China is due for a status upgrade from the World Trade Organization (WTO).
You see, when Beijing negotiated the terms that allowed China to accede to the WTO in 2001, the United States agreed to treat China as a "non-market economy" (NME) in anti-dumping cases.
At least for the next 15 years, after which China would then get a WTO status upgrade to "market economy."
But the United States still thinks Beijing is "dumping" its goods worldwide, thereby breaking the terms of its contract with the WTO and China.
"Dumping" refers to predatory pricing applied to products left over from a trade surplus. China produces nearly half of the world's steel and has faced growing trade tension abroad as its economy has slowed and its steelmakers have stepped up exports.
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China claims that it hasn't sold its leftover products at lower costs, effectively hindering global competition in the steel industry.
The U.S. says, "Oh yes, you have."
So now, in anticipation of a WTO denial, China has been taking steps to better position itself to defend itself, or to more aggressively retaliate, against the United States in what could handily become a global trade war...
China to Challenge the U.S. by Taking the Following Three Steps
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China's WTO Language Challenge: Again, Beijing believes it's time for China to be treated like all other market economy countries active in the World Trade Organization.
And it believes the United States has been manipulating the language of the WTO to keep the Red Dragon from realizing this upgrade.
"Because this agreement was not drafted precisely as the Chinese intended," reported China Law Blog on Feb. 2, "the United States has been able to parse the language to come up with a plausible legal argument that the U.S.-China WTO Accession did not call for an absolute hard deadline for terminating China's NME status, but rather provided only a conditional promise to terminate China's NME status."
Removal of China's NME status is a high-priority objective among Red Dragon leadership. Immediately after the WTO deal's 15th anniversary -- on Dec. 11, 2016 -- China filed a challenge with the global organization against the U.S.' continued application to keep Beijing's status from its due upgrade.
China Is Planning to Challenge the WTO's Denial: "China's complaint against the United States' refusal to grant market economy status will take many years to work its way through the WTO dispute settlement process," claimed China Law Blog last Thursday.
In the meantime, China will not just wait to see if the WTO will rule in its favor. Just within the past month, the country's state-run media outlets have issued various press releases discrediting specific methodologies used by the U.S. Department of Commerce and the U.S. Court of International Trade to maintain its stances on China's purported dumping.
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China Intends to Hit Back at the U.S. on Exports: Not only is China playing more aggressive defense in regards to anti-dumping trial proceedings with the WTO, the country has already started to make the same accusations of the United States as well.
On Jan. 12, 2017, Beijing authorities announced the final results in anti-dumping investigations against dried distiller grains from the United States and found that cost margins were higher than expected.
This determination indicates that China is looking to use its own anti-dumping actions "not only to score political points, but also to have an economic impact. It is rumored China already has received an [anti-dumping] petition against soybeans from the United States and is just waiting for an appropriate time to officially initiate these investigations, probably in reaction to a U.S. action against China," China Law Blog reported.
Up Next
In his first days in office, President Donald J. Trump has made it clear that his tough talk on China was more than just campaign rhetoric.
And with all the new president's saber-rattling, now would seem to be the worst possible time to invest in anything related to China.
But Money Morning Director of Technology & Venture Capital Research Michael A. Robinson, a 34-year Silicon Valley veteran and one of the top technology financial analysts working today, has uncovered a sizzling Chinese tech sector that lies well beyond the reach of the leader of the free world.
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