Academic Suggests ‘Revenge List’ as China-U.S. Trade Tensions Rise

As trade tensions between Beijing and Washington heighten, China should prepare countermeasures including a “revenge list” and employ global trade rules to protect its interests, a top Chinese academic said.

“U.S. officials turned very hawkish this year and were basically pushing their one-sided perspectives (on trade issues),” Lu Feng, a professor at Peking University, said Monday at a forum in Beijing.

Lu was recounting his visit to the U.S. in January, when he met with officials from several agencies, including the National Security Council and the Department of the Treasury.

Considering the situation, Lu suggested that China look for ways to reduce risks of a trade war, though he also advised it should have countermeasures ready should things deteriorate. Specifically, he mentioned using World Trade Organization rules to protect China’s interests, mobilizing other parties to buck U.S. protectionist actions and creating a “revenge list.”

By “revenge list,” Lu meant that China should identify several major U.S. exports to China that could be targeted with retaliatory tariffs, particularly U.S. products of which China imports great quantities.

At the World Economic Forum in Davos, Switzerland last week, U.S. President Donald Trump said his country will no longer turn a blind eye to unfair economic practices such as massive intellectual property theft, industrial subsidies and state-led economic planning. The statement followed an announcement that his administration had handed down heavy tariffs on imported solar panels and washing machines.

The head of China’s Ministry of Commerce’s Trade Remedy and Investigation Bureau later called the tariffs excessively protectionist.

China’s trade surplus with the U.S. rose to a record $275 billion last year, up from $163 billion in 2016, according to Chinese government data. From 2007 to 2017, the surplus has increased 68.7%.

Lin Yifu, former chief economist of the World Bank, blamed the U.S. trade deficit on its citizens’ immense consumption power. Lin said the U.S.’s less-regulated financial markets, as well as its fiscal and monetary policies have created bubbles in the stock and real estate markets and created excessive buying power, which led the U.S. to buy large amounts of foreign goods.

Lu also suggested that China should press on with domestic reforms to improve the domestic business environment, strengthen intellectual property protection, lower barriers to entry for some industries and deregulate investment controls on foreign capital.

He also warned that both China and the U.S. should avoid politicizing trade tensions.

Contact reporter Pan Che (chepan@caixin.com)