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What trade war? China plays nice in tire and chicken dispute.

In response to US tariffs imposed last Friday, Beijing threatened to investigate alleged US dumping of auto and chicken parts. But both categories would only allow limited retaliation.

By Staff writer of The Christian Science Monitor / September 14, 2009



Beijing

Beijing has reacted sharply to President Obama's decision Friday to slap stiff import tariffs on cheap Chinese tires. Chinese officials have cried foul, railed against Washington's protectionism, and announced they will investigate allegations of US dumping in China at below-market prices.

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But Beijing's bark may turn out to be worse than its bite. China's choice of dumping complaints to investigate – about chicken parts and auto parts – seems designed to minimize the impact of any retaliatory measures it might take.

Certainly Beijing sounded angry at Mr. Obama's decision, which will throttle China's exports to the US of low-cost tires. US union leaders had complained that such sales had destroyed 4,000-5,000 American jobs.

"This will undermine China-US economic and trade ties, and the early recovery of the world economy," said Foreign Ministry spokeswoman Jiang Yu in a statement.

China hits back

The Chinese Commerce Ministry was quick to hit back at Washington. On Sunday, it said it would look into complaints by local producers of chicken meat and auto parts that American competitors had "entered our markets via dumping, subsidies, and other unfair trade means."

That sparked fears of a trade war, just two weeks before Obama is due to host Chinese President Hu Jintao in Pittsburgh, Penn., at a meeting of G-20 heads of state. The US president is also planning to visit Beijing in November.

But an escalation of the tiff seems unlikely. "Sino-American relations in general are better than ever," says Shi Yinhong, an expert on US affairs at Beijing's Renmin University. "I don't think a trade dispute can do that much damage. Both sides will try to stop this spilling over into something more serious."

That would seem to be the intention behind Beijing's decision to focus on chicken and automotive spare parts.

Which chicken products are at issue?

The Commerce Ministry did not specify which chicken products it would investigate, but Chinese poultry farmers have been complaining for some time about the low prices at which US producers export chicken wings, drumsticks, and claws, which find little favor with American consumers but are popular in China.

The deputy head of the China Animal Agriculture Association, a trade group, told the daily Global Times two weeks ago the poultry industry was planning to launch an anti-dumping case about such chicken parts.

But they accounted for a little over 1 percent of overall US poultry exports to China last year, which totaled 337,000 tons, according to US Department of Agriculture figures. Moreover, in the first half of this year, exports of chicken parts to China fell sixfold from their already insignificant level a year earlier, USDA figures show.

Beijing obeys WTO ruling

Meanwhile, China reduced import tariffs on auto parts just two weeks ago, obeying a World Trade Organization (WTO) ruling. That would appear to limit its ability to impose serious new sanctions on such goods.

Beijing also made it clear that officials here believe Obama made his move as much to placate US unions – whose help he needs in his battle to pass healthcare reform – as for any other reason.

The Commerce Ministry protest referred to "domestic political pressure" and the official news agency, Xinhua, commented that "it is regrettable that a trade issue has once again fallen victim to American domestic political wrestling."

Meanwhile, China's auto industry shifts into high gear

Partnerships with West have given it needed technology; now it's the world's biggest car market, having passed the US this year. Check out our story here.

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