Monday, June 17, 2024

EDITORIAL: Biden should not politicize China trade war by hiking tariffs | The Asahi Shimbun: Breaking News, Japan News and Analysis

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U.S. President Joe Biden’s move to sharply raise tariffs on a range of Chinese imports is nothing but blatant protectionism and a harmful form of election politics.

It is not new that the United States, which has been acting as the leading champion of free trade, will trample on the rules that allow trade between countries with minimal or no barriers such as tariffs.

This time, however, Washington is going too far.

Biden should recognize that his action has the potential of hurting the entire global economy.

The Biden administration has decided to impose high tariffs on an array of imports from China, such as electric vehicles (EVs) and semiconductors, citing the country’s “unfair trade practices.”

Since China is likely to respond with retaliatory measures, there are serious concerns about a fresh flare-up of the trade war between the world’s two biggest economies.

In 2018, President Donald Trump’s administration began imposing punitive tariffs on a variety of Chinese industrial and agricultural imports. However, these taxes did not exceed 25 percent.

The Biden White House has announced plans to raise such tariffs to an extraordinarily high level–100 percent for EVs and 50 percent for both legacy semiconductors–older or previous generations of semiconductor devices that are not at the cutting edge of technology but are still widely used in various applications–and solar cells.

The Biden administration justifies these punitive tariffs by claiming that massive subsidies from the Chinese government have led to overcapacity in Chinese enterprises, causing artificially low-priced Chinese exports to flood global markets.

However, Chinese-made EVs are hardly imported into the United States. There is no good reason for a country to take measures that go against the principles of free trade, termed as preventive steps, without any specific damage being caused to the country’s industry.

Michigan, where U.S. automakers are based, and Pennsylvania, a center for steel production, are so-called swing states, or key battlegrounds that could determine the outcome of the presidential election.

It is clear that by raising tariffs on Chinese products, the Biden administration is adopting a stance of protecting manufacturing jobs and playing tough on China to counteract Trump’s attempt to regain power in the November presidential election.

On the other hand, it is a fact that Chinese President Xi Jinping’s administration has been promoting the domestic manufacturing sector with its “Made in China 2025” initiative to comprehensively upgrade Chinese industry, providing policy support to Chinese companies in the form of subsidies and tax benefits.

Still, the issue of overcapacity should be seen as a problem of the overall structure of the Chinese economy. After years of investment-driven economic growth, backed by a high savings rate, China’s economy is facing the problem of weak domestic consumption.

This structural problem is causing Chinese exports to wash over other parts of the world.

Moreover, the nation’s real estate sector, which had been a cornerstone of China’s investment-led growth, has fallen into a slump, threatening the overall economic expansion.

Although the Xi administration should be taking steps to ramp up consumer spending, it is stressing the need to expand production capacity instead.

Xi’s claim that there is no problem of excess capacity in China is far from convincing.

Just last month, U.S. Treasury Secretary Janet Yellen visited China and agreed with Beijing to initiate a U.S.-China dialogue on “balanced economic growth.” From this point of view as well, the Biden administration’s policy toward China is inconsistent.

The Biden government should prioritize urging China to embark on reforming its economy rather than “penalizing” it for political purposes.

–The Asahi Shimbun, May 16

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