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Report Says Trade War with Mainland China Having Little Positive Impact on Resolving Outstanding Issues

Neither negotiations nor other measures taken as part of the trade dispute between the United States and mainland China have yet had any significant impact on resolving “decades of unfair Chinese economic policies and trade-distorting practices,” according to the most recent annual report from the U.S.-China Economic and Security Review Commission. However, this report includes relatively few recommendations for congressional action to address these issues.

The report states that while the United States is pushing for Beijing to codify commitments to strengthen intellectual property protection, prohibit forced technology transfer and remove industrial subsidies, these practices “are core features of China’s economic system, and the Chinese government views U.S. demands as an attack on its national development.” As a result, U.S. tariff increases and other measures are leading Beijing to accelerate efforts to achieve technological self-reliance, apply pressure on U.S. companies and target key U.S. export sectors with tariffs.

The report acknowledges that trade tensions with the United States and other factors have slowed mainland China’s economic growth and that Beijing has pursued limited market and financial system opening in response. However, the report adds that these measures “remain narrowly designed to address specific pressures facing China’s economy and do not appear to herald a broader market liberalization of the kind that U.S. companies and policymakers have long advocated.”

Considering the report’s apparent conclusion that neither traditional measures nor more recent efforts have been successful in addressing the trade-related problems the Commission has documented for years, it is somewhat surprising that the report makes few recommendations for congressional action concerning these problems. In fact, the report suggests only that Congress enact legislation directing U.S. economic statistics-producing agencies to review methodologies for collecting and publishing not only gross trade flow data but also detailed supply chain data to better document the country of origin for components of each imported good before it reaches U.S. consumers. Such an initiative could potentially expand the number of imports subject to the Section 301 additional tariffs on mainland Chinese goods, which currently range from 15 to 25 percent.

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