The facts and China's position on China-US trade friction

Reform of China's Agricultural Support Policies

Based on the pilot reform between 2014 and 2016, in March 2017 the NDRC and the Ministry of Finance published the Notice on Deepening Reform of Cotton Target Price, adjusting the subsidy policy for Xinjiang cotton target prices and putting a cap on the volume of cotton that qualifies for target price subsidies. The target price-setting period was changed from once a year to once every three years, and thus the cotton subsidy has become a WTO blue box measure. While China still keeps the minimum purchase price policy for rice and wheat, it has steadily lowered the minimum price in recent years. At the same time, the Chinese government has stepped up the reform of fiscal payment subsidies and stressed the orientation toward green ecology. In May 2015, the Ministry of Finance and the Ministry of Agriculture published Guiding Opinions for Adjusting and Improving the Three Types of Agricultural Subsidies Policies. 80% of agricultural inputs, plus direct subsidy and improved varieties subsidy, are used for farmland protection. The remaining 20% of agricultural inputs plus large-scale farmers' direct subsidies and increments to the three subsidies are mainly used for establishing and improving the agricultural credit guarantee system.

III. The trade protectionist practices of the US administration

The numerous investment and trade restriction policies and actions adopted by the US that distort market competition, hamper fair trade, and lead to breakdowns in global industrial chains are detrimental to the rules-based multilateral trading system and severely affect the normal development of China-US economic and trade relations.

1. Discrimination against foreign products

Many American regulatory policies are clearly self-serving and protectionist as they run counter to the principle of fair competition and discriminate against foreign products. The US directly or indirectly restricts the purchase of products from other countries through legislation, subjecting foreign companies to unfair treatment in the US, with Chinese companies being the main victims.

The US product market falls behind most developed countries and even some developing countries in terms of fair competition. According to the statistics on Indicators of Product Market Regulation30 released by the OECD in 2013, the Netherlands, the UK and Australia were the top three among 35 OECD countries, while the US ranked only 27th, pointing to the many obstacles created by the US market regulatory policies for fair competition in the product market. When the indicators of 12 non-OECD countries were added, the US ranked only 30th among the 47 countries, indicating a product market environment less fair than those of non-OECD countries such as Lithuania, Bulgaria and Malta.

The US is far more discriminatory against foreign products than most developed countries and even some developing countries. According to the ranking of 35 OECD countries on Differential Treatment of Foreign Suppliers31, a secondary indicator of the Indicators of Product Market Regulation, the US ranked 32nd among 35 OECD countries in 2013, indicating severe discrimination against foreign countries in its product market. When the indicators of 12 non-OECD countries were added, the US ranked 39th among the 47 countries, with a higher degree of discrimination than such non-OECD countries as Brazil, Bulgaria, Cyprus, India, Indonesia and Romania (Chart 7).32

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