JWG via DTN 15 January 2023 JT and Rae have been reading the tar baby saga and are trying hard…
Trump administration U.S./China relations May 2019 – June 2020
The Thucydides Trap: Are the U.S. and China Headed for War?
By Graham Allison
(The Atlantic) In 12 of 16 past cases in which a rising power has confronted a ruling power, the result has been bloodshed.
The defining question about global order for this generation is whether China and the United States can escape Thucydides’s Trap. The Greek historian’s metaphor reminds us of the attendant dangers when a rising power rivals a ruling power—as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago. Most such contests have ended badly, often for both nations, a team of mine at the Harvard Belfer Center for Science and International Affairs has concluded after analyzing the historical record. In 12 of 16 cases over the past 500 years, the result was war. When the parties avoided war, it required huge, painful adjustments in attitudes and actions on the part not just of the challenger but also the challenged. (24/09/2015)
The Endangered Asian Century – America, China, and the Perils of Confrontation
By Lee Hsien Loong, Prime Minister of Singapore
Asia has prospered because Pax Americana, which has held since the end of World War II, provided a favorable strategic context. But now, the troubled U.S.-Chinese relationship raises profound questions about Asia’s future and the shape of the emerging international order. Southeast Asian countries, including Singapore, are especially concerned, as they live at the intersection of the interests of various major powers and must avoid being caught in the middle or forced into invidious choices.
(Foreign Affairs) In Southeast Asia, the U.S. Seventh Fleet has contributed to regional security since World War II, ensuring that sea lines of communication remain safe and open, which has enabled trade and stimulated economic growth. Despite its increasing military strength, China would be unable to take over the United States’ security role. Unlike the United States, China has competing maritime and territorial claims in the South China Sea with several countries in the region, which will always see China’s naval presence as an attempt to advance those claims.
Another obstacle that would prevent China from taking over the security role currently played by the United States stems from the fact that many Southeast Asian countries have significant ethnic Chinese minorities, whose relations with the non-Chinese majority are often delicate. These countries are extremely sensitive about any perception that China has an inordinate influence on their ethnic Chinese populations—especially recalling the history of China’s support for communist insurgencies in Southeast Asia until the early 1980s. Those sensitivities will constrain China’s role in Southeast Asian affairs for the foreseeable future.
Singapore is the only Southeast Asian country whose multiracial population is majority ethnic Chinese. In fact, it is the only sovereign state in the world with such demographics other than China itself. But Singapore has made enormous efforts to build a multiracial national identity and not a Chinese one. And it has also been extremely careful to avoid doing anything that could be misperceived as allowing itself to be used as a cat’s-paw by China. For this reason, Singapore did not establish diplomatic relations with China until 1990, making it the final Southeast Asian country, except for Brunei, to do so.
Of course, Singapore and all other Asian countries want to cultivate good relations with China. They hope to enjoy the goodwill and support of such a major power and to participate in its growth. Global supply chains—whether for aircraft, cellular phones, or surgical masks—link China and other Asian countries closely together. China’s sheer size has made it the largest trading partner of most other Asian countries, including every treaty ally of the United States in the region, as well as Singapore and nearly every other ASEAN country.
It would be very difficult, bordering on impossible, for the United States to replace China as the world’s chief supplier, just as it would be unthinkable for the United States itself to do without the Chinese market, which is the third-largest importer of U.S. goods, after Canada and Mexico. But neither can China displace the United States’ economic role in Asia. The global financial system relies heavily on U.S. financial institutions, and the renminbi will not replace the U.S. dollar as the world’s reserve currency anytime soon. Although the other Asian countries export more to China than to the United States, U.S. multinational corporations still form the largest source of foreign investments in many Asia-Pacific countries, including Singapore. China’s major companies are starting to invest abroad, but it will be many years before China has multinational corporations of the same scale and sophistication as those based in the United States, which tie global production chains together, link Asia with the global economy, and create millions of jobs.
For these reasons, Asia-Pacific countries do not wish to be forced to choose between the United States and China. They want to cultivate good relations with both. They cannot afford to alienate China, and other Asian countries will try their best not to let any single dispute dominate their overall relationships with Beijing. At the same time, those Asian countries regard the United States as a resident power with vital interests in the region. They were supportive—some more overtly than others—when U.S. President Barack Obama declared that the United States intended to “rebalance” American foreign policy toward Asia. They take comfort that although the Trump administration has raised issues of cost and burden sharing with its friends and allies, it has also put forward a strategy for the Indo-Pacific region and announced its intention to build up the U.S. military’s Indo-Pacific Command.
… The strategic choices that the United States and China make will shape the contours of the emerging global order. It is natural for big powers to compete. But it is their capacity for cooperation that is the true test of statecraft, and it will determine whether humanity makes progress on global problems such as climate change, nuclear proliferation, and the spread of infectious diseases.
The COVID-19 pandemic is a stark reminder of how vital it is for countries to work together. Diseases do not respect national borders, and international cooperation is desperately needed to bring the pandemic under control and reduce damage to the global economy. Even with the best relations between the United States and China, mounting a collective response to COVID-19 would be hugely challenging. Unfortunately, the pandemic is exacerbating the U.S.-Chinese rivalry, increasing mistrust, one-upmanship, and mutual blame. This will surely worsen if, as now seems inevitable, the pandemic becomes a major issue in the U.S. presidential election. One can only hope that the gravity of the situation will concentrate minds and allow wiser counsel to prevail.
In the meantime, Asian countries have their hands full, coping with the pandemic and the many other obstacles to improving the lives of their citizens and creating a more secure and prosperous region. Their success—and the prospect of an Asian century—will depend greatly on whether the United States and China can overcome their differences, build mutual trust, and work constructively to uphold a stable and peaceful international order. This is a fundamental issue of our time.
Will President Trump Stand With Hong Kong?
Time is running out for the free world to speak up.
