Trump administration U.S. – China relations

Written by  //  December 14, 2018  //  China, Geopolitics, U.S.  //  No comments

See also: North Korea
Trump & Trade 2018
China Seas /2

Wall Street Is Battered by Worsening Economic Outlook in China
Weak data on industrial output and retail sales in China kicked off the global market downturn Friday. The numbers further inflamed worries among investors that the trade war between the United States and China is beginning to slow global economic growth.

13 December
Jeffrey Sachs: The U.S., not China, is the real threat to international rule of law
(Project Syndicate via Globe & Mail) The context of the arrest of Huawei CFO Meng Wanzhou – a dangerous move by U.S. President Donald Trump’s administration in its intensifying conflict with China – matters enormously. The United States requested that Canada arrest Ms. Meng in the Vancouver airport en route to Mexico from Hong Kong, and then extradite her to the United States. Such a move is almost a U.S. declaration of war on China’s business community. Nearly unprecedented, it puts American business people travelling abroad at much greater risk of such actions by other countries.
Quite transparently, the U.S. action against Ms. Meng really seems to be part of the Trump administration’s broader attempt to undermine China’s economy by imposing tariffs, closing Western markets to Chinese high-technology exports and blocking Chinese purchases of U.S. and European technology companies. One can say, without exaggeration, that this is part of an economic war on China – and a reckless one at that.
The unprecedented arrest of Ms. Meng is even more provocative because it is based on U.S. extra-territorial sanctions – that is, the claim by the U.S. that it can order other countries to stop trading with third parties such as Cuba or Iran. The U.S. would certainly not tolerate China or any other country telling American companies with whom they can or cannot trade.

5-7 December
Huawei CFO committed fraud in breach of US sanctions, prosecutors say
Meng Wanzhou lied about links between telecoms giant and shell company, Vancouver court hears as bail arguments continue
Meng Wanzhou, Huawei’s chief financial officer, appeared in court on Friday as she sought bail in a case that has sparked a major international dispute between China and the US. After more than five hours of debate, the court has not yet decided if Meng will be granted bail as she fights an extradition order to the US. The closely-watched hearing will resume on Monday morning.
Crown prosecutors allege Meng – the daughter of Huawei’s founder – engaged in “conspiracy to defraud multiple financial institutions” in 2013 when she attempted to convince bankers that Huawei and a former Hong Kong subsidiary SkyCom were wholly separate entities.
The case, which has prompted fury in China, has put Canada in a difficult position: comply with a request from its neighbour and largest trading partner, or risk angering the country it has, for months, sought stronger ties with.
Canadian wariness is not without cause: the last high-profile extradition request executed by Canada resulted in tit-for-tat action by the Chinese.
Huawei Executive’s Arrest Intensifies Trade War Fears
(NYT) The timing of the arrest, some experts said, could feed the suspicion of Chinese officials that nationalist factions in the Trump administration were trying to sabotage the trade deal. Their mood had already soured since Saturday, when the White House announced the two sides had agreed to 90 days of talks, amid confusion over the timetable and doubts that the Chinese would agree to the trade concessions described by Mr. Trump.
Canada arrests Huawei CFO. She faces US extradition for allegedly violating Iran sanctions
(Reuters/CNBC) The daughter of Chinese tech giant Huawei’s founder has been arrested in Canada and is facing extradition to the United States, dealing a blow to hopes of any easing of Sino-U.S. trade tensions and rocking global stock markets. The shock arrest of Meng Wanzhou, who is also Huawei Technologies’ chief financial officer, is riling authorities in Beijing and raises fresh doubts over a 90-day truce on trade struck between Presidents Donald Trump and Xi Jinping on the day she was detained.

4 December
US stock markets slide after Trump warns China: ‘I am a Tariff Man’
(The Guardian) On Tuesday Trump, who has taken a combative stance on China, was once again threatening sanctions. “President Xi and I want this deal to happen, and it probably will,” Trump wrote on Twitter. “But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power.”
“The sense is that there’s less and less agreement between the two sides about what actually took place,” said Willie Delwiche, investment strategist at Baird. “There was a rally in the expectation that something had happened, the problem is that something turned out to be nothing.”

1-3 December
What Beijing and its state-controlled media are saying about the Trump-Xi deal
(CNBC) While both the U.S. and China called this weekend’s meeting on trade very successful, many Chinese-language state media left out references to a 90-day condition for both sides to agree on issues such as technology transfer. While it’s typical for there to be some daylight between governments’ spin about bilateral meetings, a host of differences between the Chinese and the American version of events points to a potentially challenging road ahead for any negotiations
Trump’s China Truce Calms Markets, but He Chooses a Hard-Liner to Lead Talks
(NYT) President Trump cast his trade accord with President Xi Jinping of China as a huge win for American farmers, automakers and other key political constituencies — statements that helped send volatile financial markets higher on Monday and seemed intended to calm worries about the economic toll of a protracted trade war.
Yet 48 hours after the deal was struck, several big areas of contention remained unresolved and Mr. Trump appointed a veteran trade negotiator with deep skepticism toward China to lead the talks for the United States.
Mr. Trump’s choice of Robert Lighthizer, the United States trade representative, to lead the negotiations is significant, given that the official statements from Saturday’s meeting included only vague commitments and that deep divisions remain, particularly over China’s treatment of American companies and push to obtain trade secrets and intellectual property. …
The lack of specific commitments from China and the conflicting statements from United States and Chinese officials struck many analysts as a sign that the president might ultimately get far less than he was publicly portraying.

