Trump launches US probe into ‘unlawful’ China trade practices, raising spectre of trade war

Trade tensions between the United States and China heated up on Tuesday as Beijing warned that it “will not sit idle” if a US probe into its intellectual property practices leads to sanctions. 

President Donald Trump's decision to order the investigation comes on top of strains between the two nations over how to handle Beijing's ally North Korea.

Trump on Monday signed a memorandum directing US Trade Representative Robert Lighthizer to determine whether Chinese policies hurt American investors or companies -- with retaliatory measures a possible outcome.

"We will stand up to any country that unlawfully forces American companies to transfer their valuable technology as a condition of market access. We will combat the counter feiting and piracy that destroys American jobs," Trump said.

"We will safeguard the copyrights, patents, trademarks, trade secrets and other intellectual property that is so vitalto our security and to our prosperity. "Washington will turn a blind eye no longer," Trump insisted.

The president said the US would no longer tolerate Beijing's "theft" of US industrial secrets, long a concern of major foreign corporations seeking a share of the huge Chinese market.

"We will engage in a thorough investigation and, if needed, take action to preserve the future of US industry,"Lighthizer said. China's commerce ministry issued a statement voicing"serious concern" and warning that any US trade protectionism "will definitely harm bilateral trade relations".

"If the US side take actions that impair the mutual trade relations, disregarding the facts and disrespecting multilateral trade rules, China will not sit idle," the statement said. The ministry said the country "is definitely going to adopt all appropriate measures to vigorously defend the lawful rights and interest of China."

The United States is China's second-largest trading partner after the European Union, but Washington and Beijing have seen their relations grow increasingly fraught since a promising summit between Trump and China's Xi Jinping in April. The new intellectual property inquiry joins numerous investigations launched by Washington into Chinese trade practices, notably those concerning steel and aluminum and their national security consequences, which the Trump administration began earlier this year.

However, the start of a US inquiry will not immediately result in open confrontation. Lighthizer will first need to reach a preliminary finding of unfair practices by China before opening a formal investigation, which could take as much as a year, administration officials said.

The Chinese commerce ministry said the country has"always been paying high attention to intellectual property right protection, continuously perfecting the legislation",and that the progress it has made on that front is "obvious to all". Since launching his successful run for the White House and then taking office, Trump has frequently accused China of undermining the US economy.

The bilateral US trade deficit with China approached USD350 billion in 2016, and Trump has repeatedly blamed Chinese imports for gutting employment in US sectors such as steel.

Last week, Washington announced preliminary sanctions against Chinese imports of aluminium foil. But so far, the US has not imposed heavier trade measures on Chinese goods. On Thursday, Trump reiterated the suggestion that he could often his position on trade if Beijing were to do more to help rein in nuclear-armed North Korea.

"If China helps us, I feel a lot differently toward trade," he said. China said it would halt iron, iron ore and sea food imports from North Korea starting Tuesday, in accordance with new UN sanctions that Beijing voted to approve. US administration officials, however, have denied anylink between the latest trade action and Pyongyang's nuclear ambitions. Beijing echoed this view Monday, with the foreign ministry saying the two matters were "totally different." Despite Monday's expected action, Trump has so farrefrained from making good on threats of retaliatory trade measures against China.

This includes in particular concerns over Beijing's requirement that foreign companies establish local joint ventures. According to Washington, this can mean surrendering technological know-how to Chinese partners.