Hard-liner on China picked for U.S. trade post

U.S. president-elect Donald Trump named Peter Navarro, an economist who has urged a hard line on trade with China, to head the newly formed White House National Trade Council, the transition team said on Wednesday.

Navarro, 67, is a professor at University of California, Irvine, who advised Trump during the campaign. His book Death by China: How America Lost Its Manufacturing Base was made into a documentary film.

In response to reports of Navarro's appointment, the Foreign Ministry said Beijing is paying close attention to Trump's transition team and the possible direction of policy.

"China and the U.S. have broad common interests. It is the only correct choice for the two countries to cooperate," ministry spokeswoman Hua Chunying told a daily news briefing. "We hope the U.S. works with China to maintain the healthy, stable development of ties, including business and trade ties."

The choice is seen as a prelude to a potential slowdown in U.S. investment in China, according to several Chinese experts, who also cautioned that a trade war could ensue.

Chai Yongzhi, a researcher at the Beijing-based China Council for the Promotion of International Trade, said Navarro might persuade U.S. companies to slow their investment in China by offering them more attractive terms for investing domestically.

"With Navarro's nomination, it won't be easy for China to gain market economy status as stipulated by the World Trade Organization anytime soon," Chai said.

In an opinion piece in Foreign Policy magazine in November, Navarro and another Trump adviser, Alexander Gray, reiterated the president-elect's opposition to major trade deals.

"Trump will never again sacrifice the U.S. economy on the altar of foreign policy by entering into bad trade deals like the North American Free Trade Agreement, allowing China into the World Trade Organization and passing the proposed TPP," Navarro and Gray wrote. "These deals only weaken our manufacturing base and ability to defend ourselves and our allies."

China has been one of the fastest-growing markets for U.S. exports, according to the Ministry of Commerce. Bilateral trade between China and the U.S. has reached $558.39 billion, making China the largest trade partner for the U.S., replacing Canada. The U.S. was China's top export market and fourth-largest import market.

Yu Jianlong, secretary-general of the China Chamber of International Commerce, said that with the trade surplus, the country doesn't want a trade war with the new U.S. administration.

"However, if the U.S. keeps imposing inadequate trade remedy investigations on Chinese products, the country would have no choice but to confront the challenge," Yu said.

Tu Xinquan, a professor at the University of International Business and Economics in Beijing, said he believed that escalation of trade frictions between China and the U.S. would come at a much heavier cost to U.S. companies than to Chinese ones.

Since U.S. companies have invested a great deal in China, they will want to avoid a trade war to ensure the well-being of their business, Tu said.