Uneasy China ‘seeks to build firewall’ with US allies against Donald Trump’s aggressive trade moves

Beijing may have miscalculated the severity of the US president’s trade measures, prompting China’s international trade representative to meet with European ambassadors, people familiar with the talks said

PUBLISHED : Tuesday, 17 April, 2018, 11:44pm
UPDATED : Wednesday, 18 April, 2018, 10:51pm

China’s international trade representative has met ambassadors from major European nations to ask them to stand together against US protectionism, a sign that Beijing has apparently underestimated the resolve of US President Donald Trump on trade, according to four sources familiar with the discussions.

Some of the Western diplomats involved in the meetings last Thursday and Friday with Fu Ziying, who is also a Chinese vice-commerce minister, have viewed the approaches as a sign of how anxious Beijing is getting about the expanding trade conflict with Washington, the sources told Reuters.

The individual meetings, which were called by Fu, were generally “non-confrontational” as China sought support in countering Trump’s aggressive trade measures, a European diplomat with knowledge of the discussions said.

There were, though, some “subliminal threats” about consequences for foreign companies, this person said.

“The message was that we have to stand together against US protectionism in favour of free trade,” the diplomat said.

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“China is showing confidence, but internally they appear quite concerned. They have apparently underestimated Trump’s resolve on trade,” the diplomat said, adding that Beijing is nervous about China’s major trading partners siding with Washington.

The rush of meetings with ambassadors from France, Germany, Britain, Spain, Italy and the European Union may be a signal that China is trying to build a firewall against Trump’s aggressive trade measures, the severity of which some foreign diplomats said Beijing had miscalculated.

Three other diplomatic sources, and three embassies, confirmed that the meetings occurred.

An Italian embassy spokeswoman said its ambassador met Fu on April 12, and that while the US-China trade dispute was discussed, the meeting was mostly about bilateral issues.

A British embassy spokeswoman also confirmed that its ambassador met Fu last week as part of regular discussions with the ministry that touched on “bilateral and multilateral trade issues”.

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An EU delegation spokesman said its ambassador attended a meeting with Fu, but did not elaborate.

A German embassy spokesman declined to comment, and the other embassies did not respond immediately to requests for comment.

China’s Commerce Ministry also did not respond to a request for comment.

US President Donald Trump has threatened to impose tariffs on US$150 billion in Chinese imports to the US to punish China for what US government officials regard as its predatory industrial policies and abuse of US intellectual property. Beijing has vowed to retaliate.

Amid the rapidly rising tensions between the two sides, China has sought to seize the moral high ground as a defender of the multilateral trade system, even as US allies express shared concern with Washington over Beijing’s highly restricted market.

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The Chinese government’s top diplomat Wang Yi, during a visit to Tokyo on Monday, urged Japan to work together with China to oppose protectionism, though foreign officials said that China was not naive enough to think that it could fully drive a wedge between Washington and its allies.

One senior EU diplomat in Brussels who confirmed the meetings said the EU was not in the business of taking sides, and that its goal was to get the multilateral process back on track, referring to efforts to resolve trade disputes through the World Trade Organisation.

“I think it also smacks of desperation because China also knows that the European Union is not going to confront its biggest ally,” the EU diplomat said of the meetings.

“China has been very effective at making the most of the free-trading rule book. I don’t think anyone in the West is going to leave it to China to set new ones,” the Brussels-based diplomat said.

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Trade policy for members of the EU is handled by the European Commission, not by individual member states.

Another Western diplomat in Beijing, who was speaking on condition of anonymity, said China’s outreach to European countries had begun even before Trump announced 25 per cent tariffs on US$50 billion in Chinese industrial technology, transport and medical products in early April.

When Beijing responded within hours with its intention to levy similar duties on US$50 billion worth of US soybeans, planes, cars, beef and chemicals, Trump then escalated the dispute by instructing his administration to identify another US$100 billion worth of Chinese goods to penalise.

None of these threatened duties has yet gone into effect.

US business groups argue that Trump should form a coalition with the EU, Japan and other Western nations to push China to open its economy.

They say that these countries share Washington’s consternation over Chinese market restrictions and its policies to produce national champion companies in major industries at the expense of foreign competitors.

However, instead of reaching out to its European allies, Washington has alienated them with its protectionist moves, including its targeting of European countries with tariffs on steel and aluminium exports to the US.

The EU has said the US steel and aluminium tariffs are unjustified and is seeking compensation from the US at the WTO.