US-China trade war: amid allegations that yuan is undervalued, why are tiny twist ties so important?
- Beijing and Washington quarrel over China’s currency again, and the fallout could affect US$450 billion worth of Chinese imports to the United States each year
- If the case involving twist ties becomes a precedent, it could materialise the controversial idea of using the yuan exchange rate to determine trade penalties
Beijing appears to be alarmed by a US probe into whether the yuan is being undervalued to give Chinese exporters an unfair advantage, which could spell big trouble for China’s US$450 billion worth of annual exports to the United States.
And that big trouble could stem, in part, from a very small item: twist ties – thin bendable wires coated in paper or plastic that are widely used for tying up bags, cables and food packaging.
But these tiny twist ties have become anything but trivial in the US-China trade war. In fact, China’s Ministry of Commerce has publicly warned the US to stop using claims of China’s alleged yuan undervaluation to justify the imposition of anti-dumping and countervailing duties on the imports of twist ties from China.
If the case, initiated by the US Department of Commerce this month, becomes a precedent, it could materialise the highly controversial idea of using the yuan exchange rate in determining possible trade penalties – and in theory, more Chinese shipments to the US could be affected.
This could give the US a new tool in restricting Chinese exports to the US, while potentially making the yuan a focus of the trade dispute between the world’s two biggest economies.