U.S. Trade Representative Katherine Tai (Katherine Tai) released the 2021 Annual National Trade Estimate Report (National Trade Estimate Report) on Wednesday, noting that China still has significant trade barriers, including excess capacity, industrial subsidies, technology transfer and more.
The data show that the U.S. and China had a trade deficit of $310.8 billion last year, a tenth of a percent narrower than in 2019.
The report notes that China’s state-led economic and trade system makes it the world’s largest capacity violator, especially in industries such as steel, aluminum and solar, where severe and persistent overcapacity is evident, and that the “Made in China 2025” policy could also lead to significant overcapacity in some advanced manufacturing sectors.
The report also says that China is still providing huge subsidies to domestic industries, which are hurting U.S. industry, and that some of its subsidies appear to be in violation of WTO rules. Since China joined the WTO in 2001, the authorities have consistently failed to provide it with a full notification of central government subsidies, nor have they provided any notification of local government subsidies since July 2016.
The report said that despite China’s commitment last year in the first phase of the U.S.-China trade agreement that it would not continue to force foreign firms to transfer technology to Chinese companies for market access, the U.S. government is still in close communication with the business community, particularly about their concerns that China is still using informal, unwritten means to force U.S. firms to transfer technology.
The report also cites a range of other trade barriers in China, including investment restrictions, administrative licensing, and export restrictions, among others.
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