China announced dumping and subsidy probes of chicken and auto products from the US, two days after President Barack Obama imposed tariffs on tires from the Asian nation.
Chinese industries complain that they’re being hurt by “unfair trade practices,” the nation’s Ministry of Commerce said on its web site yesterday. The dumping investigation relates to poultry alone, a spokesman said in Beijing today. The ministry didn’t specify the value of imports of the products.
Rising protectionism may hamper world trade and undermine the global economy’s recovery from recession, the European Central Bank said last week. The US placed tariffs starting at 35 per cent on $1.8 billion of tire imports from China, backing a United Steelworkers union complaint against the second-largest US trading partner.
“While there’s friction, I suspect that the two nations will keep any disputes under control,” said David Cohen, an economist at Action Economics in Singapore. “They understand that they’re increasingly dependent as trading partners.”
Dumping is selling goods for less than the cost of producing them.
The state-run China Daily newspaper said in a front-page article today that the probe was “not revenge” for the decision on tires. The commerce ministry spokesman, who wouldn’t be identified by name, said the government was assessing whether the subsidy and dumping complaints had merit.
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‘Strategic Relationship’
Rubber futures in Shanghai tumbled by the daily trading limit today because of the tire tariffs. The January-delivery contract dropped 5 per cent from the previous settlement to 17,710 yuan a metric ton.
Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong, said today that he doubted that the tire tariffs would trigger a trade war.
The “macroeconomic impact is not enough to warrant an escalation of such a trade dispute to such levels that would threaten the strategic relationship between the two countries,” Wang said.
The Chinese commerce ministry said Sept 12 that it strongly opposes the US decision on tires and may refer the case to the World Trade Organization.
A “sluggish” global recovery and rising unemployment may tempt governments to restrict trade, triggering a retaliatory spiral of measures, the Frankfurt-based ECB said in its monthly bulletin. Trade protectionism could “significantly impair the global recovery,” it said.
Opposing Protectionism
Yesterday’s three-paragraph statement from the Chinese commerce ministry didn’t refer to the tire dispute.
“China has always steadfastly opposed trade protectionism,” the ministry said, adding that the nation was “willing to continue acting in concert with other nations to promote a global economic recovery as soon as possible.”
The dumping and subsidy probes involve “some” auto and chicken imports from the US, it said, without specifying which ones. In June, China said it had asked the World Trade Organization to set up an experts panel to investigate US restrictions on imports of Chinese poultry products.
“Chinese poultry companies have been struggling over the past couple of years amid bird flu and a flood of imports, and the financial crisis is making that worse,” Ma Chuang, vice-secretary general of the China Animal Agriculture Association, said in Beijing today. “This case is long overdue.”
Ma said about 80 per cent of imported chicken came from the US
Fear of Retaliation
In the US, pork, soybean and other farm-goods exporters urged Obama on Sept 3 to refrain from imposing tariffs or quotas on tires from China because of the fear of retaliation against US food and agriculture products.
The US consulted with Chinese officials before imposing tariffs to try to work out a solution, a US trade official said, speaking on condition of anonymity. The US hasn’t been notified of the new dumping cases, the official said.
If China is considering the cases in retaliation for the US tires decision, the US could challenge that action at the WTO, the official said. The US prefers holding talks to address the underlying causes of the problem in China, such as subsidies, the official said.