The US will vigorously defend US economic interests and values against the negative impacts of China’s economic policies as Beijing doubles down on its state-centred economic system, top trade official Katherine Tai said on Wednesday.
Tai told the House of Representatives ways and means committee that Washington’s talks with Beijing about its unmet purchase commitments under a Phase 1 trade deal and broader non-market policies had been “unduly difficult” and new tools were needed.
“Going forward, our strategy will expand beyond only pressing China for change and needs to include vigorously defending our values and economic interests from the negative impacts of China’s economic policies and practices,” Tai, the US trade representative, said.
She said Washington “cannot stop pushing China for change,” but could no longer wait for China to change its policies, noting that tariffs on $300 billion to $400 billion in Chinese imports had not incentivised Beijing to make fundamental changes.
China only met about 60% of its Phase 1 deal commitments to increase US purchases by $200 billion during 2020 and 2021 compared with 2017 levels.
It had also pledged to improve protections for US intellectual property and grant more Chinese market access to US financial services and agricultural biotechnology.
In addition to “continuing to create pressure for China to change,” Tai said Washington needed to take more steps on its side, including promoting investments in innovation, semiconductors and the return of manufacturing supply chains to US shores.
“That is the plan that we need to pursue going forward,” she said.
Tai has long said that trade laws needed to be updated to deal with the challenges of China’s massive industrial subsidies, but she did not provide details on specific changes that she is requesting.
Tai said the US would not reduce tariffs but would include “meaningful economic outcomes” aimed at setting new, market-based standards for digital commerce, the environment and labour.
- Reuters with additional editing by Jim Pollard