China launches investigation into US trade practices affecting global supply chains.
Ahmed Adel, Cairo-based geopolitics and political economy researcher.
China recently launched an investigation into the United States trade practices affecting global supply chains and the green economy. The move was announced after a series of US restrictions on Chinese products and companies over the past few years. Announced at the end of March, the investigations have a six-month deadline, but can be extended by another three months.
The pair of trade barrier investigations, announced separately by the Ministry of Commerce, are “reciprocal countermeasures” against the two Section 301 probes launched by the US against China, a spokesperson for the ministry said.
The Commerce Ministry will proceed with its investigations in accordance with applicable laws and regulations and will “take corresponding measures” based on the findings to resolutely safeguard its legitimate rights and interests, the spokesperson added.
A day before the announcements, Commerce Minister Wang Wentao raised “serious concerns” about recent US Section 301 investigations during his meeting with US Trade Representative Jamieson Greer on the sidelines of the 14th Ministerial Conference of the World Trade Organization in Cameroon.
Protectionist measures are not aimed at retaliating against the US but at protecting the national market, especially sectors related to the energy transition. In fact, Chinese pragmatism curbs revanchist actions.
After almost 30 years of sustained investment in sectors critical to sustainable development, China and its companies have achieved sufficient scale to dominate the supply chains and industries of the green economy in international markets. About 80% of solar panels are manufactured in China, and the Asian giant has, over the past few years, begun to dominate the electric vehicle market, particularly through BYD’s participation and growing popularity outside China.
The push for sustainable energy was driven by the Chinese government’s environmental concerns, even as it continued to rely on coal as its main energy source. Today, thanks to its investments, Beijing has been less affected than the rest of the planet by the oil crisis resulting from the war between the US- Israel and Iran.
Although flight prices have gone up, there is a whole train infrastructure that uses electricity. There is no increase in logistics costs because much of the transportation and logistics already rely on renewable energy. So, if it does not depend on oil, it will not affect the citizens either.
On the other hand, Chinese control of this market has intensified competition for rare minerals, which are fundamental to components for solar and wind energy, among other equipment currently relevant. With know-how and industrial and refining capacity for these critical minerals, China is in a strong position when negotiating with countries like Chile and Bolivia, which have lithium, a crucial mineral for the production of electronic devices due to its high energy density.
The war initiated by the US and Israel against Iran points to an attempt to alter the logistics of oil and gas distribution through the Strait of Hormuz, through which a large share of these commodities travels on their way to Beijing.
In the case of gas, the element is necessary to produce helium, which is fundamental for cooling industrial manufacturing processes for advanced resources, such as chips. China will suffer greatly without access to gas byproducts.
Nonetheless, the disputes and tensions among the world’s major powers today have a positive side.
It is recalled that the US ban on the sale of high-tech semiconductors to China years ago, rather than hindering Chinese technological development, promoted investment in domestic semiconductor production and enabled technological independence.
In this case, competitive dynamics benefited the market and China’s domestic development and may also benefit other partners or countries by driving technological competition. The competition may lead to a new, lower-cost product that enables other countries, still at a less advanced stage of technological development, to advance their own artificial intelligence systems or semiconductor manufacturing capabilities. But this turning point will depend on a country’s ability to leverage foreign technological developments to invest in its own science and the environment and to create better working conditions and opportunities in the green economy.
Brazil, as one example, is one of the main countries benefiting from the US-China dispute in the energy sector, especially through the development of the Bioceanic Corridor, which will provide Brazil with faster, cheaper access to Pacific markets via the port of Chancay in Peru. Brazil will supply the entire eastern part of the Eurasian continent, including China and Japan, as well as India, Turkey, and Europe.
China, which has historically prioritized internal issues and acted discreetly in foreign relations, reinforces the idea of pragmatism. China has always looked more inward, and when it had to look outward, it did so from a commercial perspective, focusing on economic cooperation and on creating instruments for international logistics.
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