China US trade war

Recently, most people’s attention to US President Trump has focused on his speech on Hong Kong affairs, whether it is “(Chinese President) Xi Jinping goes to the front line with demonstrators,” or “how do they say that Hong Kong is me?” Responsibility, are all eyeing. People have noticed that Trump seems to be putting the Hong Kong issue on the agenda of the China-US negotiations for the first time: “I absolutely believe that China can’t wait to reach a trade agreement, but before that, China should solve the Hong Kong problem humanely.”

In fact, in early August, Trump was still a “no matter” attitude toward the Hong Kong issue. He also said that “Hong Kong should be handled by Hong Kong and China itself.” But under the pressure of the aides and Congress, Trump I also realized that Hong Kong can serve as a bargaining chip for negotiations with China. US media Politico reported on Wednesday (August 14) that including US National Security Adviser John Bolton and other economic advisers, the president should support the Hong Kong demonstrators and put on a tougher stance. Recently, former Democratic presidential candidate Hillary Clinton, Democratic House leader Nancy Pelosi, Republican Senate leader Mitch McConnell and others have repeatedly expressed their views on the Hong Kong issue. Trump, who avoided talking about Hong Kong, became more and more out of place.

But the report also said that Trump is actually not interested in this, he hopes to focus more on trade negotiations with Xi Jinping, and also worried that China will influence the progress of trade agreements. In fact, in Trump’s Twitter on “solving the Hong Kong issue first”, most of the content still focuses on the trade issue: “China has depreciated the renminbi in order to absorb the impact of tariff penalties, and has been printing money in a frenzy. Although for American consumers, In September, the tariffs did not take effect at all, but we still released some goodwill. The tariff list for some goods was postponed until December. It is really good for the United States to postpone tariffs. However, it only helped China, and hoped that they would know how to report and feel our goodwill.”

The “300 billion” tariff is insufficient

In the Trump mouth, “the goodwill of the Zhineng newspaper” refers to the decision of the US Trade Representative Office to delay the tariff collection on Tuesday (August 13): originally scheduled to be added to the $300 billion Chinese goods from September 1. 10% tariff, some goods are excluded based on health, safety, national security and other factors. These include daily consumer goods such as computers, mobile phones, shoes and clothing, which will be delayed until December 15th.

The “other reasons” pointed out by the Trade Representative Office have long been known. However, Trump took the initiative to point out that the move was to avoid the traditional shopping season before Christmas, worrying about the impact on American consumers, and breaking his “regulations are aimed at Chinese exporters, and it is not harmful to Americans.” The discussion. The Beijing side responded to the hope that the US and the Chinese side will follow each other and implement the consensus of the two heads of state in Osaka. On the basis of equality and mutual respect, they will find mutually acceptable solutions through dialogue and consultation.

In addition to the Trade Representative Office’s announcement of the extension of tariffs, last Tuesday, Chinese Vice Premier Liu He was invited to speak with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. On the same day, Yang Jiechi, director of the Office of the Central Foreign Affairs Working Committee, and US Secretary of State Mike Pompeo met in New York to exchange views on China-US relations. Afterwards, China only issued a 60-word manuscript and did not mention the contents of the meeting. The press release issued by the US State Department is also surprisingly short: “Yang Jiechi and Pompeo have an in-depth exchange of views on China-US relations,” which is almost identical to the Chinese version.

In the past few rounds of China-US trade negotiations, even if the two sides made positive progress in negotiations, the press releases they released were far apart. For example, in the case of a press release issued by the two parties after the G20 summit in Argentina at the end of last year, the Chinese document appeared in the words “mutual respect, equality and mutual benefit and proper control”, and the US only described the basics of stopping tariffs and restarting negotiations. fact. This time, the two sides have a tacit agreement. There is a great opportunity for the two sides to have more consensus. Of course, the two countries will remain silent about the meeting, and perhaps they will also discuss the sensitive issues such as Hong Kong and Taiwan.

The US has lowered its stance, which is also related to the recent “warning” of US economic data. Beginning in April this year, although the US economic growth rate and unemployment rate data still showed good results, but the debt rate reflecting investor confidence has fallen, Trump has continued to pressure the Fed to cut interest rates to promote the economy. However, the US economic and trade team may not have thought that the “crisis” came so fast.

On the day after the announcement of the levy of tariffs (August 14th), as investors are not optimistic about the short-term economic prospects, the interest rate of “short-term high interest rates and long-term” in the US debt market is upside down, which clearly releases the signal that the economy is about to decline. First seen since 2007. US stocks plummeted that day, the Dow Jones index closed near the all-day low, at 25,479 points, down 3.05%, the biggest decline since October last year. Trump has always claimed that “China has suffered much more losses in the trade war than the United States”, but this time in addition to acknowledging that “American consumers have also been hit” and facing dangerous economic data, it seems that there is a lack of confidence in continuing toughness.

