US tariff measures may boomerang

China should stick to its path of opening-up

Cui Fan, a professor at the University of International Business and Economics, and director of China Society for World Trade Organization Studies

Trump has said the tariffs will "encourage China to change the unfair practices identified in the Section 301 action with respect to technology and innovation". But the investigation under Section 301 of the US Trade Act of 1974 has violated World Trade Organization rules.

Article 1 of the General Agreement on Tariff and Trade on general most-favored nation treatment is the cornerstone of WTO rules and the multilateral trading system established after World War II. It says that no WTO member should offer "treatment no less favorable than" that given to third parties, which means WTO members should not discriminate against each other.

The US' discriminatory actions against China not only harm China's interests under the WTO framework but also violate WTO rules. So if China doesn't respond in kind, it would put its interests as well as those of other WTO members at risk.

But it is more important that China sticks to its path of reform and opening-up. It should not allow the tariff war to disturb its plan to further open up its economy, although it has to take potent measures to counter the US' provocative actions.

Also, China should fully implement the recently published negative list for foreign investment, as the inflow of foreign capital would help China cope with the aftereffects of the tariff war. And foreign capital that continues to have faith in China's economy in these tough times is bound to gain significantly from the growth of the Chinese market in the long run.

Another way to meet the challenge is through deepening reform among which building and perfecting a fair environment for competition should be given priority. Since the tariff war could leave many private enterprises facing a life-and-death battle, they should be given special attention, as they have contributed a lot to the growth of the Chinese economy.

It is important therefore for China to take a firm stand against the US' hegemonic moves on the one hand and deepen reform and opening-up on the other to deal with the tariff war. China should also expedite bilateral and multilateral trade negotiations to facilitate the making of new trade rules that are potent, binding on all parties and promote the multilateral trading system.