#精品长文创作季#
Every time there is a U.S. election, U.S.-China relations encounter serious challenges. It seems that shifting all responsibility to the mainland has become the "ability to grab votes" that US politicians are best at. Biden, who has entered a critical period of the election, is no exception, although during Yellen's visit to China, the US side repeatedly opposes "decoupling and breaking the chain". But on the most critical issue of sanctions, the United States has not been relentless at all.
After adding six Chinese-funded enterprises to the "Entity List", the United States launched a "Section 301 investigation" on the mainland's steel and aluminum, shipbuilding and maritime logistics. What kind of impact will the US Section 301 investigation have on the mainland, and what is the killer feature in China's "anti-provocation toolbox"?
1. 301 investigations that harm others and are not beneficial to oneself
Compared to the "Entity List" for a single enterprise, a Section 301 investigation is more lethal. This protectionist policy, introduced by the United States in 1974, gave the U.S. Department of Commerce the right to carry out four strikes against "problem countries".
First, retaliatory tariffs or other fees will be imposed. For the vast majority of foreign trade goods, tariffs are a crucial cost of doing business. If the cost of tariffs on a product is too high, companies are likely to be forced to abandon overseas markets.
Take the suppression policy issued by the United States on China's steel and aluminum products as an example, if the US Department of Commerce finally proves that there is a problem of abuse of subsidies for mainland steel and aluminum products through an investigation. Then the relevant companies will need to bear retaliatory tariffs equivalent to three times the current tariff. For China's steel and aluminum industry, which relies heavily on cost performance, such high tariffs are obviously unaffordable.
Second, reduce trade preferences. As a developing country, the mainland could have enjoyed a more favorable tax policy in Sino-US trade, but as a country under investigation for Section 301 tariffs, the U.S. Department of Commerce could cancel the trade preferences originally granted to Chinese manufacturing. For those companies engaged in low-end manufacturing, it is difficult for them to stay in the U.S. market without enjoying trade preferences.
Third, increase market access restrictions. It is well known that there should be no additional market access restrictions among WTO members and that countries must abide by the agreements signed with WTO. However, the United States, which has the advantage of hegemony, does not care about the WTO treaties at all. In their view, any country suspected of violating Section 301 can be expelled from the list of trading partners of the United States.
Fourth, force the other party to compensate. In peacetime, we rarely see a country paying reparations to another country, but the U.S. Section 301 investigation has given the United States this right. If the country under investigation refuses to stop the "violations", the United States will force the other party to compensate for its trade losses.
Judging from the above four aspects, the Section 301 investigation seems to be beneficial to the United States. In reality, however, the U.S. economy is also a victim of a Section 301 investigation. According to U.S. Treasury Secretary Janet Yellen, U.S. inflation increased by 1.3 percentage points due to the adverse effects of the Section 301 tariffs. This is by no means good news for the United States, which continues to cut interest rates to ease debt pressure.
2. China's "propionic acid countermeasures"
Since Biden is unwilling to do good business with the mainland, there is no need for the flower grower to save any face for Lao Mei. According to media reports, after nearly nine months of anti-dumping investigations, the Ministry of Commerce of the mainland decided to take temporary anti-dumping measures against US propionic acid.
Before the mainland formally imposes a penalty on the U.S. propionic acid, the U.S. propionic acid company must pay a high deposit equivalent to up to 43.5% of the value of the goods to the mainland customs department.
Propionic acid is a very important chemical raw material, and the pesticide, pharmaceutical and other industries in the mainland are all major customers of propionic acid in the United States. According to statistics, in 2023, the mainland will import about 8.33 million US dollars of propionic acid from six countries and regions including the United States, Belgium, and the United Kingdom. Among them, propionic acid from the United States is the most, accounting for 88%.
Although according to the Ministry of Commerce, the mainland's suppression measures against US propionic acid are completely reasonable and legal anti-dumping measures. However, according to the view of the US media, China's move is clearly a counterattack to the White House's Section 301 investigation of Chinese steel and aluminum products. It is particularly worth mentioning that less than 48 hours after the United States announced the launch of a Section 301 investigation on mainland goods, the mainland Ministry of Commerce quickly announced countermeasures.
So, will the U.S. propionic acid countermeasures threaten the safety of the mainland's chemical industry? This concern is obviously unnecessary, because the mainland is already one of the world's largest producers of propionic acid. According to media reports, Luxi Chemical is building a world-class propionic acid production base with an annual output of 200,000 tons of propionic acid.
You must know that the mainland's annual import demand for propionic acid is less than 20,000 tons, and Luxi Chemical's propionic acid production base not only has the ability to free China's chemical industry from its dependence on American propionic acid, but also helps China's propionic acid to enter the global market. The most important thing in the chemical industry is cost control, and it is difficult for Chinese propionic acid, which has just been put into production, to compete fairly with foreign products.
