As economic tensions expand across the globe, China finds itself at the centre of an increasingly contentious debate regarding its trading practices. In recent years, accusations of technology theft and dumping have intensified, particularly in Western countries. These charges have not only strained diplomatic relations between China and its critics but have also highlighted a broader struggle for hegemony in international trade. It is essential to recognize that the complexities of modern international trade necessitate an understanding of how China responds to such accusations.
China has faced multiple allegations of stealing the intellectual property of foreign companies through espionage or coercion. The US Chamber of Commerce claims that intellectual property theft alone results in an annual loss of between $225 billion and $600 billion for American businesses. Disputes involving Huawei have garnered significant media attention. Reports in early 2023 indicated that Chinese hackers had infiltrated the email accounts of US government officials. Such incidents raise substantial concerns regarding cybersecurity and espionage. These examples underscore ongoing worries about China's approach to technology and the broader implications for global competitiveness.
As trade tensions escalate, Beijing continues to defend its economic and technological policies, while Western nations seek to protect their industries
Dumping is defined as a practice whereby a country exports commodities at prices significantly lower than the normal market price, typically for market penetration purposes. China's low-cost production structure has been cited as a factor in dumping across various sectors, including steel and solar panels. In May 2024, the United States raised tariffs on Chinese aluminium and steel by 25% due to concerns about overproduction and aggressive pricing strategies that undermine US manufacturers. Simultaneously, the European Union has initiated an investigation into China's pricing mechanisms in the solar energy sector, indicating the extent to which dumping appears to have adversely affected the market.
The US position: Section 301 Tariffs
In 2017, the United States government launched an investigation into China’s trading practices under Section 301. This inquiry led to the imposition of tariffs on a range of Chinese imports, amounting to $60 billion in goods. Through May 2024, the Biden administration has maintained these tariffs and applied additional levies on another $18 billion of Chinese products.
These newer tariffs range from 25 percent to as high as 100 percent, targeting strategic sectors such as semiconductors and electric vehicles, which alone face an estimated $3.6 billion in added taxes. China, in response, implemented tariffs on over $106 billion of American goods, intensifying the trade conflict and showcasing the complexities of this economic struggle.
China’s counterarguments and strategies
In the face of these allegations, China has employed several strategies to defend its trade practices.
- Defence of Economic Policies:
Beijing argues that its economic ascent is grounded in competitive pricing driven by mass manufacturing and dictated by market forces. Officials assert that accusations of dumping are unfounded, suggesting that this concept stems from Western anxieties, primarily protectionism. China has also used the World Trade Organization to challenge US tariffs, as seen in a 2019 case where China won a ruling against US steel tariffs, forcing the US to reassess its protectionist measures. - Innovation and Technological Advancement:
China emphasizes innovation, particularly in critical sectors like 5G, artificial intelligence (AI), and renewable energy. For instance, Huawei has remained a global leader in the 5G market, even amid sanctions. In 2023, China’s spending on research and development rose to 2.55% of its GDP, underscoring the government’s focus on fostering domestic innovation. Beijing argues that Chinese technological achievements are a natural progression for a rapidly growing nation and should not be perceived as a threat. - Countermeasures and Trade Policies:
In retaliation for US actions, China has imposed duties on American goods and bolstered its relations with non-Western countries through initiatives such as the Belt and Road Initiative (BRI). By mid-2024, China had secured over 140 BRI agreements with nations across Asia, Africa, and Europe, demonstrating its commitment to global infrastructure projects aimed at enhancing trade connections and reducing the impact of US tariffs. - Public Diplomacy:
Chinese state media have actively shaped the narrative around these accusations, often framing them as efforts to hinder China’s rise. Outlets like the Global Times argue that US policies are hypocritical, accusing the US of engaging in unfair trade practices while condemning China for similar actions. This narrative seeks to garner both domestic and international support for China’s position in the global economic landscape.
China’s response to accusations of technology theft and dumping represent a broader struggle for influence between China and the West, particularly the United States. As trade tensions escalate, Beijing continues to defend its economic and technological policies, while Western nations seek to protect their industries. These trade disputes and tariffs shape the contours of international trade relations in an era marked by geopolitical rivalry.
As these issues unfold, they raise significant questions about the legitimacy of competition in an evolving global economy. Are these actions genuine responses to unfair trade practices, or are they indicative of a shifting balance of power? The outcomes of this economic confrontation will have lasting implications for global trade dynamics in the years to come.