Photo: Tom Brenner for The New York Times
Trade Truce by China and U.S. Gives Both Sides Political Breathing Room
(NYT) The agreement reached by President Trump and President Xi Jinping of China to effectively pause their trade war and work toward a pact appears to be aimed at giving the two leaders some political breathing room after an escalating fight has begun inflicting economic damage on both sides of the Pacific.
The temporary truce, forged over a working dinner on Saturday night in Buenos Aires, does little to resolve the deep differences between the two nations and is more a political agreement than a substantive one. Both sides immediately positioned the cease-fire as a domestic victory while staking out areas where they would not compromise.

Trump, Xi agree to 90-day tariff pause citing progress on trade disputes
The White House announced the agreement in a statement following Trump and Xi’s working dinner in Argentina as part of the G20 summit of nations.
“President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture,” the White House said in a statement.
“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries,” the statement continued, adding that “China has agreed to start purchasing agricultural product from our farmers immediately.”
If the two countries cannot reach a deal within 90 days, the White House says, existing 10% tariffs on $200 billion worth of Chinese goods will be increased to 25%.

26 November
Trade deal or not, the long-range prospects for US-China relations are growing more troubling
At this point, nothing short of leader-level intervention will arrest the current downward trend in the relationship. If Trump and Xi are to do so on the margins of the G-20, both leaders will need to gain confidence in the direction the other seeks to take the relationship. They both could do so while allowing for a highly competitive bilateral relationship. As long as competition is undertaken within mutually understood parameters, it need not be destabilizing. Those parameters do not currently exist, and as a consequence, there is growing risk of mutual miscalculation leading to unintended escalation.
(Brookings) As significant as the trade discussion will be—particularly for investors, farmers, factory workers, and consumers sensitive to price increases on goods—it may end up being a sub-plot to a larger story. The lasting import of the meeting between Trump and Xi may be whether it leads to a resetting of ties between the world’s two largest powers, or whether it serves as a way-station toward entrenched enmity.
Recent trends in the bilateral relationship do not provide cause for optimism. The U.S.-China relationship arguably is more strained now than at any point since the normalization of relations in 1979. In recent months, the relationship has accelerated along a continuum from rivalry toward adversarial antagonism
In the United States, a policy shift on China has been propelled by a sense that China is winning and America is losing in a 21st-century competition for global preeminence. To arrest this perceived trend, the Trump administration has adopted an increasingly publicly confrontational and zero-sum approach. … The Trump administration views it as advantageous to restrain China’s rise. From Beijing’s perspective, Washington’s actions reflect the predictable pattern of a declining power trying to hold back the rising power. Many Chinese experts have been forecasting for decades, and particularly since the global financial crisis, that Washington would resist China’s rise.
By treating Washington’s activism toward China as a symptom of America’s insecurity, Beijing is eliminating the rationale for resolving irritants with Washington. According to this logic, bending to Washington’s demands on trade or other issues would not eliminate America’s anxieties, but it could compel Trump to pocket concessions and demand more, and thus, it would be better for Beijing to stay the course than to mollify Washington’s concerns.

30 October
The Number 7 Could Make China’s Currency a Trade-War Weapon
(NYT) As the United States and China swap threats and mete out increasingly punishing tariffs, the world is watching to see whether Beijing turns to one of its most potent economic weapons. It involves the number 7.
China’s currency, the renminbi, has been gradually losing value since mid-April, and on Tuesday it was at its weakest point in a decade. If the currency weakens any further, it could fall below the psychologically important level of 7 renminbi to the dollar. The last time it took more than 7 renminbi to buy a dollar was in May 2008, as the world was slipping into a financial crisis.
The Trump administration doesn’t like the idea of a weaker Chinese currency. That could give what it considers an unfair advantage to China’s exporters. In the arsenal of trade disputes, currencies can be potent weapons.
… A weaker currency can also help Chinese exporters beat President Trump’s tariffs. Right now, the United States imposes tariffs of about 10 percent on a wide variety of Chinese goods that arrive at an American port. If the renminbi has fallen 10 percent, the tariff is basically nullified.

25 October
The Long Sino-American Trade War
By Michael Spence
If governments are going to engage in trade wars, they should have a clear and pragmatic vision of where they want to end up. Yet the trade war initiated by the Trump administration seems less like a tough negotiating tactic, and more like a guessing game.
(Project Syndicate) …beyond the short-term risks, it seems increasingly likely that the trade war will have significant long-term consequences, affecting the very structure of the global economy. The rules-based multilateral order has long been underpinned by the assumption that growth and development would naturally lead China to embrace Western-style economic governance. Now that this assumption has largely collapsed, we are likely to face a prolonged period of tension over differing approaches to trade, investment, technology, and the role of the state in the economy.
Whereas Western governments tend to minimize their intervention in the private sector, China emphasizes state control over the economy, with far-reaching implications. For example, subsidies are difficult to detect in the state-owned sector, yet doing so is crucial to maintaining what would be considered a level playing field in the West.
Moreover, Chinese foreign direct investment is often carried out by state-owned enterprises, and thus frequently packaged with foreign aid – an approach that can put Western-based firms at a disadvantage when bidding for contracts in developing countries. Lacking any version of America’s Foreign Corrupt Practices Act, China is also willing to channel FDI toward countries and entities that US companies might eschew.
With the Trump administration lacking enthusiasm for multilateralism of any kind, and perhaps owing to lingering hopes that the old multilateral order can be preserved, no one is so much as attempting to develop feasible alternatives. What the US administration has done recently is reverse its negative stance on foreign aid, presumably in response to China’s massive investment in developing countries.