(NYT Editorial board) With the world fixated on the coronavirus pandemic, with relations with the United States at a low, and with 3,000 delegates gathered in Beijing for the annual propaganda-fest of the National People’s Congress, he evidently concluded that this was the time to pounce, proposing a national security law that could allow Chinese authorities to crack down on civil liberties in Hong Kong.
How this latest showdown plays out could have major ramifications for the future of Taiwan and for China’s behavior in its neighborhood and the world. The question is whether President Trump has the leverage, support or stomach for the fight.
China’s Hong Kong Crackdown Could Put Trump in an Unwelcome Spot
A proposed new security law has senators calling for sanctions. But the president is reluctant to jeopardize his ties to President Xi Jinping.
(NYT) The proposal announced in Beijing on Thursday provoked outrage in Congress, where bipartisan support grew quickly for new sanctions on Chinese officials and entities that Mr. Trump — who has shown limited interest in Hong Kong’s plight and a continued desire to carry out terms of a trade deal with Beijing — may not welcome.
The Rest of the World Is Laughing at Trump
The president created a leadership vacuum. China intends to fill it.
(The Atlantic) Crude propaganda is what China’s leaders do, both at home and abroad, and since the pandemic began they have stepped up their efforts. But even those who are mocking should beware: Anybody who knows any history will be aware that propaganda—even the most obvious, most shameless propaganda—sometimes works. And it works not because people necessarily believe that all of it is true, but because they respect the capabilities or fear the power of the people who produced it.
Propaganda also works best in a vacuum, when there are no competing messages, or when the available alternative messengers inspire no trust. Since mid-March, China has been sending messages out into precisely this kind of vacuum: a world that has been profoundly changed not just by the virus, but by the American president’s simultaneously catastrophic and ridiculous failure to cope with it.
Even the more learned analyses of U.S.-China relations suddenly look out of sync with reality. It’s all very well for think-piece authors or former Trump-administration officials to suggest that a post-pandemic America must change its relationships with China, rally its allies to defy China, and rewrite the rules of commerce to exclude China. But when Trump seeks to lead the world against China, who will follow? Italy might refuse outright. The European Union could demur. America’s close friends in Asia might feel nervous, and delay making decisions. Africans who are furious about racism in China—African students have been the focus of heavy discrimination in the city of Guangzhou—might well do a quick calculation and seek good relations with both sides
The latest detente between Donald Trump and Chinese President Xi Jinping didn’t last long.
After vowing last month to fight alongside Xi against the coronavirus, the U.S. president turned his anger yesterday toward the World Health Organization and its ties with Beijing, announcing a temporary halt in funding for the global body. Trump said the WHO took China’s claims about Covid-19 “at face value” and failed to share information about the pandemic. China defended its response and blasted Washington.
The WHO’s loss of its biggest donor during a pandemic is unprecedented, and Trump’s announcement drew criticism from the likes of billionaire philanthropist Bill Gates and UN Secretary-General Antonio Guterres. Infections are quickly heading toward the 2-million mark, with the U.S. now the epicenter of the outbreak. … And while he may have stopped calling Covid-19 the “Chinese Virus,” his decision to target the WHO could have far-reaching consequences for global health — and relations with Xi.
China’s Coming Upheaval
Competition, the Coronavirus, and the Weakness of Xi Jinping
(Foreign Affairs) A key component of Washington’s strategic confrontation with Beijing is economic “decoupling,” a significant reduction of the extensive commercial ties that the United States and China have built over the last four decades. Those advocating decoupling—such as U.S. President Donald Trump, who launched a trade war with China in 2018—believe that by cutting China off from the United States’ vast market and sophisticated technology, Washington can greatly reduce the potential growth of China’s power. In spite of the truce in the trade war following the interim deal that Trump struck with Xi in January 2020, U.S.-Chinese economic decoupling is almost certain to continue in the coming years regardless of who is in the White House, because reducing the United States’ economic dependence on China and constraining the growth of China’s power are now bipartisan aims.
…decoupling may not depress China’s economic growth as much as its proponents have hoped. But it will certainly have a net negative impact on the Chinese economy, one that may be amplified by the country’s domestic economic slowdown, which is itself the product of a ballooning debt, the exhaustion of investment-driven growth, and a rapidly aging population. The slowdown may be further exacerbated by Beijing’s attempt to shore up near-term growth with unsustainable policies, such as increased bank lending and investment in wasteful infrastructure projects.
The deepest threat to the regime’s stability will come from the Chinese middle class. Well-educated and ambitious college graduates will find it difficult to obtain desirable jobs in the coming years because of China’s anemic economic performance. As their standard of living stalls, middle-class Chinese may turn against the party. This won’t be obvious at first: the Chinese middle class has traditionally shied away from politics. But even if members of the middle class do not participate in anti-regime protests, they may well express their discontent indirectly, in demonstrations over such issues as environmental protection, public health, education, and food safety. The Chinese middle class could also vote with its feet by emigrating abroad in large numbers. …
The events of the past few months have shown that CCP rule is far more brittle than many believed. This bolsters the case for a U.S. strategy of sustained pressure to induce political change. Washington should stay the course; its chances of success are only getting better and better
China’s Xi offers Trump help in coronavirus fight as Wuhan reopens to traffic
(Reuters) Xi’s offer of assistance follows a war of words between Beijing and Washington over various issues, including the pandemic. Trump and other U.S. officials have accused Beijing of a lack of transparency over the outbreak, and Trump has referred to coronavirus as the “Chinese virus” because it originated there late last year.
According to an account of the conversation published by the Chinese foreign ministry, Xi reiterated to Trump that China had been open and transparent.
