Francis Moriarty: Is US-China trade at the brink?

Posted

WILLIAMSTOWN — China and the U.S. are locked in a round of brinkmanship over trade tariffs that right now look as likely to end in an impasse as they are to find a mutually acceptable deal.

That's because deadlock is a circumstance that for very different reasons suits each side after having shown their respective opening positions.

President Trump considers himself a master dealmaker and eventually we'll find out. But as anyone will know who has ever negotiated with the Chinese (or covered their negotiations) playing with Beijing is like being a weekend card player who looks across the table and sees poker legend Minnesota Slim.

The American side is unlikely to have any clue what Beijing's real position is until the last seconds of the final hour of negotiations.

Those seeking confirmation of China's patience and timing are invited to consult any British diplomat who served on the group that negotiated Hong Kong's return to Chinese sovereignty in 1997.

Or perhaps they might seek the advice of the last colonial governor, Chris Patten (now Lord Patten), who had 17 rounds of talks with China on Hong Kong's political development during which the Chinese team waited until the most embarrassing possible moment (for Patten) before springing the text of a secret agreement between London and Beijing that the British Foreign Office had somehow "forgotten" to mention to the incoming governor when he was being briefed about his new job. It undercut his own proposals.

HARDLINER'S 'DREAM TEAM'

The U.S. trade team, led by Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, is following a script for dealing with Beijing that was crafted by the president's bellicose trade advisor, Peter Navarro, who has firm ideas about dealing with Beijing despite never having done it. Navarro has the backing of Trump's senior policy advisor, Stephen Miller, as well as Trump's National Security advisor, John Bolton. Together, Navarro, Miller and Bolton — joined by Lighthizer— comprise any trade hardliner's "Dream Team."

On the eve of Friday's negotiations, Trump upped the ante — announcing on Twitter that that he was increasing the tariff to 25 percent on $200 billion worth of Chinese imports. Should this tariff hike prove insufficient to get the desired result, he threatened to impose even more increases, while also saying that he was in no rush to reach a deal because higher tariffs were actually good for the U.S. economy.

Article Continues After These Ads

To show that he meant business, he followed up with that move round of increases. It was as if Trump, the property developer, was negotiating with a prospective buyer of a Trump tower.

China's trade delegation is led by Vice Premier Liu He, a veteran bureaucrat. Shortly before heading off for the talks on Friday in Washington, Liu had his own position considerably altered by China's President Xi Jinping, who responded to Trump's threats by taking out his own red pencil and redrafting Beijing's tariff position. This was followed on Monday by another tariff hike on snother $60 billion worth of goods starting June 1.

Ahead of the opening round, Trump told reporters that XI had sent him a "beautiful letter" and indicated that they would speak personally, though no date was given. After the opening round, Liu said that discussions had gone "fairly well." Apparently not well enough, though, to stave off the subsequent volleys fired by both sides. China's latest tariff increases were accompanied by a boilerplate statement from Beijing's Ministry of Finance expressing the hope that Washington would work toward a "win-win" agreement.

China has not openly revealed what it wants from the talks, but this much is safe to assume: Anything that touches on China's perception of its own sovereignty will be off limits. Also objectionable would be any deal that leaves the U.S. the sole judge of whether Beijing is compliant or in violation of the agreed-upon terms.

SEEKS TO SET STANDARDS

China is equally unlikely to accept an agreement under which any organization (e.g., the WTO) that Beijing perceives as a creature of Washington would be in a position to pass judgment on its trade practices or alleged violations of high-tech rules. This touches on China's view of sovereignty. That's one more reason that the Huawei controversy has sparked such a strong reaction from Beijing, which wants to set world standards, not be bound by them.

But how far can China go in raising tariffs? The U.S. imports far more from China than China buys from the U.S. That means that America has far more goods on which it can potentially raise tariffs. At some point, perhaps soon, China will run out of American imports to threaten. Of course, it also also holds a trillion dollars or so in U.S. currency and debt.

Trump needs Xi Jinping's help on North Korea. Xi also has a pressure point in the Taiwan Strait. Then there's that pesky extradition request for Huawei executive Meng Wanzhou, whose detention Trump has now openly linked to trade. In short, the U.S. side has trade chips to play, but so does Beijing. So how far does Team Trump really want to push China?

Francis Moriarty was the senior political reporter for public broadcaster Radio Television Hong Kong (RTHK) covering the return of Hong Kong from British to Chinese sovereignty in 1997. He also was RTHK's lead reporter covering Washington's decision to grant Most-Favored Nation trade status to China.


TALK TO US

If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.



Powered by Creative Circle Media Solutions