China Blames U.S. for Trade Talks Flop; Targets FedEx
China is ramping up its response to President Donald Trump’s decision to impose higher tariffs on US$200 billion of its exports and blacklist national technology champion Huawei Technologies Co.
Its latest rhetorical salvo is a so-called White Paper that blames the U.S. for the breakdown in trade talks, accuses it of unreasonable demands and implies it uses “beggar-thy-neighbor unilateralism.”
Though the paper released Sunday in Beijing is largely a rehash of well-established policy positions and language, including a requirement that the U.S. must remove all existing tariffs for any deal, it also contains some interesting insights into China’s thinking. Here are some key excerpts:
The paper says Trump’s decision to raise tariffs on US$200 billion of Chinese goods on May 10 was a breach of an agreement reached by Trump and President Xi Jinping:
“These acts contradicted the agreement reached by the two presidents to ease friction through consultation -- and the expectations of people around the world -- casting a shadow over the bilateral economic and trade consultations and world economic growth.”
U.S. Backtracking, Not China
The US has backtracked on its commitments in the China US economic and trade consultations, not the other way around.
“The U.S. government accusation of Chinese backtracking is totally groundless. It is reckless to accuse China of ‘backtracking’ while the talks are still under way.”
"From late March to early April, the working teams of the two countries held another three rounds of high-level consultations and made substantial progress. Following numerous rounds of consultations, the two countries had agreed on most of the issues. Regarding the remaining issues, the Chinese government urged mutual understanding and compromise for solutions to be found. But the more the U.S. government is offered, the more it wants. Resorting to intimidation and coercion, it persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, which only served to delay the resolution of remaining differences.”
“One side should not cross the other’s ‘red lines.’ China will not give ground on issues of principle. Both China and the U.S. should see and recognize their countries’ differences in national development and in stage of development, and respect each other’s development path and basic institutions. The right to development cannot be sacrificed, still the less can sovereignty be undermined.”
While the U.S. administration accuses China of stealing its intellectual property and forcing American companies to transfer their technology to Chinese competitors to gain market access, China sees things very differently:
“Turning a blind eye to China’s unremitting efforts and remarkable progress in protecting intellectual property and improving the business environment for foreign investors, the U.S. issued a myriad of slanted and negative observations, and imposed additional tariffs and investment restrictions on China, provoking economic and trade friction between the two countries.”
A key concern for the U.S. is how a deal would be enforced, especially if existing tariffs were removed, as China demands. China’s message is there’s no need to worry:
“The 11 rounds of high-level consultations have made significant progress...China has kept its word during the consultations. China has emphasized repeatedly that if a trade agreement is reached, it will honor its commitments sincerely and faithfully.”
Economists and former officials interpreted the paper differently.
The key message is that “China is willing to work together with the U.S. to find solutions,” said Ding Shuang, chief China and North Asia economist at Standard Chartered Bank Ltd. in Hong Kong. “It is still willing to do whatever is possible to delay a potential conflict between the two countries.”
Enodo Economics in London saw the paper as alarming in many ways. “While it’s not necessarily an escalation of the conflict, it’s a confirmation that China is digging its heels in and preparing for a drawn-out geopolitical conflict with the U.S.,” said chief economist Diana Choyleva in London. “Prepare for the Great Decoupling.”
“The white paper signaled that the trade standoff between China and the U.S. will be prolonged,” said Zhou Xiaoming, a former commerce ministry official and diplomat. “Don’t expect China to take the initiative to resume the talks. Before Washington makes concessions in key issues, even if the US wants to resume talks, the Chinese side may not respond.”
--With assistance from Miao Han