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Business holds little fear for U.S.-China sanctions

In this story:

Retaliation

'Huge act'

Growing trade

RELATED STORIES, SITES

By staff and wire reports

HONG KONG, China -- Business leaders in China say the odds of the U.S. imposing trade sanctions in the fallout of a recent spy plane drama are extremely low.

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CNN's Kirsty Alfredson speaks to Dr Eden Woon. He says normal trading relations may be affected.

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Chambers of commerce in Hong Kong and Beijing say taking action against China for its role in the 11-day standoff will only exacerbate the diplomatic gulf between the two countries, which execute more than $125 billion in trade annually.

Eden Woon, a director of the Hong Kong General Chamber of Commerce, says the imposition of sanctions against China would be a "huge act" which no business would support.

Robert Kapp, president of the United States-China Business Council, says for the U.S. to impose sanctions against China would be tantamount to engaging in an "economic war".

The warnings come after members of Congress in the U.S. said at the weekend they were considering sanctions against China in response to its 11-day detainment of a U.S. military spy plane crew.

The 24-person crew -- consisting of 21 men and three women -- was held on China's Hainan Island after its spy plane made an emergency landing following a mid-air collision with one of two Chinese fighter jets sent to intercept it.

The EP-3E spy plane remains stranded at a military air force base on Hainan, while the Chinese jet and its pilot have not been found after plunging into the South China Sea.

The United States and China blame each other for the April 1 collision.

Negotiators for each nation are due to meet on Wednesday, probably in Beijing, to determine the fate of the U.S. spy plane and to talk about the future of surveillance flights along China's coast.

Retaliation

With the U.S. spy plane crew now back on home turf -- but only after the U.S. was forced into a vaguely worded apology -- the U.S. Congress is beginning to talk loudly about retaliation in the form of trade sanctions.

The timing of the U.S.-China spy plane confrontation could not have been worse, arriving just as the focus of rhetoric in Washington turns to annual trade relations with Beijing. Each year, the U.S. President is faced with the decision of whether or not to renew normal trade relations (NTR) with China.

While that annual choice will disappear when China enters the World Trade Organization (WTO) -- which is slated to happen before the end of the calendar year -- there remains a window of opportunity for the U.S. to use trade relations as a tool against China.

"I hate on Easter morning to talk about retribution, but there's gonna be retribution," said Sen. Robert Torricelli , D-New Jersey, who sits on the Senate Foreign Relations Committee, at the weekend.

Woon said the most likely form of retribution would be Congress "overriding the U.S. president's upcoming � probable renewal of normal trade relations with China in June".

"Overruling that would have to pass through both houses of Congress, and then they would have to override a possible veto from the president. To me this would be the most likely form of retaliation if they were looking for some sort of retaliation," he said.

'Huge act'

Woon, who is also a former China policy adviser to the U.S. in the administrations of former presidents George Bush and Bill Clinton, added that the U.S. could also revoke its decision to grant China permanent normal trade relations status once it enters the WTO.

"Any revoking of the PNTR would really be a huge act and the business community in the U.S. or most people who do business with China would hope that we don't get that far," he said.

Kapp said that despite the loud and angry words likely to emanate from Congress in the annual debate over whether to renew NTR with China, the imposition of sanctions would be "extremely unlikely".

"I think it's reasonable to expect that the president would not throw his weight behind members of Congress who are calling for this gigantic economic blow against China," he said.

"There will be people who speak very strongly about the need to punish China for many reasons by closing the U.S. market to Chinese products, and the EP-3E (surveillance plane) issue will be included as one of those."

"But I believe the majority of members of Congress will ask themselves whether that would make sense for the U.S. economy and whether it would help the U.S. manage its relationship with China, and they will say: 'No, it doesn't'."

China ranks fourth in the list of U.S. trading partners, and very high on the lists of many U.S. allies in Asia, including Australia, South Korea and Japan.

The state-run People's Daily newspaper reported that China's foreign trade in the first quarter of this year was up 15.9 percent year-on-year to $113.81 billion, according to newly released statistics from China's General Administration of Customs.

These figures show that China achieved a favorable trade balance of $4.73 billion from January to March this year, with $59.27 billion worth of exports and $54.54 billion imports, up 14.7 percent and 17.3 percent respectively.

Growing trade

In March alone, China's total trade increased 15.7 percent over the same period of last year to $43.91 billion, with $23.14 billion of exports and $20.77 billion of imports.

China's exports to Japan, the Association of Southeast Asian Nations (ASEAN) and Russia surged over 20 percent, whereas exports to the Hong Kong SAR and Taiwan province were up by 4.9 percent and 2.7 percent respectively.

China's imports were also on the rise. Imports from Japan and the European Union alone accounted for one-third of China's total imports, totaling $10 billion and $8.08 billion respectively.

Several senators, however, also warned that the U.S. differences with China should not be allowed to escalate to another crisis.

"Look, I have a feeling in my heart that this could get out of hand, we could have another cold war, God forbid, a hot war," Sen. Barbara Boxer, D-Calif., said on CNN's Late Edition with Wolf Blitzer. "I think that everything we do from this point forward must be weighed."

Others talked in far sharper tones as lawmakers continued to assess the fallout from the 11-day

The Associated Press & Reuters contributed to this report.