How likely is the US 301 investigation to approach the Sino-US trade war?

US President Trump has officially launched an attack on China on trade issues.
On August 14, local time, Trump signed an administrative memorandum authorizing the US trade representative to review the so-called "China trade behavior", including China's practice in the field of intellectual property such as technology transfer.
The results of this review are undecided, but may result in the United States levying new tariffs on goods imported from China.
The US claims that this move is to ensure "fair and reciprocal trade rules." The analysis generally believes that the United States only violates free trade and trade protection under the banner of "fair trade", thereby reducing its growing trade deficit.
Zhou Shizhen, a senior researcher at the China-US Relations Research Center at Tsinghua University, said that the trade deficit is the core reason for the US launch of censorship. According to the US Department of Commerce, in 2016, the total US trade deficit reached 502.3 billion US dollars, of which the US deficit with China was 374 billion US dollars, accounting for 47.3% of the total US deficit.
The memorandum may open the door for the United States to launch a "301 investigation" against China. The "antique"-level investigations carried out under the US domestic trade law with strong unilateral colors are divided into investigation and evidence collection, negotiation and negotiation, and sanction enforcement. stage. The analysis believes that China should actively respond to negotiations and consultations in accordance with the WTO's multilateral rules, and prepare for the "justification of the courts" with the United States in the WTO.
On August 15, the Ministry of Commerce responded that it expressed serious concern about this and hoped that the US trade representatives should respect objective facts and act with caution. If the US side does not care about the facts and does not respect the multilateral trade rules and takes measures to damage the economic and trade relations between the two sides, the Chinese side will never sit idly by and will take all appropriate measures to resolutely defend the legitimate rights and interests of the Chinese side.

Excuses for "fair" trade protection. On August 14, US President Trump signed a presidential memo, instructing US Trade Representative Wright Heze to decide whether China’s relevant laws, policies, practices or practices may be unreasonable or discriminatory. Investigate damage to US intellectual property, innovation or technological development. On the same day, the US Trade Representative issued a statement stating that a full investigation will be conducted and measures will be taken as needed.
Zhou Shizhen told the 21st Century Economic Reporter that Trump authorized the review of "China's trade behavior" as fair, which is really against the trade deficit, excuses fair trade to implement trade protection, and is mixed with market opening, intellectual property protection, North Korea. A variety of demands, such as problems, to put pressure on China.
He said that the United States was the first country to propose free trade. In the 1940s, the United States held high the banner of free trade, but with the increase in labor costs in the United States, American products lost competitiveness. Thus, in the 1970s and 1980s, the United States proposed fair trade. "Handheld fair trade sticks, blindly pursuing trade balance, this is actually the outdated business and trade thoughts of the late 19th century."
Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce, told the 21st Century Business Herald that Trump’s move was an excuse for fair trade against free trade. The so-called “fairness” was based solely on its own scale – promoting manufacturing. The return, one-sided emphasis on US employment, and thus guarantee its votes - to determine.
"There is a different measure of whether trade is fair, such as a mobile phone, a part in the United States, assembled in China, and $200 when entering the US, but we earn a few dollars. From our perspective, this is unfair."
Intellectual property rights are the focus of this review. Bai Ming said that in the past, China was still not perfect in the patent system, but now China has achieved remarkable results in intellectual property protection. China is moving from a manufacturing power to a manufacturing power. Intellectual property protection is a need for its own development. The importance of innovation drive, but the US side turned a blind eye to this, more excuses for intellectual property rights to implement trade protection.
The Ministry of Commerce said that China has always attached great importance to the protection of intellectual property rights and has established a relatively complete legal system for the protection of intellectual property rights. The laws of the Anti-Unfair Competition Law, the Patent Law and the Copyright Law are being revised. China has also established knowledge. The property court has increased the criminal attack on law enforcement, and the State Council of China has also set up a national leading group to combat infringement and counterfeiting.
In terms of technology transfer, Bai Ming said that the United States has prepared for China's high-tech aspects. However, the United States has a comparative advantage in high-tech trade with China. Limiting high-tech exports to China is an important reason for the US-China trade deficit.
"If the United States only has a trade deficit with China, it may be China's problem, but the reality is that the United States had a trade deficit with 101 countries and regions last year, and since 1971, the United States has had a trade deficit, and the more The bigger the situation, the more it is based on the US dollar 'privilege' to eliminate a large number of deficits: the total foreign trade deficit of the United States from 2008 to 2015 is nearly four trillion, but in 2008-2014, the United States passed quantitative easing Printed 3.96 trillion US dollars, basically solved the trade deficit problem." Zhou Shizhen said.
Zhou Shizhen said that China has been working hard to reduce this deficit in the near future. Through the "100-day plan", the restrictions on the entry of US beef and rice into China have been released. In the first half of this year, the proportion of imported LNG and oil in the United States has also increased. According to US statistics, its exports to China increased by 15.6% in the first half of this year.