16 October
China’s economy may suffer under Donald Trump’s cold war but the US shouldn’t count on stopping it
Andrew K.P. Leung says that whatever US’ reasons, and whatever methods it may use, China is far too integrated into global supply chains for the US containment strategy to end its upwards trajectory
(South China Morning Post) US Vice-President Mike Pence’s ferocious anti-China speech was the latest salvo in what The New York Times has called a “new cold war”. It followed a recent US-Mexico-Canada Agreement (USMCA) with a “poison pill” clause that forbids parallel agreements with “non-market economies” (read China).
Similar clauses are expected in future US agreements with Japan and the European Union. A Western economic wall is being built to isolate the Middle Kingdom.
Concurrently, the White House has made an issue of the yuan exchange rate, and the US might designate China a currency manipulator, moving towards a currency war.
China’s rapid and unorthodox rise has brought disillusion and consternation to the world’s extant superpower. Its alleged violation of intellectual property rights, its perceived lack of market reciprocity, and its recent assertiveness in the South China Sea are seen as direct threats to American national interests. Many of these worries, which are bipartisan, are shared by key members of the EU and other US allies.
How Trump’s Trade War Is Driving China Nuts
Chinese leader Xi Jinping has reacted to American pressure with a level of desperation that is good for neither Washington nor Beijing.
(Politico) Six months ago, Beijing was throttling ahead with “Made in China 2025,” a multitrillion-dollar effort to dominate the future of self-driving vehicles, renewable energy, robots and artificial intelligence. Party bigwigs were also planning festivities to commemorate the 40th anniversary of Deng’s reforms—and Xi’s steps to accelerate them.
Now, Xi’s undivided attention is on making this year’s growth numbers. Trump’s trade-policy grenades are sending a few too many market forces Beijing’s way for comfort. China’s currency is down 6.4 percent this year. Shanghai stocks are down 22.3 percent this year as JPMorgan Chase and other investment banks turn cautious despite China’s 6.7 percent growth.
The disappearance of a beloved actress, the detention of an Interpol bigwig and the visa troubles of a Western journalist wouldn’t normally be big concerns for economists. But there’s nothing typical about the lengths to which China is going to fend off Trump’s escalating trade war. … Taken together, these plotlines make a mockery of Xi’s market-forces pledge. Rather than creating a predictable rule of law on which trusted economies thrive, Xi’s China is regressing in ways sure to chill foreign investment. This imperils his efforts in the Trump era to portray China as a credible power ready to fill the global leadership void. Xi is engaged in his own Trumpian battle against the media—even outside the mainland—and going after high-profile rivals.

15 October
US-China trade war is really a clash of civilisations and ideologies
(South China Morning Post) Despite the headlines, the growing conflict between Beijing and Washington is very little to do with tariffs, says Zhang Lin
While the trade imbalance between the two countries continues to make headlines, it actually means little to either. For China, the role of net export contribution to economic growth has been negative in most years since 2008. For the US, a trade deficit is inevitable when it consumes 30 per cent of the world’s products but produces only 13 per cent. Both Washington and Beijing must know this: the dispute is about much more than trade.
Washington has been reflecting on its China policy, as US Vice-President Mike Pence said in his speech at the Hudson Institute on October 4 – the US opened the door to let China join the World Trade Organisation in 2001 and helped it to thrive through trade. However, China has refused to follow the path that Washington once hoped it would.

11 October
US and China face growing risk of military clashes as conflict intensifies
Washington-Beijing ties threaten to get much worse before they can possibly be stabilized
(Nikkei Asian Review) …Mike Pompeo’s brief visit to Beijing, the shortest on record by an American secretary of state, on Oct. 8. Instead of patching up a relationship in free fall, the occasion turned into an acrimonious exchange of accusations.
Pompeo’s visit occurred at an inauspicious moment. Four days before he landed in Beijing, American Vice President Mike Pence delivered a speech on China that is so harsh that it was seen as a turning point. Commenters, both in China and the West, even labeled it America’s official declaration of a cold war with China.
Chinese leaders must also have been angered by the new NAFTA agreement (officially the U.S.-Mexico-Canada Agreement, or USMCA) signed on Sept. 30. At Washington’s insistence, it effectively gives the U.S. a veto over future free deals Canada and Mexico may want to reach with China.
Just after Pompeo’s trip, Commerce Minister Zhong Shan warned against expecting China to back down. He said: “This unyielding nation suffered foreign bullying for many times in history, but never succumbed to it even in the most difficult conditions.” …
This geopolitical contest will likely escalate dangerously. Powerful forces on both sides are driving the world’s two strongest countries toward full-fledged confrontation. …
Both sides will have the incentive to undermine each other’s security interests. The U.S. will likely intensify efforts to challenge Chinese control of the South China Sea through shows of force (such as high-profile freedom of navigation operations and multination naval exercises). American diplomatic and military support for Taiwan will almost certainly increase, a step that will touch the most sensitive nerve in Beijing and elicit neuralgic reflexes. In retaliation, China will likely increase its support for North Korea and thwart Trump’s attempt to denuclearize Pyongyang. Iran, another avowed foe of the U.S., may get more support from Beijing.