The Coronavirus Could Reshape Global Order
China Is Maneuvering for International Leadership as the United States Falters
By Kurt M. Campbell and Rush Doshi
(Foreign Affairs) As Washington falters, Beijing is moving quickly and adeptly to take advantage of the opening created by U.S. mistakes, filling the vacuum to position itself as the global leader in pandemic response. It is working to tout its own system, provide material assistance to other countries, and even organize other governments. The sheer chutzpah of China’s move is hard to overstate. After all, it was Beijing’s own missteps—especially its efforts at first to cover up the severity and spread of the outbreak—that helped create the very crisis now afflicting much of the world. Yet Beijing understands that if it is seen as leading, and Washington is seen as unable or unwilling to do so, this perception could fundamentally alter the United States’ position in global politics and the contest for leadership in the twenty-first century.
US intrusions in S.China Sea can be stopped by electromagnetic weapons: experts
The US side is using “freedom of navigation” as an excuse to repeatedly enter the South China Sea to flex its muscles and cause trouble, which are acts of hegemony that violate international law, threatening peace and stability in the region, People’s Liberation Army (PLA) Southern Theater Command spokesperson Li Huamin said after the US naval activities on March 10, noting that the US warship was expelled by Chinese naval and aerial forces
Chinese military experts on Tuesday suggested the use of non-lethal electromagnetic weapons, including low-energy laser devices, in expelling US warships that have been repeatedly intruding into the South China Sea in the past week.
Ships from the Theodore Roosevelt aircraft carrier strike group and America amphibious assault ship expeditionary strike group sailed together in the South China Sea on Sunday for expeditionary strike force drills, the US Pacific Fleet said on its Twitter account on Monday.
This is the third time in just a week US warships are known to have trespassed into the South China Sea: US guided missile destroyer McCampbell on March 10 trespassed into China’s territorial waters in the Xisha Islands, and amphibious assault ship America and littoral combat ship Gabrielle Giffords sailed in operations in the South China Sea on Friday.
To counter US’ repeated trespasses into Chinese territorial waters, the Chinese military has the option of using new approaches, including the deployment of electromagnetic weapons, Song Zhongping, a Chinese military expert and commentator, told the Global Times on Tuesday.
Related: Chinese air and naval forces expel US warship in South China Sea
Huawei Is Winning the Argument in Europe, as the U.S. Fumbles to Develop Alternatives
Germany seems poised to follow Britain in letting the Chinese maker build next-generation networks, despite last appeals from the United States.
(NYT) America’s global campaign to prevent its closest allies from using Huawei, the Chinese telecom giant, in the next generation of wireless networks has largely failed, with foreign leaders publicly rebuffing the United States argument that the firm poses an unmanageable security threat.
The United States is now aiming to cripple Huawei by choking off its access to the American technology it needs and trying to cobble together a viable American-European alternative to compete with it.
The Huawei fight is just one part of a bigger U.S.-China battle, as Washington tries to contain Beijing’s influence and power and ensure that the world’s second-largest economy does not come to dominate advanced industries that could give it an economic and military edge. That includes the next-generation telecommunications networks that Huawei is building, known as 5G. Those superfast networks will control communications, critical infrastructure and, most worrying for American officials, the “internet of things” devices that are already controlling factories, autonomous vehicles and the day-to-day operations of military bases.
The United States is also trying to limit China’s access to American technology more broadly and is considering restricting sales of microchips, artificial intelligence, robotics and some types of advanced software, along with preventing tech companies from teaming up — or even sharing research — with Chinese firms.
Will the new US-China trade deal end the trade war?
By David Dollar and Adrianna Pita
(Brookings) The U.S. and China recently signed what’s being called “phase one” of a trade agreement, rolling back some tariffs on Chinese goods in exchange for China promising increased purchases of U.S. goods and services. David Dollar breaks down the details of the new deal, including China’s commitments on intellectual property rights and technology transfers, whether the U.S. can increase production to meet those export goals, and the likelihood of any further concessions anytime soon.
“While Mr. Trump and his team celebrate their ‘victory’ over China, don’t expect much fanfare among anyone else.” The recently passed China trade deal may limit some short-term damage to the U.S. economy, but Eswar Prasad says China might end up being the winner when the dust settles.
Trump Gets His Trade Deal, China Gets the Win
China has suffered short-term pain from the trade war, but it stands to gain in the long term.
(NYT) Peace rather than more conflict is finally in the cards, at least temporarily, for the United States-China economic relationship. After many twists and turns, the United States and China are expected to sign a trade deal on Wednesday and have agreed to resume a regular dialogue about their differences. The phase-one agreement leaves many issues unresolved, so tensions between the two countries may continue. But a cease-fire and dialogue are certainly preferable to the alternative — a further escalation of trade and economic hostilities between the world’s two largest economies.
Bloomberg Politics: It was a key promise on the campaign trail, and now Donald Trump is set to deliver — at least somewhat.
The U.S. president is poised today to sign a “phase one” trade deal with China that for the first time would punish Beijing if it fails to make good on pledges related to its currency, intellectual property and trade balance, while unleashing a $200 billion Chinese buying spree in agriculture and energy.
The move is a win for Trump at a crucial time. The Senate is on the cusp of starting its impeachment trial, while tensions with Iran have sparked concern in the Middle East and criticism from within his own party.
It’s also good news for President Xi Jinping. He’s managed to stop the bleeding on a damaging trade war, allowing him to concentrate on China’s slowing economy and ongoing protests in Hong Kong.
Now, as Shawn Donnan, Jenny Leonard and Justin Sink write, the big question for Trump is whether the pact actually rewires the relationship between the world’s biggest economies. It’s unclear when talks will start on phase two, which will tackle much thornier issues.
And if voters don’t see any gains, Trump could be in trouble come November.
The Economist: Our first cover of the year looks at the economic and political context of the trade deal that America and China will sign on January 15th after three years of a bitter dispute. The “phase one” agreement trims tariffs and obliges China to buy more from American farmers. But do not be fooled. It is a modest accord that cannot disguise how the world’s central relationship is at its most perilous juncture since before Richard Nixon and Mao Zedong re-established links five decades ago.