The "301 Survey" asymptotic analysis generally believes that with the publication of the above-mentioned administrative memorandum, Wright Heze has no suspense in launching the "301 investigation" against China in accordance with Article 301 of the US Trade Act of 1974.
Zhou Shizhen said that Trump's signing of the administrative memorandum does not mean that the United States immediately adopts trade sanctions against China. The US may start the "301 investigation" first. The investigation is mainly divided into three stages:
The first stage is to investigate and collect evidence, accept complaints from companies in the United States, and the government will be responsible for investigation and evidence collection. Zhou Shizhen said that the "301 survey" can be roughly divided into "special 301" and "general 301" and "super 301", of which the former mainly targets intellectual property rights, and the latter two mainly point to trade deficits.
This time, the focus of the US side is on the field of intellectual property and technology transfer, which is the scope of “Special 301”.
The second stage is negotiation and negotiation. The United States takes evidence and negotiates with China to solve the problem, including consultations in the form of trade compensation or elimination of trade barriers. Senior US officials said on August 12 that if the US decides to launch the "301 investigation," it will first consult with China.
Zhou Shizhen said that this phase is time consuming and may involve multiple rounds of negotiations as needed. "Dialogue is always stronger than confrontation. If the US evidence can prove that China has violated the principles of intellectual property rights, China can punish, and Chinese companies can also actively defend."
He said that if the negotiations break down, it will enter the third stage, the implementation stage of sanctions. At that time, the United States is expected to introduce sanctions against China, such as restricting the import of Chinese products and imposing additional tariffs, in accordance with Article 301.
In a response on August 15, the Ministry of Commerce stated that since its introduction, the "301" system has had a strong unilateralism and has been opposed by other countries. The United States has made a commitment to the international community to implement the system in a manner consistent with WTO rules. The Chinese side believes that the US should strictly abide by its commitments and not become a destroyer of multilateral rules.
The “301 Survey” was initiated, investigated, decided and executed by the United States. Previously, the United States had used it to Japan and Germany. However, after the establishment of the World Trade Organization (WTO), the "301 investigation" had become outdated due to the WTO dispute resolution mechanism. However, the United States has not completely abandoned this "quiet sentence." In 2010, the United States launched the “301 Survey” on China's clean energy related policies and measures.
Zhou Shizhen believes that if they are members of the WTO, there are any problems for China and the United States to go to the WTO to go to the courts, in accordance with the principles of international trade law, rather than in accordance with US domestic law. “The Ministry of Commerce has long proposed that we are complying with international trade law, not US trade law. The United States cannot afford to override its own trade law over international trade law.”
Bai Ming also said that the United States had previously advocated "301 investigations" against China and was later interrupted through consultations. After many years, this "old antiques" was taken out, indicating that the United States has been "skilled" in the normal trade remedies such as anti-dumping and anti-subsidy. The trade protection is "unknown", so it can only seek this ancient tool.
He believes that Trump does not rule out the "301 investigation" as a means of negotiation to raise the asking price in the future Sino-US negotiations.

China should actively respond to the short-term impact, but the US review will undoubtedly bring uncertainty to China's exports to the United States.
Zhou Shizhen believes that the "301 investigation" may have an impact on China's high-tech industry. Mobile phones, computers, integrated circuits and other industries are easily affected, but whether sanctions are formed must be strictly in accordance with the evidence.
In Bai Ming's view, the main impact of the review is the overlapping of industrial structures between China and the United States. If an investigation is initiated, some industries in China with high technological content, high competitiveness, and threats to the US will bear the brunt.
"It turned out that the US industry is biased towards the high end. We are biased towards the low end. The two 'wells do not make rivers', but with the transformation and upgrading of China's industry and foreign trade, China is increasingly climbing to the middle and high end, while the United States is promoting low-end manufacturing. The industry has returned, so it has formed a coincident zone, so it is a part of the higher technical content for us. For the United States, the industry with relatively low technological content is likely to form a trade dispute of 'grabbing a bowl'." Bai Ming said.
Bai Ming said that in response to the US review, China should actively study its policies, avoiding the unfavorable findings of China as much as possible, and at the same time making the worst preparations. If the United States is willing to go its own way, China should be prepared to "before the rituals": on the one hand, actively respond to the WTO, on the other hand, it must have necessary trade countermeasures.
Is it possible for China and the United States to erupt a "trade war"? Bai Ming believes that there is no obvious difference between trade wars and trade frictions. The accumulation of trade frictions, frequency and amount to a certain extent will push the two countries to the edge of the trade war.
Zhou Shizhen judged that the United States will not easily implement the "Article 301" and thus provoke a "trade war." In the short term, the evidence collection and negotiation cycle is long, and it will not be affected for half a year to one year.
"China is the second largest commodity import market after the United States. 22% of the US exports, 56% of soybeans, and 26% of Boeing aircraft are destined for China. In the event of a trade war, China can also On the other hand, 60% of shoes imported from the United States, 37% of textiles and clothing, and 94% of tablets come from China. If they are not imported from China, their prices will rise." Zhou Shizhen said.
"I hope that the US trade representative should respect the objective facts and act with caution. If the US side does not care about the facts and does not respect the multilateral trade rules and take measures to damage the economic and trade relations between the two sides, the Chinese side will never sit idly by and will take all appropriate measures to resolutely defend the legitimate rights and interests of the Chinese side. The Ministry of Commerce said.

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