looking at Chinese state media commentary on the proposed American tariffs on $50 billion worth of Chinese goods, Donald Trump called China’s retaliatory plans to tax 106 American goods “unfair” and instructed the United States Trade Representative (USTR) “to consider whether $100 billion of additional tariffs would be appropriate.” China’s curt response, per Xinhua News Agency:

China is fully prepared and will not hesitate to strike back fiercely if the United States unveils the list of additional tariffs on 100 billion U.S. dollars of Chinese products, the Ministry of Commerce (MOC) said.
“We are not taking any options off the table,” Gao Feng, spokesperson with the MOC, said at a press briefing Friday.

Reuters reports that Gao elaborated: “If the United States announces an additional $100 billion list of tariffs, China has already fully prepared, and will not hesitate to immediately make, a fierce counter strike.”

What weapons does Beijing have in its armory? Additional duties on U.S. goods imported to China is the obvious option, but as Bloomberg’s Gadfly points out, reciprocal tariffs, “when added to the $53 billion in trade that’s already under threat, would max out China’s ability to retaliate through conventional means,” because $153 billion is already more than China buys from the U.S. in most years. Which is why China might fight back without additional taxes, but instead do one or more of the following:

  • Interfere with American companies in China: During the height of tensions between Beijing and Seoul last year over the THAAD missile deployment, South Korean companies like Lotte and Hyundai found themselves the subject of official investigations, project suspensions, and consumer boycotts. South Korean TV shows were taken off the air, while previously scheduled opera and K-pop performances by Korean entertainers were canceled without explanation.

  • Make bureaucratic obstacles for American imports and companies: In 2012, when relations between the Philippines and China were highly strained by their ongoing South China Sea dispute, China said that bananas imported from the island nation were “infested by pests” and began “requiring full inspections on all shipments.” The slowdown spread to Filipino papayas, mangoes, coconuts, and pineapples.
    A similar tactic was used to punish Norway after activist Liu Xiaobo 刘晓波 was awarded a Nobel Prize in 2010: “Norway’s salmon rot as China takes revenge for dissident’s Nobel Prize” is how the Independent put it.

  • Target Trump’s business interests: What the Party giveth — for example, the new China trademarks given to Trump last year — it could take away. Ivanka Trump licenses her brand for production and distribution in China, and her father’s buildings have many Chinese tenants, including the Industrial & Commercial Bank of China.

  • Gang up on the U.S. with Russia and North Korea: The beating of trade war drums comes just after Kim Jong-un’s visit to Beijing, and in the same week that China’s defense chief said his trip to Russia was “a signal to the U.S.”

  • Restrict study abroad and tourism: There are more than 300,000 Chinese students at American high schools and universities, and around 3 million Chinese visitors each year. There are many ways to slow that flow.

  • Target Trump supporters and red states: The New York Times says (paywall) “Chinese officials seem to believe they can take advantage of what they consider vulnerabilities in the American political system,” quoting a Peking University professor who explains that China has targeted farm products such as soybeans with its retaliatory tariffs because the “American agricultural sector is quite influential in the Congress.”  Party scholars in Beijing are probably already compiling lists of other pressure points and special interest groups that will give China leverage over Trump.

  • Encourage anti-American sentiment in China and abroad
    The image below is circulating online and apparently shows a sign at a nature reserve at Hengshan asking for 25 percent extra on admissions for American tourists in response to the Trump tariffs. This recalls popular sentiment against Japan at times of tension that has spurred citizens to “ban Japanese and dogs” from their restaurants.

These actions are not official by any means, but the Party is adept at manipulating popular anger. And nothing will make the Chinese people angrier than a spike in living costs, which may be the result of a trade war with the U.S.

Social media: China’s not scared!

On social media, Chinese people are already angry. Internet users have reacted to the tariff dispute with anger and displays of patriotism. On Weibo, there is a hashtag campaign called “China’s not scared!” (中国不是吓大的 zhōngguó bùshì xiàdà de), apparently initiated by the People’s Daily (see image below) which has already attracted over 48 million views and 45,000 comments.

In reaction to a tariff-related post (in Chinese) published by the official account of the People’s Daily, the most upvoted comment reads, “As Chairman Mao said long ago, American imperialism is a paper tiger.”

