Why Beijing isn’t playing blame game with its white paper on trade war
- Economist says ‘unreliable entities’ list is about strengthening Beijing’s hand
- State Council’s paper played to domestic and overseas audiences
China’s white paper on the trade war with the United States was not about playing a blame game with Washington, but preparing Beijing for a return to the negotiating table, Chinese analysts said.
In an unusual move, the State Council published the paper on Sunday to put China’s side of the dispute. Focus fell on the part where Beijing said that the US should bear responsibility for the breakdown in the months-long trade talks.
On Monday, the US repeated its claim that China had back-pedalled on the deal. The Office of the US Trade Representative and the US Treasury said Washington’s demand for detailed and enforceable commitments to trade reform and open markets “in no way constitutes a threat to Chinese sovereignty”.
“The United States is disappointed that the Chinese have chosen in the ‘white paper’ and in recent public statements to pursue a blame game misrepresenting the nature and history of trade negotiations between the two countries,” the agencies said.
Chinese analysts who talked to the South China Morning Post before the release of the US statement said Beijing was not allocating blame, it was telling the US it would not “give ground on matters of principle” but at the same time it was willing to commit to “credible suggestions”.
Ding Shuang, chief China economist at Standard Chartered Bank, said China’s plan for a watch list of “unreliable” foreign entities deemed to have damaged the interests of Chinese firms and its threat to limit exports of rare earths minerals critical to the manufacture of semiconductors, were aimed at strengthening Beijing’s hand for negotiations.
“While China recognises the difficulty with bilateral relations even with a trade deal reached, it is still willing to do whatever is possible to delay a potential conflict between the two countries,” Ding said.
China says US ‘solely to blame’ for collapse of trade talks, but door remains open for negotiation
The trade war, initiated by Washington last year, has damaged China’s trade and investment. Chinese exports to the US have fallen for five months in a row and were down 9.7 per cent year on year in the first four months of 2019.
Chinese investment in the US continued to fall, while growth in US investment in China has slowed.
According to Chinese statistics, direct investment by Chinese companies in the US was US$5.79 billion in 2018, down by 10 per cent on 2017. In 2018, US investment in China was US$2.69 billion, up by 1.5 per cent year on year compared with an increase of 11 per cent the year before.
Mei Xinyun, a research fellow affiliated with the Ministry of Commerce, said China wanted to break the ice with the US before the G20 summit in Osaka, Japan, this month.
Mei said there were hopes in China that President Xi Jinping and US counterpart Donald Trump would agree to some kind of deal “just like the ceasefire they announced [at the G20] in Buenos Aires last year” – if the leaders meet.
Mei said the white paper could kick-start trade talks with the US by clearly stating Beijing’s bottom line and reducing the chance of miscalculations by negotiators.
Wang Huiyao, founder and president of Beijing-based non-governmental think tank the Centre for China and Globalisation, said the white paper was not only about trade with the US – China wanted to send a message to other countries, particularly those going to Osaka.
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“No matter if others buy it or not, it’s important to state your position,” Wang said. “China has not been doing much in this regard and we are now learning how to catch up [with the US] in communicating our position to the rest of the world.”
The white paper was also meant for a domestic audience. In it, Beijing stressed the need to respect “sovereign affairs” as a key prerequisite for further talks, which analysts said was an attempt to address political pressures building at home.
“The top leadership does not want to give the impression that China is bowing to US pressure,” an international relations expert said.
“The focus on sovereign affairs is aimed at soothing strong concerns that Beijing has offered, or will offer, the US too much and undermine the ruling basis of the Communist Party of China.”
The white paper did not define “sovereign affairs”, but a source said that one of the key issues concerned the “enforceable commitments” that Washington insisted should be written into any trade agreement with Beijing.
The US stipulated that it could impose additional tariffs on Chinese products if it was not satisfied with the progress of the agreement and China had to promise that it would not levy tariffs in retaliation.
At a government-sponsored seminar on China-US relations in Beijing on Friday, a group of former Chinese officials accused the US of using the trade talks to undermine China’s national security on issues such as Taiwan and the South China Sea. They did not elaborate.
Beijing to blacklist ‘unreliable’ foreign entities that ‘hurt interests of Chinese firms’
Gu Su, a political analyst at Nanjing University, said he was disappointed by the white paper because it did not clearly state what “sovereign affairs” were and how they would be affected by US demands.
“The paper was supposed to give a clear picture about what happened [in the trade talks] and how it developed into a stalemate – to help the [Communist Party] ease political pressure from Chinese society, intellectuals, officials and the inner circle of the party. However, it failed to achieve that,” he said.
“Both China and the US have chosen not to reveal the complete picture, shamefully keeping the public in the dark.”
Additional reporting by Shi Jiangtao
