As Donald Trump threatens to raise tariffs on Chinese goods, China is trying to act quickly and make its own rules before he takes office again. Experts believe that China wants to get the U.S. back to the negotiating table to talk about trade, science, and technology without triggering a full trade war.
China’s economy is not doing well, and it knows new tariffs could make things worse. This week, China announced it will investigate American company Nvidia for suspected unfair business practices. This comes after China banned some exports of rare minerals to the U.S.
Fred Neumann, an economist at HSBC, thinks China’s actions are just the start of negotiations with the U.S., rather than a fight where both sides walk away unhappy. George Magnus from Oxford University agrees that China can handle most tariffs unless they are extremely high, like 60%.
China is now leading in areas like electric vehicles and green energy, which means it doesn’t rely as much on U.S. goods like Boeing jets as it used to. However, China still needs to buy important technology from the U.S., like advanced microchips. U.S. consumers also play a key role in their economy, especially as trade globally is slowing down and buyer interest at home is weak.
Beijing wants to meet with Trump before he imposes more limits on high-tech exports and to renew an important agreement that supports science cooperation, which recently expired.
In the past, it took China a couple of years to agree to buy more American products as part of a previous trade deal. This time, China has new offers, like buying more oil and natural gas from the U.S. since America is producing more than it needs.
Given the new chip restrictions, the U.S. can still sell agricultural products and energy supplies to China. China’s commerce ministry says it is open to talking with Trump’s trade team. However, if the U.S. feels angry about China’s past commitments, it may prefer to impose tariffs instead of negotiating.
Michael Hart from the American Chamber of Commerce in China mentioned that U.S. businesses are worried about their ability to sell in China. In a recent survey, American businesses reported the lowest confidence since 1999 about their market access in China.
There are other political issues too. Trump has promised to add an extra 10% tariff on Chinese goods to encourage China to stop the flow of fentanyl into the U.S. Expert Neumann notes that using political reasons for tariffs can make trade tensions harder to resolve, and Magnus believes this might be China’s way of retaliating against U.S. actions.
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