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Sino-US relations

China may find itself in trade war with US over North Korea, experts warn

PUBLISHED : Thursday, 06 July, 2017, 11:49pm
UPDATED : Thursday, 06 July, 2017, 11:53pm

China could find itself in a trade war with the United States, ­analysts warn, after Washington lashed out at Beijing for not doing enough to rein in Pyongyang’s ­nuclear weapon ambitions.

US ambassador to the United Nations Nikki Haley on Thursday threatened Washington would cut off trade with countries that ­continued to do business with North Korea and said her ­delegation planned to introduce “in the coming days” a new UN Security Council resolution aimed at halting all violations of existing sanctions against North Korea.

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Haley’s trade threat appeared to be a jab at China, which US President Donald Trump has ­accused of undermining efforts aimed at subduing Pyongyang’s weapons programme by trading with the country. It was followed by a tweet from Trump: “US made some of the worst trade deals in world history. Why should we ­continue these deals with ­countries that do not help us?”

The remarks cast uncertainty over talks in Hamburg between Chinese President Xi Jinping and Trump on the sidelines of the G20 summit, which starts on Friday, and will add tension to the China-US trade and economic dialogues ­later this month.

Washington stepped up its rhetoric against North Korea after Pyongyang fired an intercontinental ballistic missile this week, with Haley saying that the US would use military force to stop the reclusive state.

Chinese Vice-Finance Minister Zhu Guangyao said China and the US had made “progress” in their 100-day action plan agreed in April to tackle trade ­imbalances.

He called on the US not to sanction Chinese firms doing business with Pyongyang, stressing the need for economic cooperation. “China and the US have very practical economic teams. We all know that peace can bring win-win outcomes, while fighting will leave everyone the loser,” he said.

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But Huo Jianguo, a former Chinese Ministry of Commerce research chief, warned of “long-term struggles in the China-US relationship”. “Trump’s dissatisfaction with China hasn’t waned. There’s a risk of this leading to an escalating trade dispute. China is willing to cut its trade surplus with the US ... but it will file lawsuits under the World Trade Organisation if the US applies sanctions,” Huo said.

China said its coal imports from North Korea fell by more than half to 2.7 million tonnes in January and February from a year earlier, and it had stopped the ­imports from February 19 in line with UN sanctions.

Trade between China and North Korea grew by 37.4 per cent in the first quarter to 8.4 billion yuan (US$1.23 billion or HK$9.64 billion), China’s customs agency said. Exports to its neighbour went up by over 50 per cent, while imports rose by less than 20 per cent in the period.

The US still had high hopes that China would do more to subdue North Korea’s weapons programme in exchange for smooth trade ties, observers said.“If Trump throws bilateral trade in with the North Korea issue we will see a deterioration in ties.,” Lu Xiang, a ­senior researcher at the Chinese Academy of Social Sciences, said. “Trump hasn’t formed a clear policy and China should prepare for the worst.”

In his presidential campaign, Trump pledged to label China as a currency manipulator and vowed to launch punitive tariffs on ­imports from China.