GENEVA -- China and the United States on Monday clashed again over their respective trade policies at a time when the two countries are trying to iron out their differences so further U.S. tariffs are not imposed on Chinese goods.
Dennis Shea, the U.S. ambassador to the World Trade Organization, said criticism from China about the U.S.' "unilateralist and protectionist" approach to trade was unwarranted.
He also insisted the U.S. wants to change the global trading system to make it fairer for U.S. citizens, and he defended America's role in supporting that system for seven decades, at the World Trade Organization and its predecessors.
"The United States is raising serious concerns with the functioning and direction of this important institution and the fundamental challenge posed by China's state-led, mercantilist approach to the economy and trade," Shea said during remarks for the WTO's routine "trade policy review" of the United States.
He said the global trade environment was "heavily skewed" in favor of China.
The U.S. and China are locked in a trade standoff, though President Donald Trump agreed this month to a 90-day postponement of further U.S. tariff increases on Chinese goods, allowing time for negotiations to continue.
Shea's Chinese counterpart at the WTO, Zhang Xiangchen, upbraided the U.S. over tariffs, saying the increases on steel and aluminum products were "based on dubious national security concerns."
Zhang also blasted U.S. efforts to put the WTO's appeals body "in paralysis" by blocking appointments. The appeals body could stop working by December of next year if term expirations reduce its membership below the minimum of three people.
"Whether it is a small family or an international organization, a top dog should act like a top dog," Zhang said, in an apparent allusion to the United States. "It cannot only see a narrow spectrum of its own self-interest, and it certainly should not do whatever it wishes at the sacrifice of the others."
Marc Vanheukelen, the European Union's ambassador to the WTO, noted how in 2016, at the previous review of the U.S., he had hoped that President-elect Trump's "protectionist rhetoric would end" after he took office.
"Today, unfortunately, rhetoric has turned into reality and the repercussions of tariffs and other restrictions are being felt at the heart of this organization, and more generally in global growth prospects," he said.
"The multilateral trading system is in a deep crisis, and the United States is at its epicenter for a number of reasons," he said.
Chinese factories have been responding to threats of a trade war by reducing prices, workers and investment, according to UBS Group AG.
About 86 percent of companies affected by U.S. tariffs reported a decline in orders, according to a survey of 200 chief financial officers in manufacturing firms with significant export business. While most have plans to diversify into less trade-heavy sectors, they don't expect to fully offset weaker demand. Of the 125 companies saying business has already been hurt, 68 percent cut prices on products subject to levies, 23 percent laid off workers and 18 percent cut wages.
A squeeze on corporate margins and employment threatens to deepen a slowdown in the world's second-largest economy. UBS predicts that the 90-day tariff truce is only a temporary respite, putting the probability of a lasting agreement before March at less than 15 percent.
"Most companies expect the trade war to escalate," analysts wrote, predicting that Chinese export growth will slow to 4 percent in 2019 from 11 percent this year. With that will come more price cuts and more layoffs in the next six months, according to the report.
The Chinese government has rolled out measures including tax breaks and subsidies to cushion the effect of tariffs on exporters, a strategy UBS expects will continue in 2019.
"We see the government easing macro policies to support growth, and provide some subsidies and tax cuts to support employment," the analysts wrote.
Information for this article was contributed by Jamey Keaten of The Associated Press and Xiaoqing Pi of Bloomberg News.
Business on 12/18/2018