China-US trade war: business leaders, officials scrabble to ease rising tensions

China’s vice-minister for commerce meets representatives of American Chamber of Commerce

PUBLISHED : Friday, 22 June, 2018, 7:39pm
UPDATED : Saturday, 23 June, 2018, 3:05pm

Chinese and US officials are making every effort to prevent a raft of threatened trade tariffs becoming a reality next month, but concerns are rising they may fail, sources said.

In Beijing, vice-minister for commerce Wang Shouwen, a key negotiator in the talks, held a two-hour meeting on Wednesday with the American Chamber of Commerce in China, according to two people with knowledge of the matter.

It was the first time in several months that such a senior official had met representatives of the influential lobby group, one of the sources said.

Is Trump’s team ready to restart trade talks with Wang Qishan?

Although he could not provide exact details of the talks, the source said Wang made clear that China was prepared to continue to negotiate as long as the US stopped using the threat of tariffs as a way to pressure on Beijing.

Despite the two countries agreeing in May to put the tit-for-tat posturing on hold, tensions were reignited last week when Washington announced plans to levy 25 per cent tariffs on US$34 billion worth of Chinese products from July 6. Beijing fired back with the threat of tariffs on an equivalent amount of American goods.

The back and forth continued on Monday, with US President Donald Trump threatening to impose additional tariffs on up to US$450 billion of Chinese products, and Beijing vowing to apply “qualitative and quantitative” countermeasures.

While China cannot match the US on a like-for-like basis – it simply does not buy the same value of American goods – exerting pressure on multinational companies that have operations in China could be a way for it to influence US policymakers and ease the trade tension.

US outguns China on trade tariffs but Beijing’s not done yet

Officials at the US National Economic Council have been pressing Washington for clues as to China’s possible next course of action, one of the sources said.

“We know the NEC has called a variety of people in Washington to try and understand what action China could take that would be enough to forestall the tariffs,” the person said.

“It’s unclear, however, if this is something that is being directed from a senior level or if these people are just freelancing.”

There have been suggestions circulating in Washington since last month that China’s Vice-President Wang Qishan may visit the US capital at the end of June or early July to continue the talks.

China said earlier that all of the positive outcomes of the previous talks would be voided if the US implemented the tariffs. And the commerce ministry in Beijing said on Thursday that scheduled talks on the manufacturing and service sectors would also be put on hold.

It remains to be seen if China’s latest comments will affect US strategy as the Trump administration has so far shown no signs of backing away from its hardline stance.

China gives no clues on its response to latest US tariff threat

While the consensus in the US is that action needs to be taken to counter China’s trade and industrial practices, opinion is divided on what instruments should be used, observers said.

While hawks in the Trump administration, led by White House trade adviser Peter Navarro and the US Trade Representative Robert Lighthizer, have called for a complete overhaul of China’s industrial policies, Treasury Secretary Steven Munchin and National Economic Council director Larry Kudlow are more in favour of reaching deals to lower the US’ trade deficit with China.

The primary concern for business leaders is the damage the China-US brinkmanship will do to jobs and the economy in both countries, although US representatives do want China to further open up its markets.

William Zarit, who chairs the American chamber in China, said on Tuesday that the core issue remained reciprocal treatment, “by which China would open its trade and investment markets as widely as America’s markets are open to China”.

“Until that is achieved, no one-off mega-purchases of US products, nor incremental or symbolic Chinese market openings, will result in a long term, sustainable, and mutually beneficial relationship,” he said.