The two sides used to think they could both thrive; today each has a vision of success in which the other lot falls behind. A partial dismantling of their bonds is under way. In the 2020s the world will discover just how far this decoupling will go, how much it will cost and whether, as it confronts China, America will be tempted to compromise its own values.
13 – 15 December
Trump’s Trade Wins Are a Triumph of the Trivial
By Heather Hurlburt
The China deal is classic, cynical Trump: point out a problem, make it bigger, and then claim victory over getting back to the starting place, but with less money and credibility.
(New York) The U.S.-China deal, if it is eventually signed, gets at exactly zero of the underlying problems in the U.S.-China trade relationship — the ones that both decimated those old-time manufacturing jobs and have chipped away at America’s technological advantage. It does nothing to change how China supports its industries in ways that are against international rules; nor does China even promise to do better at not stealing technologies developed by U.S. companies and workers.
… China promised to buy an unprecedented $50 billion worth of U.S. agricultural products over the next two years — or at least that’s what the White House says. China’s public statements haven’t given a number, and the two sides didn’t release a shared text, which is never a good sign. Assuming China spends something close to that amount, it will be good news for hard-hit U.S. farmers, but it won’t cover the total cost of the losses from two years of Trump tariffs in addition to the bailouts the government has already paid.
U.S.-China trade deal cuts tariffs for Beijing promise of big farm purchases
(Reuters) – The United States and China cooled their trade war on Friday, announcing a “Phase one” agreement that reduces some U.S. tariffs in exchange for what U.S. officials said would be a big jump in Chinese purchases of American farm products and other goods.
Trade deal may offer only short respite from US-China tensions, observers say
(SCMP) Reaching an interim trade deal could ease tensions between China and the United States for the time being but would not necessarily bolster relations in the long run, according to diplomatic observers.
A so-called phase one agreement may offer only initial relief as both countries’ governments face uncertainties at home, the observers said, cautioning that some of the remaining points of dispute were likely to resurface in subsequent talks, along with the unpredictability of US President Donald Trump.
Although there were rallies and upbeat sentiments across global markets on Friday after US reports that consensus on an agreement had been reached, there was no official confirmation of a deal from either side. It was unclear, for example, what agricultural purchases Beijing and Washington might agree, observers said.
White House offers first details of partial trade deal with China
(WaPo) Even as officials in Washington and Beijing began disclosing the first details, however, critics complained that resolving the most damaging Chinese trade practices had been left to future talks.
Winners and losers in Trump’s ‘phase one’ China trade deal
Winners: [Trump] can trumpet the deal particularly to farmers and manufacturing workers hit hard by the trade war. The China deal (and the recently agreed-upon U.S.-Mexico-Canada trade deal) also make it likely the U.S. economy will grow at 2 percent or more next year, avoiding a recession and helping Trump’s reelection chances.
Farmers. China has committed to buying a record amount of U.S. agricultural products next year, surpassing the prior record of about $26 billion in 2012. ..
Among the Losers: Trump’s had many trade advisers like [Peter] Navarro urging him to keep the tariffs on and push China for a bigger deal that would include China committing to no longer subsidize key industries and steal U.S. trade secrets. Instead, Trump scaled back tariffs and settled for a much less ambitious agreement. Trump promises there will be a “phase two” after the election, but many fear this will end up being a one-and-done deal.
Trump: Xi Jinping Is a Bloodthirsty Tyrant – and an ‘Incredible’ Friend
(New York) The president proceeded to explain that “if it weren’t for me, Hong Kong would have been obliterated in 14 minutes. [Xi]’s got a million soldiers standing outside of Hong Kong that aren’t going in only because I asked him, please don’t do that. You’ll be making a big mistake. It’s going to have a tremendous negative impact on the trade deal. And he wants to make a trade deal.”
One should probably interpret Trump’s remarks on this subject (and/or, any subject) as a pack of self-aggrandizing lies. It is unlikely that Xi has held off on mass murdering Hong Kong’s protesters solely out of fear of Donald Trump’s personal commitment to safeguarding democratic freedom overseas. Still, it’s notable (if unsurprising) that Trump failed to recognize any tension between boasting about how he personally stopped the Chinese president from committing an atrocity, and bragging that he and that president are very good buddies.
Henry Kissinger warns of ‘catastrophic’ conflicts unless China and US settle their differences
‘It will be worse than the world wars that ruined European civilisation,’ says former secretary of state and adviser to Richard Nixon
One side cannot dominate the other – and they have to get used to that, veteran diplomat says
China, U.S. agree to roll back tariffs as part of trade deal: officials
(Reuters) China and the United States have agreed to cancel in phases the tariffs imposed during their months-long trade war, the Chinese commerce ministry said, without specifying a timetable. An interim U.S.-China trade deal is widely expected to include a U.S. pledge to scrap tariffs scheduled for Dec. 15 on about $156 billion worth of Chinese imports, including cell phones, laptop computers and toys.
Exclusive: U.S.-China trade deal signing could be delayed to December; London a possible venue – source
(Reuters) – A meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.
Bloomberg Politics: Chinese President Xi Jinping is suddenly sitting pretty in Asia, thanks largely to missteps by two of his biggest rivals: U.S. President Donald Trump and Indian Prime Minister Narendra Modi.
Modi abruptly pulled out of a 16-nation regional trade deal yesterday, removing a key counterbalance to China. That’s bad news for Japan, which urged India to stay in.
U.S. influence also took a hit from Trump’s no-show at a regional summit in Bangkok. Southeast Asian leaders responded by snubbing a meeting with National Security Adviser Robert O’Brien.
What’s more, China’s asking price is becoming clear for Xi to head to the U.S. and sign a deal centered on agricultural purchases that Trump is seeking ahead of next year’s election. … Beijing wants tariffs scrapped on as much as $360 billion of Chinese imports before Xi gets on the plane.
