Congressional panel recommends toughing US-China trade relationship

A congressional panel has recommended that the US toughen its trade relationship with Beijing, pushing to roll back a nearly 25-year-old decision that helped bring about China's rapid economic growth but that many in Washington now see as hurting US interests.

In its annual report to Congress released on Tuesday, the US-China Economic and Security Review Commission called for the first time for ending permanent normal trade relations with Beijing. It echoes moves by prominent Republican lawmakers -- including Sen Marco Rubio, President-elect Donald Trump's pick for secretary of state -- as the trade war with China is expected to intensify under the incoming administration.

 

The change would mean the US reintroducing annual reviews of China's trade practices and gaining more leverage to address "unfair trade behaviours", the commission said in the report.

"This move would signal a shift toward a more assertive trade policy aimed at protecting US industries and workers from economic coercion," the report said.

It is among nine pages of recommendations put forward by the commission, created in 2000 to monitor the national security implications of the new trade relationship between Washington and Beijing.

The congressional decision in the last year of the Clinton administration facilitated China's entry into the World Trade Organization in 2001, with the hope that integration into the US-led global economy and economic prosperity could lead to political liberalisation in China.

That has not happened, and the trade relationship took a turn in 2018, when Trump launched a trade war with China to tackle trade imbalances.

This year, on the campaign trail, Trump vowed to levy 60 per cent tariffs on Chinese products to further narrow the trade deficit, a threat that experts say could set back China's economy and drive up consumer costs in the US. The trade imbalance stood at USD 279 billion for 2023, down from USD 418 billion in 2018.

In September, a group of Republican senators, including Rubio, introduced a bill to end permanent normal trade relations with China. The designation significantly lowers trade barriers.

"Giving Communist China the same trade benefits that we give to our greatest allies was one of the most catastrophic decisions that our country has ever made," Rubio said when introducing the bill.

Trump picked Rubio -- known for his ideological opposition to communism and his hard-line stance on China -- to lead the State Department. The choice needs to be confirmed by the Senate.

"Our country's trade deficit with China more than quadrupled, and we exported millions of American jobs. Ending normal trade relations with China is a no-brainer," Rubio said.

Last week, Rep John Moolenaar, a Michigan Republican who leads the House's Select Committee on the Chinese Communist Party, introduced a corresponding bill.