EU, China vow to uphold global trade

US plans beefed up scrutiny of Chinese investments: Bloomberg

Ag AFP

Paris/ Beijing: The United States is planning to use an emergency law in order to ratchet up its scrutiny of Chinese investments in key industries, Bloomberg News reported Monday.

The report, which cites eight sources familiar with the plans, said such a move would put "Washington´s trade war with Beijing on a potentially irreversible course".

"Under the plan, the White House would use one of the most significant legal measures available to declare China´s investment in US companies involved in technologies such as new-energy vehicles, robotics and aerospace a threat to economic and national security," Bloomberg reported.

Treasury Secretary Steven Mnuchin is expected to push for the plan in a report set for release on June 29, it added.

China´s foreign ministry on Monday said Chinese investment has created jobs and increased tax revenue in the US.

"China-US trade, investment and cooperation are mutually beneficial in nature," said foreign ministry spokesman Geng Shuang, when asked about the US plans at a regular press conference.

"We hope the US can view Chinese companies´ commercial activities in an objective way, and provide a fair, sound and predictable investment environment," Geng said.

The report comes after President Donald Trump´s "America First" administration earlier this month announced new tariffs of 25 percent on $50 billion in Chinese imports.

He then ordered his foreign trade chief to identify another $200 billion worth of imports for a 10 percent levy, citing China´s "unacceptable" move to raise its own tariffs.

China, also affected by US steel tariffs, has denounced Trump´s approach as "extreme pressure and blackmail", warning it would "take strong, powerful countermeasures" if the president enacts his threats.

The tensions, which for weeks have struck fear into the hearts of global investors, add to those sparked by the trade dispute between the United States and the European Union.

The EU hit back last week against emblematic American exports in response to US tariffs on steel and aluminium.

Meanwhile the EU and China pledged on Monday to strengthen a rules-based international trading system amid US protectionism, although the EU highlighted its concerns about Beijing´s own restrictive market practices.

Officials on both sides pledged to strengthen the World Trade Organization, announcing a plan to cooperate on updating the body which has come under blistering criticism from US President Donald Trump.

The WTO "provides the basic infrastructure for rules-based trade and rules-based world order; China and the EU both support this approach," said European Commission Vice President Jyrki Katainen, noting the two sides would form a working group to modernise the organisation.

State subsidies to industry and forced technology transfer should be taken up by the WTO, Katainen said, adding that the EU shared Washington´s concerns about Chinese practices in these areas. "The two issues together are some reasons why the US has taken unilateral action," said Katainen.

The high-level economic meetings in Beijing came as both the EU and China face rising trade tensions with the United States.

"Both sides agreed to resolutely oppose unilateralism and protectionism and prevent such practices from impacting the world economy and even dragging the world economy into recession," said Chinese Vice Premier Liu He, responsible for shepherding the world´s second largest economy.

Liu had led China´s three rounds of trade talks with the US, negotiations that have broken down over the Trump administration´s pledge to move forward with tariffs despite an agreement in May to put the duties on hold. "Unilateralism and trade protectionism is on the rise and tensions have appeared in the economic relations between major economies," Liu told an audience of European and Chinese officials.

Even as the two sides see some common ground on combating the US moves, there are deep divisions between them. EU companies and officials harbour concerns about Beijing´s policies that are shared by their counterparts in Washington.

"Industrial subsidy issues" and the "role of state-owned enterprises" should be included in an updated "toolbox of the WTO to be better suitable to the current world", said Katainen.