The Chinese leader made a pledge to a trade expo today that the phase-one deal would lead to other measures to open China’s markets. But investors are doubtful: The European Chamber said many agreements reached last year saw “no follow-through.”
Still, with Trump and Modi on the sidelines, Xi may not need to worry. — Daniel Ten Kate
US-China trade war: who wanted a deal the most? Just look at the concessions made by both sides
Washington offered one concession – deferring the October 15 tariff hikes – while Beijing backed down on US farm purchases, IP and tech transfers, financial market liberalisation, exchange-rate reform and an enforcement mechanism
(SCMP) Negotiation is all about give and take. And the party more eager to get a deal done will give more. That is why Beijing made more concessions than Washington in the just-concluded first-phase deal after their marathon trade talks.
Hopes were dim for any such deal in the weeks leading up to the 13th round of talks amid a number of controversies including: China’s quarrel over a National Basketball Association general manager’s support of Hong Kong protests; the passing of the Hong Kong Human Rights and Democracy Act in the US House of Representatives; the Trump administration’s reported discussions around possible restrictions on capital flows into China; the US blacklisting more Chinese tech firms; and a travel ban on officials linked to human rights abuses in Xinjiang.
However, the political turbulence did not deter negotiators from striking a deal, as both nations want to end the tariff war that is badly hurting their economies. Politically, both US President Donald Trump and his Chinese counterpart Xi Jinping also wanted a deal in the face of their respective unprecedented challenges.
Trump needs a quick deal to end the trade war that’s hurting American companies, farmers and consumers, and which will imperil his re-election chances. He also faces an uncertain political future amid an impeachment inquiry in the House of Representatives.
But Xi might be more eager for a deal as nothing in today’s Chinese politics is more important than economic growth and China-US relations – two critical and interconnected issues. Once the world’s fastest-growing major economy, China has lost momentum over the past decade, with a steady downturn.
Trump praises U.S.-China trade talks as Beijing seeks billions in WTO case against U.S.
(Reuters) – U.S. President Donald Trump on Monday said efforts to end a U.S. trade war with China were going well as the world’s two largest economies continued to battle over trade and politics across the world despite heralding a long-awaited truce this month.
Trump last week said he hopes that the first phase of a trade deal announced earlier in October will be signed by the middle of next month.
1 – 2 September
China launches WTO case against U.S. tariffs
(CBC) The latest tariffs actions violated the consensus reached by leaders of China and the U.S. in a meeting in Osaka, the Commerce Ministry said in the statement. China will firmly defend its legal rights in accordance with WTO rules, it said.
The U.S. under the Trump administration has said the WTO is making trade unfair for American companies and is blocking attempts to appoint new people to a panel to adjudicate cases as it takes an increasingly protectionist stance.
Trump can’t afford to win any more trade wars
The president’s team are wrong on all counts when it comes to China and are fighting a losing battle
(Asia Times) How can Trump’s China team be so far off in misreading the strength of China’s economy? Because they are lulled by the complacent feeling that America remains exceptional, that China only knows how to steal and copy and further that China will grovel when faced with the threat of tariffs. They are wrong on all counts.
Trade negotiator Robert Lighthizer, a trained lawyer, doesn’t know much about economics and believes that the only way to reduce the trade deficit with China is to levy tariffs on imports from China. Trump’s China advisor Peter Navarro never knew much about China and quite willingly pretended that he doesn’t know much about economics either – just like his boss.That way he can stroke Trump’s ego with the line of nonsense that a trade war with China is easy to win.
The Trump China team never bothered to find out what’s going on in China. If they had, they would realize total foreign direct investments into China in the first half of 2019 actually increased by 1.5% from the previous year. In other words, companies are not backing out but continue to invest in China because, unlike Trump, they believe in China as an attractive place to do business.
China’s GDP increased by 6.5% last year, only 1.5% was due to exports – and obviously exports to America contributed only a fraction of that. In other words, exporting to the US wasn’t as important to China’s economy as Trump had imagined.
Trump’s only strategy to counter China is to levy more tariffs and threaten to levy more. He has publicly asserted repeatedly that tariffs collected is “free” money being paid by China.
Someone needs to tell him that the free money is hurting the American consumer by raising the cost of goods and draining the American pocketbook. The money isn’t free and not coming from China.
As Trump Escalates Trade War, U.S. and China Move Further Apart With No End in Sight
By Ana Swanson
(NYT) President Trump’s trade war with China entered new territory on Sunday as his next round of tariffs took effect, changing the rules of trade in ways that have no recent historic precedent and driving the world’s two largest economies further apart.
American tariffs on foreign goods had already climbed higher than any time since the 1960s before Sunday, when the United States imposed a new 15 percent tariff. The levies on food, clothing, lawn mowers and thousands of other “Made in China” products come as the president prepares to tax nearly everything China ships to America.
China has responded by raising barriers to American companies and their products, while easing them for other nations.
American companies that once believed the trade war would blow over are now scrambling to limit their exposure to China, in some cases shifting production to other countries, like Vietnam, to avoid tariffs that will soon reach as much as 30 percent.
Mixed messages from Trump on China trade war during G7
(Global news) Injecting fresh uncertainty at a time of global economic jitters, President Donald Trump sent mixed messages Sunday on the U.S.-China trade war as leaders at a global summit pushed the unpredictable American president to ease frictions over tariffs and co-operate on other geopolitical challenges. Trump’s head-snapping comments at the Group of Seven summit about his escalating trade fight with China — first expressing regret, then amping up tariff threats — represented just the latest manifestation of the hazards of the president’s go-it-alone mantra. Allies fault his turbulent trade agenda for contributing to a global economic slowdown.
Two days after the U.S. and China traded a fresh round of retaliatory tariffs and Trump threatened to force U.S. businesses to cut ties with China, the president appeared to harbour qualms about the trade war, which has sent financial markets tumbling.