9 October
US-China trade war weaponizes liquefied natural gas
Beijing turns to Russia and Iran, leaving Trump a void to fill
(Nikkei Asian Review) The tariff battle has touched off a domino effect in the energy industry, with major geopolitical implications far beyond the world’s two biggest economies.
China became the second-largest importer of LNG last year, after Japan, and in doing so shipped in 500% more of the fuel from the U.S. The volume exceeded 100 billion cu. feet, accounting for under 10% of China’s total purchases, and the ratio was expected to rise further.
After U.S. President Donald Trump imposed a third round of tariffs against China on Sept. 24, however, the Chinese side hit back the same day with levies on $60 billion worth of American goods. The retaliation included a 10% tariff on LNG.

Trade war escalation will hit China harder than the US, IMF says
China’s GDP size will be 1.6 per cent lower in 2019 than it otherwise would be, if the US slaps tariffs on all Chinese imports, International Monetary Fund forecasts
(South China Morning Post) A further escalation of the trade war between the US and China would take a major toll on economic growth in both countries next year, with China the bigger casualty, according to an economic analysis released by the International Monetary Fund on Tuesday.
Trade war: China ‘risks disengagement with US unless it changes’
Long list of economic policy differences that must be addressed for both countries’ sake, Washington think tanks warn at Beijing forum
China must make substantial changes to its economic policies or it will face disengagement with its largest trading partners, American former officials and economists have warned in Beijing.
The suggestion that China could be left isolated in global trade came days after US Vice-President Mike Pence made a speech adding to concerns that an economic cold war was looming between the world’s two largest economies.

6 October
Trump has China quaking in its boots
(New York Post) With China still running a record trade surplus with the US, it seems premature — to say the least — to say that Trump has won his long-overdue trade war with China.
But it is not too early to conclude that, despite their threat of retaliatory tariffs, China’s Communist authorities know that they have lost.
The increased tariffs to date, combined with the threat of more, have already clipped the wings of China’s economic rise. Its stock market is down 21 percent year over year, industrial output is slowing and its currency is weakening.
Looking beyond the bluff and bluster emanating from Beijing, there is evidence that Party leader Xi Jinping is looking for a way to stand down.
Almost from the moment he took power in 2012, the Chinese leader was so confident that his own country’s rise was unstoppable, and so certain that America was in terminal decline, that he openly boasted about the China-dominated world to come.

2 October
After the trade war, US-China relations will not be the same again
Neal Kimberley says now Beijing recognises that Trump’s tariff moves – though in the name of fair trade – stem from a change in America’s strategic intent, it, too, is rethinking the bilateral relationship. Neither side is likely to want a return to the old status quo.
(South China Morning Post) US President Donald Trump railed last week about a recent China Daily-sponsored advertising supplement that ran in an Iowan newspaper, the Des Moines Register.
Trump has argued that such an action represented an attempt to interfere in next month’s US midterm congressional elections, but the supplement’s attempt to flag up how, in particular, Iowa’s farmers have benefited from the way the China-US economic relationship has evolved, nevertheless rings true. By extension, those farmers will lose out if that same economic relationship isn’t repaired.
Last month, Iowa State University estimated that the imposition of tariffs in 2018 on products exported by the state, of which those retaliatory imposts levied by China are a very material part, could cost the Iowan agricultural economy up to US$2.2 billion.

30 September
China will lose trade war with the US, then things will get really nasty
Beijing might be the biggest loser, but both the American and Chinese economies will take a hit – especially when this war goes beyond trade
(South China Morning Post) With Washington’s punitive tariffs on US$200 billion worth of Chinese imports and Beijing’s reciprocal tariffs on US$60 billion in American goods taking effect on Monday, on top of duties imposed on each other’s US$50 billion worth of imports, a full-blown trade war between the world’s largest and second-largest economies has begun, which will severely hit both countries and elsewhere, and thus slow global growth. However, China will suffer much more pain than the United States because of its over-reliance on trade and on core US technology in the supply chain, among other things.

The United States should be a lot more afraid of China than it is
By Mark Kingwell, professor of philosophy at the University of Toronto
(Globe & Mail) China’s Belt and Road initiative has finally, after five years of existence, made its way into mainstream North American conversation. This massive free-trade plan out of Beijing, known previously as One Belt, One Road, will affect large swaths of Asia, Eastern Europe, Africa and now even parts of the Caribbean and South America.
If the whole project is put in place, that pretty much means that the century belongs to China. Smaller nations, especially the African ones, are pinning their hopes for economic improvement on the access to markets and technology – although crippling debt traps might be lurking there. Other countries feel as though they ignore trade with China at their peril. Either way, Belt and Road is a free-marketeer’s dream, promoting “regional connectivity and a brighter future” with at least 65 countries on four continents.
For some people, anyway. In Hong Kong this week I joined a group of policy wonks, bureaucrats, lawyers, academics and scientists to ask what might sound like a fairly esoteric question: What role will artificial intelligence play in this world? The answers quickly became clear: Though the whole project is based on old-fashioned things like container ships, tunnels, bridges and railways, none of it will work without extremely complex computer systems, the kind that will make the basically self-flying Boeing 777 I took to get there look like a wind-up toy. These systems will need, or soon achieve, semi-autonomous states of operation. Maybe the world we’re creating will actually belong to the algorithms, not China.

