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Amid acrimony and low expectations, US-China trade talks to resume
WASHINGTON, Oct 10, 2019 (BSS/AFP) – As they prepared to return to the
negotiating table on Thursday, top Chinese trade officials faced a blitz of
aggressive US maneuvers, with expectations for a grand bargain between both
sides approaching zero.
President Donald Trump — who has taken the global economy on a white-
knuckle ride since launching multi-pronged trade offensives with China and
Europe last year — said Wednesday the outcome was down to him.
“They want to make a deal,” he said at the White House. “The question is
do I want to make a deal.”
US duties on $250 billion in Chinese imports are due to rise in five days
while relations meanwhile deteriorated through the week.
Washington has slapped visa restrictions on senior Chinese officials and
blacklisted more than two dozen Chinese firms, accusing both of persecuting
ethnic Muslims in China’s western Xinjiang region.
The measures have outraged Beijing and in the process penalized major
Chinese players in the artificial intelligence sector, in which both nations
are intense rivals.
Chinese trade envoy Liu He is due to meet Thursday with US Trade
Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
But Trump’s attitude toward the process is subject to sudden change, given
the churning pressures competing for his attention.
He is as usual engulfed in turmoil, facing Democrats’ intensifying efforts
to impeach him and Republicans’ stinging criticism for effectively allowing a
Turkish assault on US-allied Kurdish forces by pulling American forces from
northern Syria.
Markets were nevertheless buoyed on Wednesday by media reports that
Beijing will propose a partial deal to prevent further escalation.
China is willing to bump up purchases of US farm exports and make other
concessions but will stop short of addressing Trump’s core grievances,
according to Bloomberg and The Financial Times.
In return, Beijing would expect a pause on planned increases in US import
tariffs, which are currently scheduled to increase in waves through December.
Earlier in the week, firebrand White House trade adviser Peter Navarro
told NPR that Trump was uninterested in half measures, showing “steely
resolve” instead.
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– ‘More and more friction’ –
“It’s either a big deal or no deal,” he said, adding that any attempt to
reach an incremental bargain would be a “miscalculation by China.”
Washington accuses China of attempting to forge global industrial
predominance through massive state intervention in markets, the theft of
intellectual property, hacking and subsidies, accusations shared by Europe
and Japan.
But Clete Willems, a former Trump trade advisor, said Wednesday a partial
deal could be the president’s best move.
“I don’t think the administration should be afraid of a partial deal,” he
told CNBC, adding that a bargain that came with some structural reforms to
China’s economy could be worth it.
“I think it’s a way that the president can essentially have his cake and
eat it too. He can say, look, I made progress on some real significant things
but I’m still tougher than anyone else has ever been.”
China’s purchases of US soybeans jumped in September after stagnating
during the summer. This could offer some relief to American farms, which have
borne the brunt retaliation in the trade war.
Warning signs for the global economy have blared ever louder in recent
weeks, however, increasing the pressure on both sides to reach a deal.
The International Monetary Fund this week said the trade war was due to
shave nearly $700 billion from global growth next year, with 90 percent of
the world’s nations now experiencing a “synchronized slowdown.”
US central bankers believe the trade war is raising the chances the United
States could slip into recession, according to a readout released Wednesday
from last month’s Federal Reserve policy meeting.
American exports have weakened, manufacturing is now contracting and
business investment has fallen off sharply due to uncertainty created by the
trade war.
And if that slump persists, layoffs could soon follow, eroding consumer
spending and dragging growth down with it, according to the Fed’s minutes.
“We all know the next round of tariffs is going to hurt the United States
as much or more than China,” Wendy Cutler, vice president of the Asia Society
Policy Institute, told AFP on Wednesday.
“I think neither side will admit it but I think they’re both under
pressure to find a way to forestall the next set of tariff increases,” she
added.
“Every month that these trade talks continue, there’s more and more
friction in the relationship.”
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