At this time, the Ministry of Commerce launched an anti-dumping investigation on the United States propionic acid, which can not only effectively combat the arrogance of the United States, but also help China's propionic acid chemical enterprises grow as soon as possible. Biden thinks that by launching a Section 301 investigation into China's steel and aluminum industry, he can win the 2024 U.S. election with the support of the steel industry. But he never imagined that China's counteractions in the field of propionic acid would cause heavy losses to the U.S. chemical industry.
III. China's "Food Countermeasures"
As we all know, grain trade has always accounted for a very high proportion of Sino-US trade. In 2023 alone, the mainland imported about $32.89 billion of various agricultural products from the United States. But what deeply worries the White House is that Chinese grain buyers appear to have lost interest in American grain.
According to U.S. media reports, Chinese buyers cancelled more than 500,000 tons of U.S. wheat in March, which hit the Chicago Mercantile Exchange's wheat market hard. Not only have U.S. wheat exports been blocked, but trade in agricultural products such as corn and soybeans has also been hit.
In the case of the White House's most important soybean trade, the USDA originally expected China's demand for U.S. soybeans to break records this year. However, judging from the trade data in the first quarter, the position of US soybeans in the mainland soybean trade has been replaced by Brazilian soybeans, on the one hand, US soybeans are significantly less cost-effective than Brazilian soybeans, and on the other hand, it is related to the fact that China-Brazil relations are far better than Sino-US relations.
What worries the United States even more is that their competitors are accelerating their seizure of China's grain market. As early as last year, Russia signed a grain purchase agreement worth 2.5 trillion rubles with the mainland. Recently, there has been news from the Russian side that the construction of the "Siberian grain transportation channel" has been accelerated.
In the past, Russia's grain was mainly supplied to the EU market, but as the West continues to increase its pressure on Russia, Russia has completely lost the possibility of returning to the EU market. The fighting nations, which can only sell grain to China, will not only give a more favorable export offer than the United States, but will also be very likely to accept the payment method settled in RMB.
For flower growers with a huge population of 1.4 billion, food security is more important than any problem. Rather than handing over such an important business to the United States, it is better to choose to trust Russia. As the continent's dependence on U.S. food gradually decreases, dollar hegemony will also become precarious.
The United States has always regarded controlling global grain trade as a key means of establishing global hegemony. If the mainland no longer purchases U.S. grain, then we no longer need to use dollars to settle grain trade. This is definitely not good news for the debt-ridden Lao Mei.
Fourth, the challenges of the era of trade wars
Judging from the current situation, China and the United States will not stop this trade war without gunpowder. For entrepreneurs or ordinary migrant workers, they must be mentally prepared for long-term tension in Sino-US relations. In the era of trade wars, there are three major challenges that we must address.
First, there is the challenge of rising unemployment. Although the U.S. Department of Commerce has not yet announced the final results of the "new Section 301 investigation", this kind of negative blow may not be avoided. Once we lose the support of orders from the U.S. market, the problem of overcapacity in related industries will be more serious, and layoffs and salary cuts will be challenges we need to face.
From now on, both entrepreneurs and ordinary salaried people must be prepared for the tight days ahead. Stop all unnecessary consumer spending and accumulate sufficient risk reserves to tide us over.
Second, the challenge of rising costs. After the escalation of the trade war, both China and the United States will raise their own import tariffs, which will inevitably lead to an increase in the production costs of related industries. For example, the mainland's anti-dumping investigation against the United States propionic acid will make the domestic propionic acid rise.
While inflation is not yet there, stock up on more goods or raw materials. It can not only help us reduce production and living expenses, but also allow us to make a small profit. Don't wait until prices have completely taken off to regret that you didn't act sooner.
Third, the challenge of the outbreak of contradictions. Historical experience tells us that whenever unemployment rises and the cost of living rises, people's anger will increase significantly.
In such special moments, we should not only maintain a calm mind when dealing with others, but also try to stay away from public places where unexpected events may occur. Remember not to gamble your personal safety at any time.
epilogue
China and the United States are the two most important countries in the global economy, and as the trade war between China and the United States continues to escalate, the development trend of the global economy is becoming more and more bleak. In the downward cycle, we must be mentally prepared to tighten our belts and live, and never underestimate the huge impact of the trade war.
So, how long do you think this trade war without gunpowder will last? Welcome to leave a message in the comment area to discuss.
Sources of information:
http://vv.mofcon.gov.cn/article/zug/geekscfb/202404/20240403504146.shtmall
Announcement of the Ministry of Commerce [2024] No. 15 Announcement on the Preliminary Ruling of the Anti-dumping Investigation on Imports of Propionic Acid Originating in the United States