Short-term reconciliation is too optimistic

Since the outbreak of the China-US trade war, there have been many moments of “clouds and flowers”. After the G20 summit at the end of last year, the negotiations between the two sides reached the level of “document writing” and finally broke the news. At the end of June, the G20 summit in Osaka, the two countries reconciled again, but they also avoided the Shanghai negotiations at the end of July. Billions of dollars in Chinese goods. To make matters worse, despite repeated and repeated trades, the scale of trade wars is still “stepped up”. Even if some of the projects of the Trade Representative Office are released, there will still be nearly $120 billion worth of Chinese goods to be taxed on September 1. .

Not only the United States, but China is also plagued by the economic downturn brought about by trade wars and its own structural reforms. China’s industrial added value above designated size increased by 4.8% year-on-year in July, the worst record since 17 years and a half; the urban unemployment rate also rose to 5.3%, the highest since China announced this data. Despite this, China and the United States are only trying to avoid the deterioration of the situation, and they are not eager to “reach an agreement.” The main reason is that the expectations of the two countries are too large.

After several rounds of negotiations, the two countries are very clear about each other’s bottom line: China cannot make concessions on principled issues, weaken its own industrial policies, allow US supervision, and promise not to counter the follow-up actions of the US. These US demands are equal to let China “fully serve” It is difficult for the United States to accept a plan of “adding only American goods”, and not to mention that the White House will not agree. Congress and the US media will also regard Trump’s concession as “a humble knee to China.” Helpless Trump accumulates political capital.

On the other hand, despite the “small crisis” in the economies of both sides, there is still considerable distance from the “out of control situation” that the outside world fears before the outbreak of the trade war. On the Chinese side, despite a slight decline in GDP growth, it remains at a high level among developing countries. Although a large number of companies whose main business is exporting to the US are moving their factories out of China, the foreign direct investment data to China has not decreased.

As for the United States, although Trump delayed the collection of tariffs because of “worry about the interests of American consumers,” the overall price of the trade war was not affected. In June of this year, the US consumer price index (CPI) rose by only 1.6% compared with the same period of last year, and the increase was quite moderate; the PPI reflecting raw material prices only rose by 1.7%. The factory moved out of China moved to neighboring countries to fill the gap: in the first quarter of this year, the total US imports from China decreased by 13.6%. In the same period, Vietnam’s exports to the US increased by 40%, and South Korea also increased by 18%.

What the China-US relationship should look like

Since the outbreak of the China-US trade war, American hawks hope that China can “completely change the system” and “open up the market in an all-round way.” When it is found impossible, it turns to hope that China and the United States will reduce economic ties and achieve “decoupling.” As the former US Treasury Secretary Henry Paulson said, under this logic, “China is not only a strategic challenge for the United States, but its rise is at the expense of US interests.” Perhaps Trump may not have such a cognition, but this idea is gradually becoming a new consensus in the political circle of Washington. The current trade war situation also provides a hotbed for “decoupling.” As a result of the negotiations, the company remained highly uncertain, and the foreign investment in the United States “can go away” and accelerate the withdrawal from China. Second, China and the United States have not “teared their faces,” so that capital has enough time to leave.

However, the Chinese attitude toward the “decoupling theory” has shifted from the initial “strong disinfection” to the current calm. At the beginning of the trade war, Beijing is willing to exert influence on Washington through the “old friends of the Chinese people”: Paulson, former Secretary of State Kissinger and others all visited China and met with senior Chinese officials. Chinese Ambassador to the United States Cui Tiankai also led Trump’s son-in-law Kushner, hoping that the latter would persuade Trump friends to stay in China. However, as Kushner was first ruled out of the decision-making circle against China, “old friends” also expressed their ignorance in the United States. The Chinese side also realized that the economic and trade relationship as the “ballast stone” of China-US relations has gradually lost its effect. China-US relations have undergone fundamental changes.

Judging from the current development situation, China and the United States will maintain a “catch-up situation” for some time to come, and the gap between the two countries will continue to narrow. When one hundred years of hegemony is threatened, it is normal for the United States to have resentment and hostility. In the face of structural contradictions, what China has to do is not to “resolve contradictions” but to “control contradictions” so that the relationship between the two sides will not hinder the overall economic development of China. In the past year and a half, Beijing has indeed done it. at this point.

In the future economic and trade negotiations, it is a good thing for China and the United States to talk about nature. It is not a problem to talk about it. What’s more, even if the “economic and trade issues” were resolved within Trump’s tenure, the next president would also play “human rights cards” and “Hong Kong and Taiwan cards” in an atmosphere of non-friendliness against China. The root causes of the two countries still exist. If this is the case, it is better to shift the diplomatic focus elsewhere: whether it is to promote the China-Japan-Korea Free Trade Zone, or to play a mediating role in the recent conflict between India and Pakistan, or to strengthen relations with the EU and the UK, it is more difficult than cracking the China-US structure. Sexual contradictions have come small, and at a time when the multipolar pattern is increasingly formed, the results are not at all small.

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