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China economy

China’s former chief trade negotiator criticises Beijing’s ‘unwise’ tactics in US tariff war

  • Long Yongtu makes rare public criticism of way dispute with US is being handled
  • Former minister says targeting US soybeans from the start was a ‘political’ decision that had not been properly thought through
PUBLISHED : Sunday, 18 November, 2018, 2:34pm
UPDATED : Tuesday, 20 November, 2018, 4:17am

China’s former chief trade negotiator openly criticised Beijing’s trade war tactics on Sunday, singling out the decision to impose tariffs on soybeans as ill-thought out.

The comments by Long Yongtu, a former vice-minister with China’s foreign trade ministry who headed the talks that led to China’s entry to the World Trade Organisation, offered a rare glimpse into the country’s internal divisions about how to handle the dispute with the United States.

He told the annual conference organised by Caixin, an influential Chinese financial media outlet, that it was inappropriate to involve political considerations in trade talks.

“If we have people who always talk about politics engaging in [trade] negotiations, we will never have a deal,” Long said, without naming anyone directly. “We don’t think deeply enough.”

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In particular, Long said it was unwise to impose import duties on soybeans in retaliation for US President Donald Trump’s decision to slap additional levies on Chinese imports.

“Agricultural products are very sensitive [in trade], and soybeans are very sensitive as well … We should have avoided targeting agricultural products because targeting agricultural products should be the last resort,” Long said. “But we have targeted agricultural products, or soybeans, right from the start.”

The agricultural states that produce the bulk of America’s soybeans make up Trump’s political heartland, but Long pointed out: “China is in dire need of soybean imports, so why did we pick out soybeans from the beginning? Is this deep thinking?”

China levied 25 per cent import duties on soybeans, the key raw material for animal feed, in the first round of the tariff battle with the US.

Although this greatly reduced US exports to the world’s biggest soybean importer, it has also led to domestic price increases.

Beijing picked soybeans as one of the first US products to sanction partly because it was trying to inflict pain in the Republican Party’s heartland.

Lou Jiwei, China’s former finance minister and now the chairman of the national pension fund, said in March that Beijing could inflict pain on the US economy by “hitting” sectors such as soybeans, cars and aeroplanes.

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The US initiated the current dispute in July when it imposed 25 per cent tariffs on US$50 billion worth of Chinese products, which prompted China to slap a similar levy on the same amount of American goods.

The US escalated the trade battle further in September by imposing 10 per cent tariffs on an additional US$200 billion of Chinese imports and has warned that these tariffs will rise to 25 per cent in January if Beijing refuses to change its trade practices.

Given the trade gap between the two, China was unable to keep pace with the US tariffs, so it responded with tariffs on US$60 billion worth of American goods.

Long’s rare public criticism came as negotiation teams from the two countries prepare for a fresh round of talks.

However, Long said he was “cautiously optimistic” about the prospects of solving the dispute because Trump’s tariffs have also hurt US interests.

“To some extent, I like Trump’s character,” Long said. “I hope the trade talks can have a good result.”

Additional reporting by Zhou Xin