President Joe Biden delivers a speech on infrastructure spending at Carpenters Pittsburgh Training Center, Wednesday. (AP File Photo )
President Joe Biden delivers a speech on infrastructure spending at Carpenters Pittsburgh Training Center, Wednesday. (AP File Photo )

Joe Biden signals continued Beijing tension over industrial policy

The Biden administration raised concern about some of the policy tools China is using to spur its economy, saying they crowd out international companies and will skew markets.
Bloomberg |
PUBLISHED ON APR 01, 2021 02:35 PM IST

The Biden administration raised concern about some of the policy tools China is using to spur its economy, saying they crowd out international companies and will skew markets.

“Made in China 2025,” a key 10-year plan released in 2015 and laying out Beijing’s industrial-policy aspirations, includes a wide array of state intervention and support that restricts and discriminates against foreign enterprises, the U.S. Trade Representative said in its 2021 estimate report on foreign-trade barriers released Wednesday.

The administration’s views are consistent with those of the Trump and Obama presidencies.

“Even if China fails to fully achieve the industrial policy goals set forth in Made in China 2025, it is still likely to create or exacerbate market distortions and create severe excess capacity in many of the targeted sectors,” the USTR said. “It is also likely to do long-lasting damage to U.S. interests, as China-backed companies increase their market share at the expense of U.S. companies operating in these sectors.”

Beijing hit back at the report on Thursday, with Foreign Ministry spokeswoman Hua Chunying saying: the “U.S. side’s accusations on China’s industrial policies are groundless.”

“Our policies follow market principles, with proper guidance by the government,” she added. “The policies apply to all companies in China, equally to Chinese and foreign companies.”

The U.S. and China were embroiled in a trade war under President Donald Trump that continues to see tariffs applied on about $335 billion of Chinese goods annually. In the so-called phase one agreement last year, China promised to purchase more American products. Beijing missed its 2020 trade-deal targets as the global pandemic upended shipping and supply chains.

At her confirmation hearing last month, Trade Representative Katherine Tai called on China to live up to the commitments in its trade pact with the U.S. She acknowledged that former officials have tried before to achieve structural changes in China’s economy and faced obstacles, saying the Biden administration needs to be “exploring all our options.”

If China’s economy maintains its current growth trajectory, it will surpass the U.S. this decade to become the world’s largest.

Beijing continues to provide substantial subsidies to its domestic industries, which have caused injury to U.S. industries, the USTR said. The U.S. is working with the European Union and Japan to identify further effective action and potential rules that could address problematic subsidies practices not currently covered by existing obligations, it said.

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