26 September
U.S. has most to lose from trade war, China would benefit: ECB
(Reuters) – The United States would have most to lose if it started a trade war with other countries, while China would be better off after retaliating, a simulation by the European Central Bank showed on Wednesday. “Estimation results suggest that the United States’ net export position would deteriorate substantially,” the ECB said in the study. “In this model, U.S. firms also invest less and hire fewer workers, which amplifies the negative effect.”

21 September
.. “China Cancels Trade Talks With U.S. Amid Escalation in Tariff Threats,” by WSJ’s Lingling Wei: “China scotched trade talks with the U.S. that were planned for the coming days, according to people briefed on the matter, further dimming prospects for resolving a trade battle between the world’s two largest economies. The decision to pull out of the talks follows the latest escalation in trade tensions. … Chinese officials have said they wouldn’t bend to pressure tactics. By declining to participate in the talks, the people said, Beijing is following up on its pledge to avoid negotiating under threat.” WSJ

24 August
US-China trade talks ended without a breakthrough. Negotiators made no real progress at the two-day meeting in Washington, DC, although Beijing described the talks as “constructive.” A fresh round of US tariffs on $16 billion of Chinese imports went into effect on Thursday, and Beijing retaliated with tariffs on $16 billion of American imports.

7 August
Reuters Commentary: If you want to know why Trump shouldn’t expect to win his trade crusade against China, look no further than Alibaba, the country’s giant e-commerce version of Amazon, writes David A. Andelman, a former foreign correspondent for the New York Times and CBS News and visiting scholar at Fordham University’s Center on National Security. While the U.S. president seems to think that the U.S. can stand the pain of tariffs longer than China, “that reflects little understanding of either the Chinese mindset or the underlying strength of the Chinese economy.”
Commentary: China could win Trump’s trade war
While the Chinese stock market has taken more of a beating than the American, Trump seems to think that the United States can stand the pain longer than China and tightening the screws will bring Beijing to the negotiating table. But that reflects little understanding of either the Chinese mindset or the underlying strength of the Chinese economy which, though weaker than a year ago, is still growing nearly twice as fast as the American.

12 July
Trade War With China in Aisle 12
(NYT) If implemented, the Trump administration’s latest round of proposed tariffs on Chinese goods would finally pull American consumers into an escalating trade war that they have, thus far, mostly watched from a distance.
Administration officials took pains in their first batch of Chinese tariffs to largely shield consumers from seeing immediate price increases on products they buy. The $34 billion round imposed on July 6 focused largely on goods that businesses purchase, which do not typically appear on store shelves, such as aircraft parts and industrial machinery.
But the list of $200 billion worth of products administration officials proposed hitting with tariffs on Tuesday would push up prices at many American retailers.
China’s trade surplus with U.S. hits record as exporters rush to beat tariffs
(Reuters) – China’s trade surplus with the United States swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame a bitter trade dispute with Washington.

11 July
How Rare Earths (What?) Could Be Crucial in a U.S.-China Trade War
(NYT) Lynas Corporation, can provide only a fraction of the minerals — known as rare earths — that China produces. And even that source isn’t a sure thing: The work is so volatile, complex and expensive that Lynas once came close to collapsing.
The Trump administration amped up its trade fight with China on Tuesday when it threatened to impose tariffs on an additional $200 billion in Chinese goods, ranging from frozen catfish fillets to copper wires to piston engines. China has threatened to match them dollar for dollar.
But it has other ways to retaliate beyond tariffs. It could refuse to buy American products, like planes from Boeing. It could intensify regulation of American companies doing business on the mainland. It could threaten to offload a piece of its huge portfolio of Treasuries, which could rattle the bond market.
And in one of its more strategic weapons, Beijing could use its dominance to cut off key parts of the global supply chain. China is the major supplier of a number of mundane but crucial materials and components needed to keep the world’s factories humming. They include obscure materials like arsenic metals, used to make semiconductors; cadmium, found in rechargeable batteries; and tungsten, found in light bulbs and heating elements.

15 June
Trump’s China Tariffs Met With Retaliation Vow From Beijing
(Bloomberg) The response from China signaled a rapid escalation of the dispute. China will impose tariffs with “equal scale, equal intensity” on imports from the U.S. and all of the country’s earlier trade commitments are now off the table, the Commerce Ministry said in a statement on its website late Friday.
President Donald Trump on Friday pledged more tariffs if China follows through on the retaliation threats, without specifying an amount. In April, he asked officials to consider an additional $100 billion in levies. Meanwhile, U.S. Trade Representative Robert Lighthizer said an announcement on U.S. investment restrictions on China will follow in the next two weeks.
China criticizes ‘fickle’ Trump over tariffs
(The Hill) China’s Ministry of Commerce issued a highly critical statement on Friday calling on countries to take “joint actions” against the United States over President Trump’s actions on tariffs.
Trump announced Friday morning that the U.S. would impose 25 percent tariffs on $50 billion in Chinese products.

