How should China respond to Donald Trump’s aggressive trade policy? The answer is: strategically. It needs to manage a rising tide of US hostility.
Of the events in Washington last week, the appointment of John Bolton as the US president’s principal adviser on national security may well be more momentous than the announcement of a “section 301” trade action against China. Nevertheless, the plan to impose 25 per cent tariffs on $60bn of (as yet, unspecified) Chinese exports to the US shows the aggression of Mr Trump’s trade agenda. The proposed tariffs are just one of several actions aimed at China’s technology-related policies. These include a case against China at the World Trade Organization and a plan to impose new restrictions on its investments in US technology companies.
The objectives of these US actions are unclear. Is it merely to halt alleged misbehaviour, such as forced transfers — or outright theft — of intellectual property? Or, as the labelling of China as a “strategic competitor” suggests, is it to halt China’s technological progress altogether — an aim that is unachievable and certainly non-negotiable.