There is more to the China-US trade war truce than meets the eye
A vaguely worded statement has united the American and Chinese public: both feel they lost a trade war before it even began. Beijing, however, played its hand well, particularly on North Korea, even if it is avoiding the word ‘win’
Beijing and Washington may have cobbled together a deal to pull back from the brink of a damaging trade war but the contrast in interpretations of its implications by officials, media and analysts from both countries makes for fascinating reading.
The joint statement merely said China had agreed to “substantially” decrease the US trade deficit and “meaningfully” increase imports of agricultural products and energy from the United States – with details to be hammered out during the visit of another US delegation to Beijing.
It contained only vague language regarding the vigorous protection of intellectual property rights and curbs on what Washington sees as the rampant theft of US technologies, a focal point of Trump’s previous demands.
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The mostly negative reactions put Trump on the defensive. Trump argued that with the trade deal he had done more than what his predecessors had only talked about. In particular, he underlined that China would buy from American farmers – his traditional support base – as much as they could produce.
Curiously, the word “win” was conspicuously absent from most Chinese state media reports which instead tried their best to explain why China had not given away too much by agreeing to substantially increase imports from the US. With good reason.
Ever since Trump announced plans to impose punitive tariffs on US$150 billion of imports from China, the Chinese media has engaged in strident propaganda, blasting America for acts of “hegemony”, “playing with fire”, and “taking the unilateral approach”. The underlining message was that China would never capitulate to US demands while a gun was pointed at its head.
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In an entry on Weibo, China’s equivalent of Twitter, Yan Xuetong, one of China’s leading experts on foreign relations, raised the pertinent rhetorical question that if that were the case, did it mean the Chinese authorities did not know about these needs or did not want to meet these needs in the past? Other cynics said they would have to thank Trump for doing the right thing to help meet the growing demand of the Chinese people.
Given this context, the vague joint statement might well be couched in a way to save face for Chinese officials. The reality is China is believed to have made concrete commitments and agreed to specific targets regarding its purchases of US agricultural products and energy, tariff cuts in manufacturing, and the opening up of its financial and cultural services sectors (including by importing more American films).
Mnuchin hinted as much to Fox News last Sunday when he said China had agreed to specific targets sector by sector. He said, for example, that China would increase imports of US agricultural products by 35 to 45 per cent this year and double energy imports to US$60 billion annually over the next three to five years.
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One notable thing China did not seem to accept was Trump’s demand that China cut its trade surplus with the US by the headline figure of US$200 billion. It remains unclear if the accumulation of China’s sector by sector commitments comes anywhere close to this figure. However, it is safe to assume that China’s commitments are much bigger and more comprehensive than expected. This is what has prompted the Chinese media to explain to its audience why more imports of US goods and services are beneficial and how this will help upgrade Chinese industries.
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During the two meetings with Kim, Xi is believed to have impressed on Kim that China would be in a better position to help North Korea revitalise its economy.
The meetings definitely aroused Trump’s suspicions – following them he began to express doubts over his scheduled historic summit with Kim in Singapore next month. He told reporters that Xi may have influenced Kim given North Korea’s recent threats to pull out of the summit on June 12. Those doubts were realised on Thursday when the White House announced Trump, in a letter to Kim, had cancelled the summit.
Trump reportedly made the decision after a North Korean vice-minister of foreign affairs blasted the US vice-president, Mike Pence, on Wednesday as “ignorant and stupid” and said Pyongyang was ready for a nuclear showdown if dialogue with the US failed.
Trump’s abrupt decision has no doubt raised tensions over the Korean peninsula again but it could well be one of his brinkmanship negotiations tactics. Trump said last week that if the Singapore summit did not happen as scheduled, “maybe it will happen later”.
No matter what happens next, China’s role as power broker will become even more important and that should help Beijing gain more leverage in the upcoming trade talks. ■
Wang Xiangwei is the former editor-in-chief of the South China Morning Post. He is now based in Beijing as editorial adviser to the paper