Infrastructure Investment Will Be Part Of China's US Trade War Response.

Legal News & Analysis - Asia Pacific - China - International Trade

Asia Pacific Legal Updates

 

9 October, 2018

 

Infrastructure Investment Will Be Part Of China's US Trade War Response.

 

China will look to infrastructure investment to insulate its economy from the escalating trade war with the US, according to an infrastructure expert.

 

The US placed new tariffs on $200 billion of Chinese imports from 24 September, with tariffs increasing to 25% next year.

 

Sam Boyling, Bejing-based infrastructure specialist at Pinsent Masons, the law firm behind Out-Law.com, said: "At the moment, commentators are trying to quantify the likely impact of the increase in US tariffs on China’s continuing GDP growth. That’s a difficult thing to do. "

 

"We can expect, however, that the Chinese government will be likely to seek to offset any short-term impact by continuing to invest in new infrastructure here in China and abroad. The government has already announced in July renewed investment in the high-speed rail system to the interior of China. Investment in 'belt and road' countries will also continue apace. In the medium to long term that will also insulate China from these so-called 'trade wars'. Already there has been a significant increase in trade between China and its belt and road partners." Boyling said.

 

US president Donald Trump said that import tariffs will rise to 25% on 1 January 2019. He said in a statement: "if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267bn of additional imports".

 

In response China announced a levy on $60bn of US products starting from September 24. Chinese Customs Tariff Commission of the State Council released lists of 3,571 US products which will attract a 10% tariff and another 1,636 items that will attract a 5% tariff.

China's Ministry of Commerce (MOC) said: "China will be forced to take synchronous countermeasures to safeguard our legitimate rights and interests as well as the global free trade order."

 

It said that the US additional tariffs introduce new uncertainties and that China hopes the US side recognises the potentially harmful consequences of such an action. It called on the US to rectify the situation.

 

The Financial Times reported that several US business groups oppose the tariffs and support pushing China to open up for US imports. Gary Shapiro from the Consumer Technology Association said that the tariffs may be illegal. "Congress has not given the president or the US trade representative a blank check to pursue a trade war," he said

 

Credit rating agency Moody's said the US tariffs could reduce US growth by 0.2% and China's by 0.3%-0.5% next year, according to CNBC.

 

This article was published in Out-law here.

Pinsent Masons

 

For further information, please contact:

 

Sam Boyling, Partner, Pinsent Masons

sam.boyling@pinsentmasons.com