6 June
US-China relations deteriorating fast over flashpoint issues
Clashes over South China Sea, Taiwan and trade have plunged Trump and Xi into the diplomatic deep freeze
(The Guardian)
China’s expanding efforts to impose its will on neighbours through diplomatic, commercial and military pressure – the so-called Xi doctrine – have drawn the sharpest riposte to date from the Trump administration, with Taiwan once again the main flashpoint in a sea of accelerating Sino-American rivalry.
Following recent verbal clashes over US “freedom of navigation” patrols in disputed South China Sea waters, officials in Washington say they plan to send a US aircraft carrier battlegroup into the Taiwan Strait separating the island from mainland China. The move was in response to China’s military “turning up the heat” on Taiwan, an official said.
Dangerous US-China flashpoint issues appear to be multiplying fast. The two superpowers are locked in a worsening trade dispute. China took furious exception to American and Taiwanese comments about this week’s anniversary of the 1989 Tiananmen Square massacre of pro-democracy demonstrators. It flatly rejects criticism of its repression of similar sentiments in Hong Kong.
Now the US and China may also be heading for a collision over Trump’s attempts to cut a denuclearisation-for-normalisation deal with North Korea at a summit next week. China may greatly benefit from an end to sanctions. But if Pyongyang comes in from the cold, Beijing could catch a strategic chill.
Speaking in Singapore at the weekend, James Mattis, the US defence secretary, had a tough message for China, indicating how far relations have deteriorated since Trump visited Beijing last year. “We have seen those who wanted to dominate the region come and go, and we have been with you,” Mattis told America’s allies. China would ultimately pay a heavy price for bullying its neighbours.

3 April
Will China turn Taiwan into the next Crimea?
US support for Taiwan may prove red rag to bullish China given trade war and military rivalry
China could do to Taiwan what Russia did to Crimea if Beijing’s relations with Washington, strained by an expanding trade war and military rivalry in the East and South China seas, deteriorate further.
The warning from maritime security experts follows a series of recent Chinese moves to put pressure on Taiwan’s pro-independence government. These include a vow last month by China’s president that Taiwan would face the “punishment of history” if it pursued a separatist course. “Any actions and tricks to split China are doomed to failure and will meet with the people’s condemnation,” Xi Jinping said.
Discussing possible Chinese moves to seize Taiwan by force, a panel of maritime security experts convened by the Atlantic Council thinktank in Washington noted that by controlling Taiwan, China would gain direct access to the western Pacific and extend its influence in disputed areas of the East and South China seas, where it is establishing military bases on reclaimed land.

2017

28 August
America and China’s Codependency Trap
Stephen S. Roach
On August 14, President Donald Trump instructed the US Trade Representative to commence investigating Chinese infringement of intellectual property rights. Whatever the merit of such allegations, Chinese retaliation against US trade sanctions would almost certainly cause far more economic damage.
Seemingly at odds with the world, US President Donald Trump has once again raised the possibility of a trade conflict with China.
On August 14, he instructed the US Trade Representative to commence investigating Chinese infringement of intellectual property rights. By framing this effort under Section 301 of the US Trade Act of 1974, the Trump administration could impose high and widespread tariffs on Chinese imports.

14 August
U.S.-China relations, 6 months into the Trump presidency
Still in search of a strategy
(Brookings) Until a strategy is set, there will continue to be confused and conflicting messages from different quarters of the United States government on China, disagreement and sloppiness on proper sequencing of actions, and limits to our ability to elicit Chinese cooperation, as Beijing hesitates to commit to U.S. initiatives because of uncertainty over the steadfastness and coherence of U.S. policy.The Trump administration has not presented a coherent public explanation of how it views China, what kind of relationship it seeks to cultivate, or how it plans to do so.
(Quartz) Trump ramps up trade pressure on China. The president is expected to order an investigation into China’s allegedly unfair trade practices, including things like forcing US firms in China to hand over intellectual property. An investigation could ultimately lead to steep tariffs.
(NYT)  President Trump is expected to announce the opening salvo in what could become a far-reaching investigation into Chinese trade practices — but he runs the risk of alienating Beijing just when he needs help with North Korea.As China’s technological ambition grows, it is trying to shed its reputation for fake gadgets and pirated software, and get ready for a day when it must defend its own intellectual property against rival economies.

24 July
George Friedman: US-China Trade Talks Collapse and It’s North Korea’s Fault
(Mauldin Economics) The United States and China met to discuss trade issues. The meeting ended without agreement on anything. The obligatory joint press conference after the talks, where everyone pretends that everything was fine, was canceled. The only comment came from a U.S. official who said there were frank discussions, which means that the talks were tough and full of threats.
China has clearly failed to persuade North Korea to halt its nuclear program. There are two possible explanations for this.
The first is that North Korea doesn’t trust China but does trust that having a nuclear weapon would block any American attempts to destabilize the North Korean regime.
The second possible explanation is that China did not want to persuade North Korea this time. The reason is simple: Although China cares a great deal about trade, it cares much more right now about its geopolitical balance with the United States. North Korea has the United States on a hook. If the U.S. chooses not to attack North Korea, it would appear weak, and China would in turn look stronger. And if the U.S. chooses to attack, it could be portrayed as a lawless aggressor. In a full-scale attack, the U.S. would likely take out North Korea’s nuclear program, and China would be spared that problem. China would then claim that it had been busy mediating, and had nearly reached a deal, when the American cowboys struck.