Trump Is Melting Down Because China Won’t Give In on Trade
By Jonathan Chait
President Trump is in the midst of a public meltdown that is humiliating, scary, and banana republic–y even by Trumpy standards. The reason is that Trump started a trade war and China refuses to back down, having announced this morning that it is imposing retaliatory tariffs on $75 billion worth of U.S. goods.
Trump is pressuring China with tariff threats, on the theory that China, which is more export-dependent than the U.S., has more to lose from a trade war. China, apparently, calculates that it is Trump who has more to lose from a trade war, since he is facing reelection next year and Chinese president Xi Jinping is facing reelection … never. What’s more, China has little incentive to cough up permanent concessions in its trade relations with the U.S., given that there’s a better-than-even chance Trump will lose and it can just wait for the next president.
This has provoked one of Trump’s wilder public tantrums. First, he has lashed out at Federal Reserve chair Jay Powell, who has become Trump’s scapegoat for bad economic news despite the fact that it was Trump who appointed him to the job. (“Trump installed a Fed chair who is singlehandedly destroying the economy” sounds like an attack on Trump, but oddly enough it is Trump’s own argument.)
Bloomberg Politics: Did U.S. President Donald Trump just blink in his trade war with China?
His move to delay new tariffs on a wide range of consumer products … until December suggests an awareness of the impact the penalties are having on American consumers, companies and markets, and potentially on his campaign for re-election next year.
Tellingly, he said the decision was made “so it won’t be relevant to the Christmas shopping season” — a swing from his previous position that China alone bears the cost of the tariffs.
Still, that doesn’t mean there’s a sudden improvement in the atmosphere surrounding the trade talks. While the announcement came after senior officials spoke by phone — “very productive,” Trump said — few expect any breakthrough soon.
Indeed, Beijing may sense its best option is to wait Trump out as the election approaches and his farming base feels the pain of losses in agricultural sales to China.
Trump delays tariffs on Chinese cellphones, laptops, toys; markets jump
(Reuters) Trump’s 10% tariffs will be effective from Dec. 15 for thousands of products including clothing and footwear, possibly buttressing the holiday selling season from some of the fallout from the protracted trade spat between the world’s two largest economies.
Thomas Friedman: How Trump and Xi Can Make America and China Poor Again;
The trade war is heading in a dangerous direction for the whole world.
If President Trump and President Xi Jinping don’t find a way to defuse it soon, we’re going to get where we’re going — fracturing the globalization system that has brought the world more peace and prosperity over the last 70 years than at any other time in history. And what we’ll be birthing in its place is a digital Berlin Wall and a two-internet, two-technology world: one dominated by China and the other by the United States.
This will be a much more unstable and less prosperous world.
1 – 4 August
China lets yuan break key 7 level for first time in decade as trade war worsens
(Reuters) – China let the yuan breach the key 7-per-dollar level on Monday in a sign Beijing might be willing to tolerate more currency weakness that could further inflame a trade conflict with the United States.
The sharp 1.4% drop in the yuan comes days after U.S. President Donald Trump stunned financial markets by vowing to impose 10% tariffs on the remaining $300 billion of Chinese imports from Sept. 1, abruptly breaking a brief ceasefire in a bruising trade war that has disrupted global supply chains and slowed growth.
Some analysts said the yuan move could unleash a dangerous new front in the trade hostilities – a currency war.
Brett House on China, America and the global economy (CTV video)
Secretary of State Mike Pompeo and China’s top diplomat Wang Yi met face-to-face for the first time this year and Wang said they discussed ways to promote China-U.S. ties despite “recent disturbances”. The words contrasted with the scorn Chinese officials have heaped on Pompeo recently, with U.S.-Chinese ties souring on multiple fronts, from a trade war to U.S. sanctions on Chinese telecoms giant Huawei to Taiwan and the South China Sea.
Donald Trump hears ‘tough’ details of China’s Xinjiang camps as he meets detained Uygur scholar Ilham Tohti’s daughter
US president has first public meeting with anyone from China’s Uygur community, and makes first remarks on their internment
Action needed on China, he is told as he also meets Falun Gong practitioner and Tibetan Buddhist at gathering of victims of religious persecution
(SCMP) Trump appeared not to know in detail about the internment camps in Xinjiang – which are believed to have begun in early 2017 – asking Ilham where in China the camps were located.
The president also heard accounts from Yuhua Zhang, a practitioner of the spiritual movement Falun Gong whose husband is detained in China, and Nyima Lhamo, a Tibetan Buddhist whose uncle died while imprisoned in Sichuan.
At the same time, however, the US administration has held up economic sanctions against Chinese officials over the camps for fear of derailing progress in trade negotiations with Beijing.
A Koch Executive’s Harassment in China Adds to Fears Among Visitors
(NYT) Amid worsening trade tensions, an American businessman was barred from leaving for days, in an apparent message to President Trump. Others worry they may be next.
A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him. An industry group developed contingency plans, in case its offices were raided and computer servers were seized.
Business executives, Washington officials and other frequent visitors to China who were interviewed by The New York Times expressed increasing alarm about the Chinese authorities’ harassment of Americans by holding them for questioning and preventing them from leaving the country.
“In a very not-so-subtle manner, the Chinese government has upped the ante by detaining Americans at the borders and at their hotels, and with the obvious intent to send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove,” said James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, which works with American companies in China.
Writing in the South China Morning Post, Kevin Rafferty takes a very different position from the enthusiastic Bloomberg view below.
Xi occupies an especially ambivalent place in Trump’s world. Personally, Trump lavished praise on Xi as “a brilliant leader” with whom he had warm conversations. The grimly bemused look on Xi’s face told a different story. Surely, Xi would be forgiven for his suspicions that at the back of Trump’s mind is a great power struggle, and possibly provoking regime change in China.
