US is the real trade protectionist, and we will 'highly likely' win any legal dispute, China media says

  • China should sue the U.S. for trade protectionism if President Donald Trump orders an investigation into China's intellectual property practices, Chinese state media said
  • Although the process would be time-consuming, China would win, the hyper-nationalist Global Times said

China should sue the U.S. for trade protectionism if President Donald Trump orders an investigation into China's intellectual property practices, Chinese state media said in an unsigned editorial on Sunday.

Trump is expected to issue the so-called Section 301 investigation under the 1974 Trade Act later on Monday to investigate Chinese trade practices that force U.S. firms operating in China to turn over intellectual property, multiple outlets reported.

China will retaliate in such a case, said the Communist Party-linked Global Times, which is known for its nationalist slant.

"The Trump administration should have second thoughts about putting pressure on China on trade and avoid a full-blown trade war," said the newspaper, adding that the Beijing "should make use of the WTO mechanism to sue the U.S. for trade protectionism."

"The trade policies of the Trump administration have been widely criticized. Although filing a lawsuit with the WTO is time-consuming, it is highly likely that China would win," it said.

The latest news about a U.S. probe into Chinese trade practices could lead to steep tariffs and comes as Trump is pressing for China's cooperation in reining in North Korea's nuclear program.

"The U.S. now is walking softly and carrying a huge stick in regards to what it wants. Here, this is tactically nothing more than 'We need your support with North Korea,' part and parcel, that's it. The symbolism of this is just politics and game play," Frank Troise, managing director at SoHo Capital, told CNBC's "The Rundown."

Nomura analysts said in a note on Sunday that the U.S.-China trade deficit rose to $171 billion in the first half of 2017 from $161 billion in the same period last year, which "all else equal, should pressure Trump to be more aggressive with China."

However, the two economic giants still have a number of joint strategic issues, including North Korea.

"How aggressively the Trump administration pursues the IP investigation will no doubt be weighed against how the administration perceives China is assisting in achieving strategic goals of the U.S.," the Nomura analysts wrote.

China has repeatedly said the two issues — trade and North Korea — were not related, with the Global Times calling the link "illogical" in its Sunday night editorial.

On Monday, Chinese foreign ministry spokesperson Hua Chunying underscored the point at a scheduled press conference, reiterating the point that the issues of U.S. trade and North Korea are not connected and that there is no future in a trade war between the world's two largest economies, Reuters reported.

Still, China's Commerce Ministry issued an order banning imports of various commodities from North Korea on Monday, Reuters reported separately. The order takes effect from Tuesday, as Beijing moved to implement United Nations sanctions announced earlier in August.

Commentaries in state media normally provide insight into government thinking beyond typically thin official statements.

—Reuters contributed to this article.