The announcement was made only three days after President Donald Trump signed an executive order based on Article 301 of the US Trade Act on August 14 requesting the USTR to look into unfair practices such as China's infringements on intellectual property rights and China's demand for mandatory transfers of US technology.
According to a recent report of the US-based Institute of International Finance, "A trade war between U.S. and China will hurt not only Chinese manufacturers, but also upstream suppliers and downstream distributors such as USA retailers". He said the use of an ill advised and obsolete U.S. trade law is likely to shift attention away from China's actions toward Trump's own policies. The US Trade Law allows the US government to impose sanctions on countries that built trade barriers such as ramping up import tariffs.
Trump's remarks came amid heightened tensions over North Korea in recent weeks and his criticism of China's position in face of Pyongyang's development and tests of ballistic missiles and nuclear weapons.
Section 301, once heavily used in the 1980s and the early 1990s, allows the US president to unilaterally impose tariffs or other trade restrictions on foreign countries. "We will safeguard the copyrights, patents, trademarks, trade secrets and other intellectual property that are so vital to our security and to our prosperity".
"There is no victor in a trade war", she further emphasized. The newspaper quoted Chad Brown, a trade specialist at the Peterson Institute of International Economics (PIIE), warning the U.S. that China can use the USA at the WTO.
According to USTR, the Chinese government reportedly uses a variety of tools, including opaque and discretionary administrative approval processes, joint venture requirements, foreign equity limitations, procurements, and other mechanisms to regulate or intervene in USA companies operations in China, in order to require or pressure the transfer of technologies and intellectual property to Chinese companies.
China has urged the United States to objectively evaluate China's progress in protection of intellectual property rights (IPR) and resolve differences with China through dialogue and consultation. China had made efforts for IPR protection in recent years in the administrative and judicial aspects and produced positive results through enhancing worldwide cooperation and exchanges and China hoped that the USTR would act prudently by paying attention to these objective facts, Xinhua said.
"China needs to prevent the Trump administration from replacing the bilateral, multilateral and global trade rules with unilateralism on trade", the former vice-minister of commerce told China Daily on Sunday.
-China relations and elicit a strong response from Chinese leadership.
China's Commerce Ministry said in a statement that it would take appropriate measures to defend the country's lawful interests, and that Washington should respect the facts and act prudently.
Beijing, however, called on Washington not to politicize bilateral trade ties.