16 April

China is paralyzed on looming North Korea threat. Will Trump show restraint?
By Charles Burton, associate professor of political science at Brock University in St. Catharines, Ont., and a former counsellor at the Canadian Embassy in Beijing
(Globe & Mail) Many see two factors behind China’s reluctance to move on North Korea: 1) fear of North Korean refugees flooding into China as the DPRK regime implodes, and 2) fear of the geopolitical implications of a U.S.-oriented reunited Korea on China’s northeast border. But one wonders if this is a complete explanation. First of all, China has massive resources to control its border with the Korean peninsula. Second, a reunified Korea would likely ally itself with China, as the strategic need for U.S. military presence in Korea would be eliminated.
In fact, the key to China’s policy of non-action on the Korea threat lies more in Chinese domestic factors. The reason China characterizes its relations with the DPRK as “close as lips and teeth” is because the two nations share the same political and social institutions inherited from Stalin’s Russia and a long history of very close collaboration between the Chinese and North Korean communist parties and military elites.
… the post-Kim fallout of a German-like reunification of Korea would be profoundly politically destabilizing for China. The opening of the secret police files and the seeking of redress by the politically wronged, followed by the inevitable public trials for corruption and political venality of China’s “lips and teeth” North Korean political and military elite would trigger huge interest among citizens of China. Parallels to the Chinese system would be too closely drawn for the Chinese Communist Party leadership to explain away, and the threat this poses to mainland Chinese political stability could well be the beginning of the end of the Chinese Communist Party’s single-party authoritarian rule. Moreover, the files would likely show PRC regime complicity in a lot of matters relating to the DPRK that would severely debase China’s international prestige.

Donald Trump is making the same deal with China that Barack Obama did
(Quartz) President Donald Trump shared a little insight into US foreign policy after North Korea’s fizzled missile test [with this tweet on Sunday 16 April]:
“Why would I call China a currency manipulator when they are working with us on the North Korean problem? We will see what happens!”:
This helps explain two recent reversals that baffled Trump watchers in recent days: Following a summit with Chinese leader Xi Jinping, the president said he would no longer accuse China of subsidizing its currency to make its exports more competitive, and revealed a more nuanced understanding of China’s leverage over North Korea than he displayed on the campaign trail.

15 April
Trump and Xi: Sherpas, not summits, make the difference
(South China Morning Post) At several other meetings planned for the two leaders this year, key policy wonks could help Beijing and Washington build stronger-than-ever bilateral trade relations
Predicting the outcome of major summits is not an exact science. And the Mar-a-Lago huddle between Chinese President Xi Jinping and US President Donald Trump is no different.
Summits, as Henry Kissinger would say, embody “high politics”, by way of the history-altering dynamics they unleash. In case of Mar-a-Lago, a 100-day programme has been rolled out to improve Sino-US trade, four channels have been formed to discuss security, economic policy, and cultural and people-to-people exchanges. And Xi and Trump have agreed to meet again this year. Significant, but could they be the stuff history is made of?

Trump and Xi handshake

7 April
Donald Trump hails friendship with China’s Xi as missiles head to Syria
US president talks of ‘great relationship’ with China but timing of Syria attack likely to create anger and fear, say experts
(The Guardian) a rapidly escalating crisis in Syria threatened to overshadow their long-awaited meeting as Trump ordered cruise missile strikes in response to the deadly chemical attack on the town of Khan Sheikhun.
China, which alongside Russia has repeatedly opposed UN resolutions against Assad, did not immediately respond to Trump’s move but experts said it was likely to be both angered and impressed by the strikes.
Bonnie Glaser, an expert in Chinese foreign policy, said Beijing would view Trump’s strikes as proof he was not afraid of taking bold military action, a reality that had potential implications both in North Korea and the South China Sea.
It was not immediately clear if the Chinese president had been given advance warning of the strikes on Syria.
… experts say the public enthusiasm masks profound suspicions and even animosity and believe the behind-the-scenes conversations have the potential to be far less cordial.
“The Trump administration is deeply distrustful of China,” said Ashley Townshend, a University of Sydney academic who wrote a recent report on the billionaire’s plans for Asia. “They view China as a strategic competitor that needs to be checked with American power because it is taking advantage of the United States. These views run deep in the administration, they run deep among key advisers.”

2 April
China Learns How to Get Trump’s Ear: Through Jared Kushner
(NYT) China’s courtship of Mr. Kushner, which has coincided with the marginalization of the State Department in the Trump administration, reflects a Chinese comfort with dynastic links. Mr. Xi is himself a “princeling”: His father was Xi Zhongxun, a major figure in the Communist revolution who was later purged by Mao Zedong.
While administration officials confirm that Mr. Kushner is deeply involved in China relations, they insist that Secretary of State Rex W. Tillerson has taken the lead on policy and made many of the decisions on the choreography and agenda of the meeting at Mar-a-Lago.
By inviting Mr. Xi to Mar-a-Lago, Mr. Trump’s “Southern White House,” the president is conferring on him the same status as Prime Minister Shinzo Abe of Japan, who spent two days in Florida, playing golf with the president and responding to a crisis after North Korea tested a ballistic missile. Such a gesture is particularly valuable, experts said, given that China is not an ally like Japan.

31 March
Trump’s Meeting with China’s Xi Is Risky with U.S. Asia Policy Up in the Air
By Michael Fuchs, former deputy assistant secretary of State for East Asian and Pacific affairs
Whatever the policy direction few in Asia (or anywhere else, for that matter) have faith that Trump will honor the long-standing commitments of the United States. And whatever smiling faces the photo ops portray or how many high-level trips are made to Asia, this dynamic will sap U.S. credibility and will dominate conversations in the offices of prime ministers and presidents around the world.

