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After blinking on trade war, is Trump caving on ZTE?

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Yesterday we noted (paywall) the widespread condemnation in the U.S. of the Trump administration’s deal with China to put the trade war on hold merely to return to the status quo ante, and that Xi Jinping’s special envoy and Vice Premier Liu He 刘鹤 called the result “win-win.” Today Axios has more: A piece titled “Three factors behind Trump’s cave on his China trade war” says that “The president is buckling on his threats to punish China with fundamental, lasting changes to trade tariffs and rules… The reasons are threefold: North Korea, Steve Mnuchin and a lack of focus internally.”

Today’s trade war update:

  • Trump’s kid gloves are on for ZTE: The Wall Street Journal reports (paywall) that the details of a plan to “settle” the ZTE controversy “are still being hammered out,” but that it would potentially “remove the ban on U.S. companies selling components and software to ZTE,” and instead, the company “would be forced to make big changes in management, board seats and possibly pay significant fines.”
  • This latest apparent concession to ZTE comes just eight days after Trump tweeted that he was “working together” with Xi Jinping “to give massive Chinese phone company, ZTE, a way to get back into business, fast.”
  • U.S. Republican Senator Marco Rubio is becoming an extremely vocal anti-China activist. Today he tweeted about the Wall Street Journal ZTE story: “If this is true, then administration has surrendered to #China on #ZTE Making changes to their board & a fine won’t stop them from spying & stealing from us. But this is too important to be over. We will begin working on veto-proof congressional action”
  • “Every American should be alarmed by the reports that President Trump may allow ZTE into American markets,” said Democratic Senator Chuck Schumer, according to Reuters: “Putting our national security at risk for minor trade concessions is the very definition of short-sighted and frankly it would be a capitulation on the part of the Trump administration”
  • One piece of candy China has given the U.S. is the slashing of import duties on passenger vehicles from 25 to 15 percent, starting July 1. But the New York Times says (paywall) that “China’s tariffs for imported cars will still be relatively high, and the change is unlikely to motivate automakers to shift production.”
  • Hostility to Chinese tech continues to grow in Washington, D.C.: Politico reports that it conducted a six-month investigation and found that “the Committee on Foreign Investment in the United States, the main vehicle for protecting American technology from foreign governments, rarely polices the various new avenues Chinese nationals use to secure access to American technology, such as bankruptcy courts or the foreign venture capital firms that bankroll U.S. tech startups.”
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Jeremy Goldkorn

Jeremy Goldkorn worked in China for 20 years as an editor and entrepreneur. He is editor-in-chief of SupChina, and co-founder of the Sinica Podcast.