[The trade war, now nearly a year old, has already squeezed Mr. Chen’s bottom line. American customers insisted that he lower his prices so they wouldn’t have to raise theirs. When he contemplates moving production out of China — to Southeast Asia, for instance — he worries about losing access to China’s vast supply chain and capable work force.]
By Raymond Zhong
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A cargo ship berthing at
a port in Lianyungang, China. Oceangoing goods from
China won’t be hit by the
new tariffs until they reach American ports over
the next few weeks. Credit
Agence France-Presse — Getty Images
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BEIJING
— When the United States ratcheted
up trade tensions with Beijing on Friday, the news was greeted with weariness
and foreboding among the people in China who will pay the immediate price:
owners of factories big and small.
Brook Chen runs a plant in Shanghai that
makes suitcases for brands including Samsonite. More than four-fifths of his
orders come from the United States.
The trade war, now nearly a year old, has
already squeezed Mr. Chen’s bottom line. American customers insisted that he
lower his prices so they wouldn’t have to raise theirs. When he contemplates
moving production out of China — to Southeast Asia, for instance — he worries
about losing access to China’s vast supply chain and capable work force.
“This is totally a lose-lose situation,” Mr.
Chen said. “We lose profits and have to shut down. American importers cannot
find effective alternatives that can deliver products with the same quality.”
The Chinese government issued a muted
response on Friday after President Trump raised tariffs on $200 billion worth
of Chinese goods. China’s Ministry of Commerce vowed to retaliate, although it
did not say how or when. Still, global financial markets — which have been hit
by trade tensions in recent days — rose in hopes of an eventual deal.
China’s heavily controlled news media have
been walking a careful line, calling for defiance but not more dramatic action,
such as a boycott of American products.
Before Friday’s tariff increase, multiple
state media outlets had published a cryptic, anonymously written article with
the headline, “If You Want to Talk, We Can Talk. If You Want to Fight, We’ll
Fight.” The article presented China as a calm, neutral presence upon which
American policies had, very regrettably, exerted pressure.
Chinese people are polite by nature, the
article said, yet unafraid of confrontation. “We are prepared to fight back,”
it said.
The question for Chinese leaders is how long
the higher tariffs will last. China has ways to keep its economy humming, at
least in the near term. Negotiators also have time to reach a deal, as the
Trump administration effectively delayed the tariff increase by saying they
only applied to goods that leave China on Friday or later. Oceangoing goods, in
other words, won’t get hit by the 25 percent levy until they arrive at American
ports over the next few weeks.
Still, China’s economy has shown it isn’t invulnerable.
Some factories are already suffering.
“You can definitely feel the anxiety,” said
Lu Mengxi, the founder of a winery in northwestern China that sells both
domestically and abroad, including in the United States.
What began last year as an investigation into
China’s practices toward American companies operating within its borders has
turned into a sprawling conflict that has weighed on financial markets and
economic activity across the globe.
While analysts widely believe the two
countries will eventually reach a deal to avert a trade dispute that could
seriously hurt the world economy, the appetite for further conflict seems
unabated on both sides.
American companies operating in China have
generally chided both countries’ governments for using tariffs to bring each
other to the negotiating table. On Friday, however, Ker Gibbs, the president of
the American Chamber of Commerce in Shanghai, sounded more favorably inclined
toward the Trump administration’s policies and less tolerant of Beijing’s.
“While many of our companies are hurt by the
tariffs and ongoing trade tensions, we understand the U.S. government’s
frustration,” Mr. Gibbs said in a statement. “There needs to be a deal that
rebalances the economic relationship.”
Few in China appear to believe that a change
of tactics is due, either.
“It would be easy to do what a small minority
of people in China are advocating, and to go along with America on everything,”
Hu Xijin, editor in chief of the state-run newspaper Global Times, wrote in a
commentary on Friday. “But that just won’t do. That would not be responsible to
the people’s interests.”
“The trade negotiations have gone on for so
long because the two countries’ fundamental interests cannot be reconciled,”
Nicole Zhang, 26, an employee at an online travel company, said while shopping
in a Beijing mall on Friday. “National interests are unfeeling things like
that. That’s just how it is.”
At the beginning of the year, China’s
position was more defensive. Its economic growth slowed in the second half of
last year, in part because tariffs hurt business confidence. Since then, the
Chinese government has poured billions of dollars into the financial system and
pressed state-run banks into service extending credit.
Officials said last month that the economy
grew 6.4 percent in the first quarter of the year, matching the pace from the
previous quarter. Industrial output has been solid. Shoppers have opened their
wallets.
Still, for many Chinese businesses,
especially those that sell overseas, uncertainty remains front of mind. China’s
exports to all major regions, not only to the United States, grew more slowly
in the beginning of this year. Should the trade war intensify further, China
may find it increasingly expensive to prop up its economy, and it could face
another slowdown or widespread job losses.
The state news media have worked to reassure
the country’s consumers. In a headline published on Friday before the tariffs
rose, the People’s Daily newspaper, which is the Communist Party’s mouthpiece,
declared that Chinese trade “has positive momentum and strong driving power.”
Some companies with business on both sides of
the Pacific are trying to stay positive, too. Née Lau, the owner of Amourvino
Winery in Napa, Calif., said the tariffs China imposed last year had hurt his
profits. Still, Mr. Lau said he would rather not raise prices, even if it meant
earning less for now. Holding onto his overseas dealers and clients, he said,
is more important to the long-term health of his business.
“The United States and China will definitely
come to some kind of agreement. It’s just a matter of time,” Mr. Lau said.
“It’s impossible for a war between two superpowers to go on forever.”
Jason Wang, who owns a shoemaker in Fujian
Province that sells to the American market, says that what frustrates him is
that the tariff negotiations are taking place far from the people, like him,
who are most directly affected.
Mr. Wang also lamented the nationalist
sentiment on both sides that he felt had egged on the two countries’ leaders.
Americans, he said, probably felt that their country was taking a strong stance
by imposing tariffs.
“And when China fights back, many praise the
government for being tough,” he said.
“But I think no one actually wins in the
end,” Mr. Wang said. “Ordinary people on both sides are paying the price.”
Keith Bradsher contributed reporting. Carolyn
Zhang, Elsie Chen and Luz Ding contributed research.
Follow Raymond Zhong on Twitter: @zhonggg.
