By Kirill Bezverkhy
China and the US are in litigation involving the World Trade Organization. Is a great Pacific trade war on the horizon?
The US accuses China of illegally subsidizing domestic motor manufacturers. China accuses the Americans of imposing prohibitive tariffs on 24 Chinese-made manufactured items.
Secretary of the Russian-Chinese Commerce Chamber Sergei Sanakoyev sees domestic politics behind the dispute:
“Economic and image issues are very sensitive in the relationship, as China is bracing for leadership change, and the US, for its November elections. This means the mutual accusations are in fact spurred by domestic politics.”
Director of China studies at Moscow’s High Economics School Dr Alexei Maslov disagrees:
“The Chinese-American dispute over cars, car parts and tires dates back to 2009 and is about protecting markets, rather than boosting election or re-election chances. Obama is not the first US President to mount barriers to Chinese trade. Many remember George W. Bush acting in this way.”
In the event the sides fail to settle their disputes within two months, the WTO will attempt arbitration.
Mr Sanakoyev expects the dispute to linger, but categorically dismisses speculation of a trade war on the horizon:
“So far, Chinese-American economic bickering has not resulted in trade wars. And it never will, because the two economies are very closely intertwined. A trade war would simply destroy both.”
In a related development, the WTO ruled in July that China was acting against international trade rules by barring the Visa and the MasterCard payment systems from its financial services market.