China on the ropes: Analyst argues no deal is good deal

by WorldTribune Staff, May 10, 2019

Trade discussions between Chinese supreme leader Xi Jinping’s top trade envoy and his U.S. counterparts in Washington ended on May 10 without an announcement of an agreement.

New U.S. tariffs on $200 billion in Chinese goods went into effect at 12:01 a.m. on Friday, after the two sides were unable to nail down the details of a new trade agreement during talks on Thursday.

U.S. President Donald Trump and Chinese supreme leader Xi Jinping

It appears that Trump’s “biggest deal ever made,” is still not made — and that’s a good thing, an analyst said.

“The last thing the U.S. needs is another broken trade agreement with the People’s Republic of China,” Gordon G. Chang, author of “The Coming Collapse of China”, wrote for The Daily Beast.

President Donald Trump said on May 10 that money received from newly imposed tariffs would be used to purchase agricultural products from U.S. farmers to ship to other countries for food aid. Trump also said waivers on some products would be granted “or go to new source.”

Tariffs, the president tweeted, would make the U.S. “MUCH STRONGER, not weaker. Just sit back and watch!”

Trump also tweeted: “In the meantime we will continue to negotiate with China in the hopes that they do not again try to redo deal!”

Chinese officials have said that Beijing “cannot accept strict and unreciprocal enforcement provisions” of the trade deal “because those would make the agreement look ‘unequal,’ in other words, like a humiliation for their country,” Chang wrote.

“This nationalist narrative is not a good sign because it transforms what should be just a dry commercial matter into a deeply emotional one. Perhaps the America-can’t-disgrace-China position is just cynical. Perhaps the Chinese negotiators know Xi Jinping has no intention of honoring the deal. Beijing for decades has been expert at not keeping trade promises, and Xi, even more than his predecessors, has taken the art of trade predation to a whole new level,” Chang wrote.

Washington-based area trade analyst Alan Tonelson told The Daily Beast that China’s intransigence could leave Trump with little choice. “If the president wants an agreement that serves U.S. interests adequately, he’ll surely need to end the tariff-hike reprieve he granted Beijing in February, raise the levies, and keep increasing them until Beijing knuckles under,” Tonelson said.

Chang noted that “The overriding reality for China is that the country needs the U.S. market. Beijing’s statistics, which normally understate Chinese exports to the U.S. because they do not include transshipments through Hong Kong, show that China’s merchandise trade surplus with the U.S. in 2018 accounted for 91.9 percent of its overall surplus for the year.”

At his once-a-year press conference on March 15, Chinese Premier Li Keqiang had said that “China and the U.S., as two large economies, have become closely entwined through years of development and cooperation It is neither realistic nor possible to decouple these two economies.”

If he was not concerned about that possibility, “Li would not have mentioned it,” Chang wrote.

Some have said that “disengagement” — the American term for decoupling — has been Trump’s goal all along.

“The argument heard with increasing frequency is that all other strategies with China have failed and so the United States should at least try something new,” Chang wrote. “Why do Washington policymakers think that the remedy for decades of failed trade deals with that country is signing up another one?”

China, “unfortunately, at the moment looks too big and proud to accept a rules-based trade order, especially when compliance with agreements and others’ norms is seen as a national indignity. Trump, by threatening to cut off trade, may have hit on a solution to what otherwise looks like an intractable problem,” Chang concluded.

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