There was no need for Trump’s elaborate charade of meeting Xi in Osaka, at the end of which he declared a truce, with no more tariffs on Chinese goods while the two countries resumed talks. His announcement of a partial lifting of the ban on US exports to controversial telecoms company Huawei raised questions of whether concerns about Huawei are really related to security. Or are they commercial concerns on which Trump is using US state power against Chinese companies, in a mirror play of accusations against Beijing?
Common sense would have seen the trade truce announced long before, so that the Osaka summit could stimulate discussion of myriad global trade, economic and political and social issues, not least the threat to the Earth’s existence from climate change.
Ryan Hass: What the US and China each got out of the Trump-Xi meeting in Japan
This list is illustrative, not exhaustive. It is intended to highlight the dynamic nature of the U.S.-China relationship. With political will, pragmatism, and determination, a trade deal remains within reach for both leaders. Such an outcome is far from a foregone conclusion, though.
Did Xi Jinping and Donald Trump just get a win-win?
The presidents of the world’s two biggest economies today struck a truce in their trade war, meeting on the sidelines of the Group of 20 summit in Osaka, Japan. It’s the second time they’ve used their personal rapport (Trump called the Chinese leader a “great leader” and friend) to revive talks after an impasse.
The biggest takeaways: The truce is open-ended, giving both sides some breathing space. Trump is willing to let U.S. companies again sell some products to Chinese tech giant Huawei. And he’s leaving a bigger decision on the fate of the company, which the U.S. has called a national security threat, until the end of the broader trade talks.
Trump, with an eye on re-election, spoke repeatedly in Osaka about how getting a deal with China on trade would benefit U.S. farmers. Xi, meanwhile, gets a reprieve on a trade war that’s damaging his economy and can talk up his negotiating credentials at home.
But there are still risks in a high-stakes game for the global economy.
The 2020 vote will play a big role in how things move forward. Trump has bet so far the economy — and stock market — will hold up despite the trade tensions. And Xi must decide whether he would get a better deal with Trump or potentially one of the Democratic candidates, many of whom are advocating an even harder line on China. – Rosalind Mathieson
China, US agree to resume trade talks in phone call ahead of Xi-Trump G20 meeting
Chinese Vice-Premier Liu He speaks to US’ Robert Lighthizer and Steven Mnuchin on Monday, Chinese state media says
Presidents Xi Jinping and Donald Trump are expected to meet on the sidelines of this week’s G20 summit in Japan
(SCMP) The top trade negotiators for China and the United States have agreed to resume discussions to resolve their trade dispute, making the commitment in a phone conversation on Monday ahead of high-stakes talks between the two countries’ presidents in Japan this week.
China Is Cutting Tariffs—For Everyone Else
(The Atlantic) As Trump focuses on disruption, Beijing is evidently operating on a higher level.
Trump started the trade war by levying new taxes on $250 billion worth of Chinese exports. China retaliated both by increasing the duties Americans face and by decreasing the tariffs that confront everyone else: It has cut tariffs on thousands of products from the rest of the world’s fisheries, farmers, and firms.
Even as Tariff Man, as Trump likes to refer to himself, focuses only on disruption, Beijing is evidently operating on a higher level. China is outplaying the United States on two fronts.
First, while Trump is on the verge of slapping tariffs on almost everything the U.S. imports from China, Beijing is picking and choosing wisely. It went to town on American soybeans, in part because it knew that Brazil and Argentina could provide ample alternative supplies. But it has left untouched other American exports that are more difficult to replace.
Second, Trump has no real mitigation strategy to help the Americans facing the entirely foreseeable costs of his policies. Yes, he’s giving out tens of billions of dollars in agricultural subsidies—but that is, of course, a cost borne by Americans, not international rivals. His separate trade restrictions on nearly $50 billion in steel and aluminum imports have only worsened the effects of his fight with China; these restrictions have burdened American farmers by raising the cost of the equipment needed for harvesting or storing the crops they are now unable to sell abroad.
Trump, tariffs and how to start a war
by Gwynne Dyer
THE best way to deal with Donald Trump, especially if you are a foreign government negotiating trade issues, is to give him a little win.
… China is in an extremely vulnerable position. Its exports to America are worth almost three times as much as US exports to China, so it really cannot afford to lose the US market. Chinese President Xi Jinping should just give Trump enough to make him happy – he’s easily pleased – and move on to the next problem.
To the extent that Donald Trump calculates his moves beforehand, this would have been his calculation, and it is logically correct. But it didn’t work out that way: after a year of escalation and counter-escalation, the two countries are nearing the point where they will have imposed 25 per cent tariffs on all of each other’s exports. What went wrong?
Trump issued his usual threats and was the first to escalate at every step of the dance, but if the Mexicans and the Canadians can work around his histrionics, why can’t the Chinese?
Maybe it’s just pride: Xi simply can’t abide the vision of Trump capering with joy as he celebrates his victory over the Chinese. Or maybe it’s fear: letting Trump have a victory (and a real one, this time) would so humiliate Xi in the eyes of his own colleagues and rivals that his own position would be in danger.
Kevin Rudd: Trump hands China an easy win
How the the US president’s tough rhetoric in the trade war plays into Chinese economic nationalism
(IPS Journal) When President Trump tweeted on 5 May that the China trade deal was off, the historical echoes in Beijing were loud and clear. Almost exactly 100 years earlier, China’s ‘May Fourth Movement’ of 1919 was a direct response to the actions of President Woodrow Wilson at the end of World War I. Wilson had promised China, an American ally, that German colonies in Shandong would be returned to Chinese sovereignty, but instead handed them to Japan. China exploded with anti-American, nationalist sentiment. One of the eventual consequences was the establishment of the Chinese Communist Party, which for the last 70 years has ruled the country.
Thus, Mr Trump has handed Xi Jinping a remarkably effective nationalist card to play at a time when he has been under pressure at home because of a slowing economy. The Chinese media is now full of accounts of the country’s economic resilience and appeals to patriotism, even invoking the spirit of the Korean War, when, according to the official narrative, China was able to stare down the vastly superior American military.