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BUSINESS AND TECHNOLOGY:

  • Are China’s drug price controls failing?
    Online sales of nonprescription medications have boomed in China in recent years, providing patients with relief from high prices at hospitals. But pharmaceutical companies — and hospitals, which are fighting back against a government-mandated elimination of medicine surcharges — have put intense pressure on online retailers to raise prices.

  • China’s biggest food delivery app buys China’s biggest on-demand bike service
    Meituan-Dianping is a tech company that does food delivery, restaurant reviews, group buying, and many other services, and it seems to have China’s dominant car-hailing company, Didi Chuxing, in its sights. The latest new service comes with the acquisition of Mobike, as Meituan joins Didi in the crowded bike-sharing space.

  • A new type of Chinese free-trade port for Hainan?
    General Secretary Xi Jinping is expected to speak at the Boao Forum for Asia, to be held on the southern Chinese island of Hainan from April 8 to 11. Sources have told the South China Morning Post that Xi is likely to propose a new free-trade port on Hainan in his keynote speech at the forum.

POLITICS AND CURRENT AFFAIRS:

  • China announces retaliation for Trump tariffs
    China announced a proportional response to the Trump administration’s list of $50 billion in tariffs, a day after it was released. After a 60-day comment period, both tariff packages — China’s on 106 American products, and America’s on over 1,300 Chinese products — are set to go into force at the same time.

  • People’s Daily online exhorts China to ‘stab at the heart of the snake’ in response to U.S. tariffs
    On this year’s Qingming Festival, or Tomb-Sweeping Day, Chinese state media mythologized China’s past and made a striking call to arms to respond to Trump’s tariffs. “Bravely unsheathe the sword, have the courage to oppose, stab at the heart of the snake” is how an editorial in the People’s Daily online was headlined.

  • China fires back in trade war with Trump, but global face-off in tech is just getting started
    China applied $3 billion in tariffs on products, largely agricultural products produced in states that voted for Donald Trump, in retaliation for steel and aluminum tariffs that went into effect a week and a half ago. Meanwhile, it is clearer than ever that American officials are dead set on directly countering China’s “Made in China 2025” industrial policy, regardless of any short-term agreement on trade.

  • Journalists worry about the South China Morning Post
    A New York Times article on the South China Morning Post — Hong Kong’s English-language paper of record — has inspired a debate amongst China journalists. While almost everyone who covers China reads the SCMP’s reporting, many critics say that the company is being used as a slick propaganda tool for Beijing.

  • Whitney Duan: Prelude to a takedown of former premier Wen Jiabao?
    Caixin reported, and then deleted, the story of Whitney Duan 段伟红, a business associate of former premier Wen Jiabao 温家宝, being detained last year. “Duan is clearly in trouble. How her fall will play out — and if she’ll take Wen Jiabao’s family down with her — could become one of the most interesting stories of 2018. On the other hand, Duan could simply disappear into a memory hole, and we may never know what has been going on,” Jeremy wrote.

SOCIETY AND CULTURE:

  • Hong Kong university to punish students protesting Mandarin test
    A little over two months after a group of students from Hong Kong Baptist University (HKBU) stormed the school’s language center to demonstrate strong objection to a compulsory Mandarin-language proficiency test, the university announced today that the two leading students in the protest would receive punishments.

  • Kuaishou takes down hundreds of videos featuring teen moms
    Kuaishou, one of the biggest short video platforms in China, apologized today after state media criticized it for failing to censor content featuring teenage mothers showing off their pregnant bellies and babies. In April, China Central Television (CCTV) said several video services, including Kuaishou and Huoshan, encouraged teenage girls to show off their adolescent pregnancies and compete with one another to be crowned as the “youngest mother on the internet.”

  • Chinese student who bought semi-automatic rifles to be deported from U.S.
    As America struggles to make sense of yet another mass shooting — on Tuesday, at YouTube’s headquarters in San Bruno, California, where three people were reportedly injured — a student from the PRC and a student from Taiwan are both in trouble in the U.S. for gun possession.

  • Graduate student’s suicide raises questions about the professor-student power dynamic on Chinese campuses
    The suicide of a graduate student at the Wuhan University of Technology’s School of Automation two weeks ago has sparked a discussion online about the relationship between mentors and mentees at Chinese universities.


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