China pushes back against U.S. investigation over unfair trade practices : NPR

Delegates, including Chinese President Xi Jinping (center), stand as the national anthem is sung during the closing session of the National People’s Congress at the Great Hall of the People in Beijing on Thursday.

Ng Han Guan/AP

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Ng Han Guan/AP

BEIJING — China’s Foreign Ministry criticized a U.S. investigation opened this week into the trade practices of dozens of countries, calling it “a pretext for political manipulation.”

US Trade Representative Jamieson Greer announced Wednesday the opening of an investigation into what the administration considers “excess capacity and production in manufacturing sectors” in countries and blocs including China, Mexico and the European Union. The move comes after the Supreme Court last month struck down tariffs the president had imposed on imports from countries around the world. This could allow the administration to impose tariffs on goods from countries if it determines they are discriminating against U.S. companies.

“We oppose any form of unilateral tariff measures,” Foreign Ministry spokesperson Guo Jiakun told reporters on Thursday. “The so-called issue of ‘China overcapacity’ doesn’t really exist and should not be used as a pretext for political manipulation.”

This comes just weeks before President Trump and Chinese President Xi Jinping meet in a high-stakes summit.

It also happened as lawmakers in Beijing approved a road map for economic growth that continues the type of practices that have angered some of its partners.

China’s new five-year economic roadmap

China’s legislature on Thursday approved what it calls a five-year plan, a social and economic plan that includes policies around technological self-reliance and industrial manufacturing.

Although the plan does not mention the United States, it focuses on “managing what Beijing calls its ‘great power competition’ with Washington,” according to Yu Jie, a senior China researcher at the London-based think tank Chatham House.

Here are the key takeaways from China’s plan.

1. Scientific and technological autonomy

The plan calls for “substantial improvements” in China’s autonomy and strengthening its science and technology sectors.

China has long been uncomfortable with relying on foreign suppliers of high-end technologies, such as aircraft engines and high-end semiconductors, Yu writes.

The push for self-reliance grew after the United States restricted sales of high-end semiconductors and cutting-edge technologies to Chinese companies.

China is expected to increase its research and development spending by more than 7% per year.

2. World leader in technological innovation

China not only wants to catch up with the United States and Europe in semiconductors and aerospace, but it also wants to lead in these areas, alongside future-oriented industries such as intelligent robotics, biomedicine, quantum technology and the so-called “low-flying” economy, ranging from drones to flying taxis.

Similar ambitions in the past have made U.S. and European business groups in China fear there are few opportunities for them.

China’s official Xinhua news agency tried to allay these fears: “Technological sovereignty is not a matter of isolation,” it said in an editorial.

3. Doubling down on industrial manufacturing

China wants to innovate like the United States and manufacture what it innovates.

The plan calls on manufacturers to capitalize on China’s advances in robotics and artificial intelligence to build a “modern industrial system with advanced manufacturing as the backbone.”

This plan, however, does not address the problem of “involution,” where fierce competition among manufacturers has led to price wars and oversupply, hurting profits and increasing trade frictions overseas.

Many Chinese manufacturers have been accused of selling excess inventory overseas, hurting key industries of their trading partners.

The plan also calls for strengthening China’s competitive advantages in rare earths and other strategic minerals. Chinese officials used China’s advantage as leverage to pressure President Trump to roll back triple-digit tariffs on Chinese exports last year.

4. Stimulate consumption

The plan also calls for “vigorously stimulating consumption.”

Most of Chinese household wealth is invested in real estate. A years-long housing crisis has prompted Chinese consumers to spend more cautiously.

Successive US and European administrations have called on China to resolve its overcapacity problem by boosting domestic consumption.

“They want China to export less and import more, encourage local consumption, raise local wages so they can sell more to China,” said Wang Dan, China director of Eurasia Group.

The plan sees consumption as a key task, but it does not provide details on how China could close this gap.