Days after the president’s tweets, China listed three ‘red lines,’ positions the United States had taken in the trade talks that were unacceptable. .. These ‘red lines’ were new. Before that, China’s negotiating team had a fully flexible remit from the leadership. But not anymore. Now that these three lines are in the public domain, there is no way Chinese leaders can yield on them. The leaks of large parts of the negotiating text to the American news media has added a new level of toxicity, making it virtually impossible to return to the existing text as a basis of negotiations.
As Trump escalates China trade dispute, economic ties lose stabilizing force in matters of national security
(WaPo) The United States for years relied on economic interdependence with China as a stabilizing force in relations with Beijing, with business between the two nations forming what former treasury secretary Hank Paulson used to call the “ballast” in U.S.-China affairs.
But as President Trump escalates his trade dispute with Chinese President Xi Jinping, there is a realization that those days are gone. The result is a reduced incentive for stability and restraint in Washington when it comes to China, raising the possibility that tensions could extend beyond the trade sphere and impact other areas of contention, including Taiwan or the South China Sea.
The Trump administration has sent mixed messages about what it is seeking to achieve long term with its trade and national security policies on China. Some officials, including Trump at times, suggest economic ties with China will continue apace and possibly even deepen, so long as Beijing agrees to new, fairer rules. Others emphasize American resolve to restrain China’s unfair expansionism and end the economic linkages that have been fueling its rise.
Reuters: The United States must show sincerity if it is to hold meaningful trade talks, China said after President Trump dramatically raised the stakes with a potentially devastating blow to China’s Huawei. Beijing has yet to say whether or how it will retaliate to the latest escalation in trade tensions, which saw Washington put the telecoms equipment giant on a blacklist that will make it difficult for it to do business with U.S. companies. Over the last month the U.S.-China trade war has boosted the risk of a U.S. recession, say a strong majority of economists polled by Reuters, who now put the chances of that happening in the next two years at 40%.
Blacklisting Huawei takes the US-China trade war to a dangerous new level
(CNN Business) Resolving the trade war between the United States and China just got harder. Much harder.
Negotiations between Washington and Beijing were already on rocky ground following new rounds of tit-for-tat tariffs. Then, on Wednesday, the United States dramatically escalated its fight against Huawei, the world’s largest telecoms equipment maker and one of China’s national champions.That could scuttle an agreement entirely.
US bans Huawei from selling telecom gear and threatens its supply chain
… shortly after the order was issued, the US Commerce Department formally added Huawei to the list of companies the US government considers to be undermining American interests. By adding Huawei to the so-called Entity List, the Trump administration ensures Huawei will be covered by the new executive order.
Inclusion on the list also means companies such as Qualcomm (QCOM) may have to apply for US export licenses to continue supplying technology to Huawei.
The executive order — along with Huawei’s addition to the list — comes as Trump is seeking to apply additional pressure on China in trade talks, with stiffer tariffs affecting billions of dollars of goods.
Trade Dispute Between U.S. and China Deepens as Beijing Retaliates
(NYT) The United States and China intensified their trade dispute on Monday, as Beijing said it would increase tariffs on nearly $60 billion worth of American goods and the Trump administration detailed plans to tax nearly every sneaker, computer, dress and handbag that China exports to the United States.
The escalation thrust the world’s two largest economies back into confrontation. While President Trump said on Monday that he would meet with China’s president, Xi Jinping, next month in Japan, the stakes are only increasing as the president continues to taunt and threaten China, causing it to retaliate on American businesses.
Trump Increases China Tariffs as Trade Deal Hangs in the Balance
(NYT) President Trump escalated his trade war with China on Friday morning, raising tariffs on $200 billion worth of Chinese goods and taking steps to tax nearly all of China’s imports as punishment for what he said was Beijing’s attempt to “renegotiate” a trade deal.
Mr. Trump’s decision to proceed with the tariff increase came after a pivotal round of trade talks in Washington on Thursday night failed to produce an agreement to forestall the higher levies. The White House said talks would resume again on Friday but it remains uncertain whether the two sides can bridge the differences that have arisen over the past week.
The renewed brinkmanship has plunged the world’s two largest economies back into a trade war that had seemed on the cusp of ending. The United States and China were nearing a trade deal that would lift tariffs, open the Chinese market to American companies and strengthen China’s intellectual property protections. But discussions fell apart last weekend, when China called for substantial changes to the negotiating text that both countries had been using as a blueprint for a sweeping trade pact.
Reuters Exclusive: China backtracked on nearly all aspects of U.S. trade deal. The diplomatic cable from Beijing arrived in Washington late on Friday night, with systematic edits to a nearly 150-page draft trade agreement that would blow up months of negotiations between the world’s two largest economies, according to three U.S. government sources and three private sector sources briefed on the talks. The document was riddled with reversals by China that undermined core U.S. demands, the sources told Reuters.
Trump threatens seismic shift in trade war with China, suggesting new tariffs on $325 billion worth of Chinese goods
– President Donald Trump threatened to dramatically escalate the trade war with China.
– Trump said that on Friday tariffs on $200 billion worth of Chinese goods will increase from 10% to 25% and the US will slap an additional $325 billion worth of Chinese goods with a 25% tariff.
As it stands the US has placed tariffs on $250 billion worth of goods coming from China, while Beijing has responded with tariffs on $110 billion of American goods.
Economists have warned that a dramatic escalation of the trade war could cause US consumers to pay more for goods coming from the country and potentially cause serious negative consequences for the American economy.
Reuters: His shift in tone came after U.S. Trade Representative Robert Lighthizer told him that Chinese negotiators had pulled back from some prior commitments in talks last week in Beijing, people familiar with the talks said.
Specifically, the Chinese side was seeking to deal with any policy changes through administrative and regulatory actions, not through changes to Chinese law as previously agreed, one person with knowledge of the talks said. … not codifying the concessions would make it difficult to verify and enforce China’s compliance.