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Chinese Vice-Premier Liu He and US President Donald Trump signed the phase one trade deal in January. Photo: Reuters

Coronavirus: US-China blame game prompts Beijing hawks to ramp up criticism of phase one trade deal

  • Ahead of China’s crucial ‘two sessions’ policy meetings next week, criticism of the US-China trade deal has grown from state-backed news and social media outlets
  • Analysts suggest Beijing is still committed to phase one, but the gloves are off with regard to how the deal and the US handling of it is discussed in official organs

Hours after top negotiators finished up their first teleconference since the US-China phase one trade deal was signed in January, a blog thought to have ties to officials in Beijing published an aggressive attack on Washington’s perceived muddying of the agreement with the row over coronavirus.

“Everyone with a discerning eye can see that there is a clear logic behind these actions,” read a post on Friday on Taoran Notes, a WeChat account affiliated with the official Economic Daily newspaper, which was closely followed through more than a dozen rounds of US-China trade talks for the inside line from China’s negotiating team.

“Some people in the United States insist that ‘the election situation is greater than the epidemic situation’, and the political interests of the minority are placed above the lives of the majority. Essentially, this is a disregard for life.”

A few days later, the Global Times – a tabloid newspaper published by the People's Daily, the Communist Party's mouthpiece – published an English language-only article saying “sources close to the Chinese government” and “a former Chinese trade official” were “calling for new negotiations and a tit-for-tat approach on spiralling trade issues”.

Neither outlet said the trade deal, barely a few months old, was doomed. Indeed, both trumpeted the importance of the accord.

But the articles show the division that the phase one deal has sewn in Beijing. As in Washington, the deal was not without its detractors in China, even during the negotiating period, as indicated by the dramatic collapse in talks last May, when perceived hardliners in Beijing reacted after seeing the proposed text of the deal for the first time.

Worsening US-China ties over the spread of coronavirus this year have not helped change the minds of the naysayers, even if few believe the Chinese government is serious about renegotiating. Instead, the coronavirus dispute has given a platform for hawks on both sides of the agreement.

“The Global Times report reflects the fact that there are people who are unhappy with the current situation with regard to the Sino-US relations, but [the report] does not reflect the official position and such opinion has always existed in both countries,” said Wu Xinbo, director of the Centre for American Studies at Fudan University in Shanghai.

Whether [China] chooses to go full-on confrontation, or continue to maintain competition without decoupling, that is what we need to pay attention to
Chinese government adviser

With the delayed “two sessions” – China’s annual policy affirming meetings – set to commence next week, there is a sense among analysts that these opposing factions are jostling to get their views out beforehand. On the part of state media, there may also be an effort to ensure no “major surprises” come out of the meetings.

“The timing is very interesting. It could be the party attempting to hedge ahead of the National People’s Congress. We all know that the delegates are told what they are supposed to say, not supposed to say, and how they are supposed to say it. But it will not hurt for the official media to present another perspective, on whether China should revoke the deal,” said Chen Zhiwu, director of the Asia Global Institute at Hong Kong University.

A Chinese government adviser, who did not wish to be identified, said that the two sessions will not have much direct bearing on the trade deal, but the language used will show how Beijing will approach future dealings with Washington.

“Whether [China] chooses to go full-on confrontation, or continue to maintain competition without decoupling, that is what we need to pay attention to,” he said.

Already, however, the souring of relations has been marked by increasingly combative rhetoric on both sides that shows no sign of abating. On Tuesday, for example, Global Times editor Hu Xijin tweeted that the “US government is stupid, and [White House trade adviser] Peter Navarro is a vivid representative of the dumb team”.

Hu has been a consistently aggressive voice against Washington on Twitter for some time, but he has now been joined by the new breed of Chinese “wolf warrior” diplomats, led by Foreign Ministry spokespeople Hua Chunying and Zhao Lijian, who have disparaged US President Donald Trump in language that seemed to be off-limits during the trade talks.

“Key players in Beijing have clearly decided not to pretend to be so nice. They have decided to play hardball. Personally, I think too hard, it does not help China in the long run,” said Chen at Hong Kong University, adding that Chinese officials have “totally accepted the reality that Trump will say anything and fully use the coronavirus to go after China to be re-elected”.

The business end of the trade deal is also not progressing according to plan. China is well behind on its purchasing targets outlined in phase one, which commits it to buying US$200 billion more US products over two years than it did in 2017.

Data wire Agcensus reported that Cofco and Sinograin, China’s state-owned soybean crusher and stockpiler, have started to buy soybeans in bulk in recent weeks, including 400,000 metric tonnes this week alone and 2.3 million metric tonnes since April 20.

But other products have not fared so well, with purchases of corn and wheat slowing after a small spike in March and ethanol purchases behind 2017’s baseline levels. Purchases have “tailed off as the US rhetoric around who is responsible for the Covid-19 outbreak has ramped up,” Agcensus said.

“China’s purchases of US products so far this year are running below levels in either 2017 or 2019. The gap is large for soybeans, transport equipment, and energy. China is still buying sophisticated manufactured products, such as electrical and specialised machinery, at rates higher than we have seen in the past. This might be because China has fewer alternatives to US products for specialised equipment,” read a report from S&P Global on Wednesday.

Customs data on both sides show that rather than ramping up, US-China trade is actually in decline. China’s imports from the US fell by 11.1 per cent in April compared to a year earlier, while Californian ports – the US gateway for imports from China – forecast on Tuesday that 48 cargo sailings would be cancelled between April and July, a 380 per cent increase on the same period in 2019.

Supply chain issues stemming from the coronavirus are a huge factor in the drop in cargo shipments, but the White House in various statements over recent weeks has appeared determined to hold China to its commitments – much to the consternation of Beijing, analysts said, even if other US officials are likely to be more understanding.

He Weiwen, a former senior official at the Chinese consulates in New York and San Francisco, said many in Beijing are “citing the force majeure clause [in phase one]” and calling “for the US to have a more flexible adjustment of the US$200 billion procurement target amid the coronavirus-caused lockdown”.

Additional reporting by Catherine Wong, Frank Tang and Orange Wang

This article appeared in the South China Morning Post print edition as: Virus row elicits Beijing swipes at phase one deal
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