30 March
Trump Anticipates a ‘Very Difficult’ Meeting with Chinese President Xi Jinping
(TIME) Trump predicted “a very difficult” meeting in a tweet just hours after both governments announced the summit. He wrote in part: “We can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.”
The relationship between the world’s No. 1 and No. 2 economies has been uncertain following the election of Trump, who accused China during his campaign of unfair trade practices and threatened to raise import taxes on Chinese goods and declare Beijing a currency manipulator.
It is unclear whether Trump will follow through with either threat. He is now seeking Beijing’s help in pressuring North Korea over its nuclear weapons and missiles programs. China is North Korea’s most important source of diplomatic support and economic assistance.

19 March
Tillerson ends China trip with warm words from President Xi
(Globe & Mail) China has been irritated at being repeatedly told by Washington to rein in North Korea’s nuclear and missile programmes and the U.S. decision to base an advanced missile defence system in South Korea.
Beijing is also deeply suspicious of U.S. intentions towards self-ruled Taiwan, which China claims as its own, with the Trump administration crafting a big new arms package for the island that is bound to anger China.
But meeting in Beijing’s Great Hall of the People, those issues were brushed aside by Xi and Tillerson, at least in front of reporters, with Xi saying Tillerson had made a lot of efforts to achieve a smooth transition in a new era of relations.
“You said that China-U.S. relations can only be friendly. I express my appreciation for this,” Xi said.

24 January
Michael Den Tandt: Batten the hatches — China and the U.S. poised to clash as never before
all the signals coming from senior Trump administration officials — from the president himself, with his Taiwan-friendly Tweets, on down — are not of waning interest in the Pacific region, but waxing. Only rather than the softish power of multilateral trade ties, the primary instrument of American power projection will be military — aircraft carriers and nuclear deterrence.
(National Post) The president’s executive order withdrawing the United States from the Trans Pacific Partnership trade agreement, far from pulling America back from the Pacific region, sets the stage for an old-fashioned superpower standoff there.
Long before the TPP (which had comprised Australia, New Zealand, Japan, Singapore, Malaysia, Vietnam, Brunei, Chile, Mexico and Peru, Canada and the United States) ran afoul of right-wing nativists and left-wing populists in the United States, it was an Obama administration strategy for containing the increasingly impatient regional muscle-flexing of Communist China.
The U.S. Navy is the guarantor of last resort for international law and international shipping through the South China Sea, worth an estimated US$5-trillion annually. China is attempting to assert a claim over much of that open ocean, contained by its so-called nine-dash line, as well as a group of small islets in the East China Sea in Japan’s Okinawa Prefecture.
Chinese incursions into territory long claimed by its neighbours have become commonplace in recent years, causing Japan to re-garrison its farthest-flung islands. Regional nerves have been further frayed by the People’s Liberation Army’s rapid building of various regional shoals and reefs into what appear to be air strips and fuel depots.

10 February
Trump changes tack, backs ‘one China’ policy in call with Xi
(Reuters) U.S. President Donald Trump changed tack and agreed to honor the “one China” policy during a phone call with China’s leader Xi Jinping, a major diplomatic boost for Beijing which brooks no criticism of its claim to self-ruled Taiwan.
Trump angered Beijing in December by talking to the president of Taiwan and saying the United States did not have to stick to the policy, under which Washington acknowledges the Chinese position that there is only one China and Taiwan is part of it.
A White House statement said Trump and Chinese President Xi had a lengthy phone conversation on Thursday night, Washington time.
“President Trump agreed, at the request of President Xi, to honor our ‘one China’ policy,” the statement said.

20 January
China now the unlikely champion of free trade in the Trump era
(Globe & Mail) Here stood the authoritarian successor to thousands of years of cloistered imperial rule addressing the distillation of the Western liberal approach that populates the World Economic Forum at Davos, the annual Swiss mingling of titans, stars, soothsayers and heavyweights.
But this year, it was a crowd freighted with fear, searching for comfort from the spectre of Donald Trump taking office and, plank by plank – a tariff here, a torn-up trade deal there – disassembling the global trade structure that has dominated the latter half of the postwar era.
No wonder, then, that Mr. Xi commanded rapt attention with his presentation of China as the new guardian of borderless trade and custodian-in-chief of international priorities, a responsible and reliable new global leader for the Trump age.

12 December 2016
China warns Trump against ignoring its Taiwan interests
(Reuters) China expressed “serious concern” on Monday after U.S. President-elect Donald Trump said the United States did not necessarily have to stick to its long-held stance that Taiwan is part of “one China”, calling it the basis for relations.
Trump’s comments on “Fox News Sunday”, questioning nearly four decades of U.S. policy, came after he prompted a diplomatic protest from China over his decision to accept a telephone call from Taiwan President Tsai Ing-wen on Dec. 2.
China’s Foreign Ministry said cooperation was “out of the question” if Washington could not recognize Beijing’s core interest on Taiwan, indicating it would reject any effort by Trump to use the issue as a bargaining chip in a long list of commercial and security problems facing the two countries.
Trump says U.S. not necessarily bound by ‘one China’ policy
Trump plans to nominate a long-standing friend of Beijing, Iowa Governor Terry Branstad, as the next U.S. ambassador to China.
But Trump is considering John Bolton, a former Bush administration official who has urged a tougher line on Beijing, for the No. 2 job at the U.S. State Department, according to a source familiar with the matter.

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