Trade war, day 161: Are U.S.-China relations beyond repair?

Domestic News

Other than the nasty Canada-China hostage situation, described above, which is officially not related to the trade war (though Trump couldn’t help himself but connect the two issues), there is no major news directly about the trade war today.

A small thing to note is that no plans for trade delegation visits in either direction have been reported (Liú Hè 刘鹤 was originally supposed to come to Washington this week, but that was, we assume, delayed by the hostage situation), though the Chinese commerce ministry has publicly invited the Trump team to visit.

Meanwhile, several pieces have been recently published that get at the all-important question of how U.S.-China relations have deteriorated as far as they have, where they might go in the next year, and whether we are headed towards a “cold war” of some type. These are all excellent articles to read for anyone following U.S.-China relations (read the whole articles):

Other trade-war-related links for today:

  • Signals from Chinese officials about stimulus
    US trade war spreading to China’s state-owned enterprises, warns senior government official / SCMP
    “The trade war with the United States is dealing a heavy blow to China’s private-sector businesses and that impact has started to spread to state-sector firms, a senior Chinese government official has warned in a private speech.
    Meng Jianmin, the deputy head of the State-owned Assets Supervision and Administration Commission (SASAC), which supervises China’s state-sector assets, made the comments last week at an internal meeting urging state enterprises to quickly pay invoices for goods and services from private-sector firms to help shore up their finances.”
    China sets sights on ‘powerful home market’ to drive growth through 2019 trade turmoil / SCMP
    “China will try to develop ‘a powerful home market’ to help offset external uncertainties next year, the country’s top leadership agreed on Thursday…The Politburo, the country’s highest decision-making body, said China still had a ‘strategic window of opportunity’ and ‘must firmly focus on getting its own goals accomplished’, state-run Xinhua reported, signalling Beijing’s determination to limit the fallout from the trade tensions on its domestic agenda.”
  • Trade war strategy
    A weakened China tries a different approach with the U.S.: Treading lightly / NYT  (porous paywall)
    “Seemingly against the odds, Beijing decided to take a measured response to the Huawei incident. The Chinese leadership has compartmentalized the situation as a law enforcement dispute while making concessions on trade to help defuse tensions.
    China’s tempered approach is born, in part, out of a position of weakness. The country’s economy is in a sharp downturn, putting political pressure on President Xi Jinping to reach a deal with President Trump.”
  • Beijing influence debate
    Opinion: Who’s afraid of China’s influence? / by Minxin Pei in ASPI Strategist
  • Chinese stock markets up, inbound foreign investment down
    Chinese markets were early to the trade war meltdown. Now they’re not so worried. / NYT (porous paywall)
    China’s foreign direct investment plunges 27.6 per cent in November on trade war worries / SCMP
  • Monthly trade deficit up
    China’s trade surplus with US reaches record level / SCMP
    “China’s exports to the US rose by 9.7 per cent year on year to US$46.2 billion in November, while imports dropped 25 per cent to US$10.6 billion, according to data published by the General Administration of Customs in China on Saturday…Exports to the US are likely to have been bolstered by American businesses front-loading their stock.”
  • Extension to comment period on Commerce Department export rules
    U.S. plan to limit high-tech exports forges on amid trade truce / Bloomberg (porous paywall)
    “Separate from those trade negotiations, the U.S. Commerce Department last month asked for public comment on a list of new technologies that have national-security applications and whether they should be subject to stringent export-control rules. Commerce has extended its comment period by three weeks, to Jan. 10, in response to companies and business groups that have asked for more time to weigh in on the complex process.”
    See analysis of these upcoming export rules from Paul Triolo on SupChina: U.S. efforts to control advanced technology hitting new levels, directed squarely at China
  • Competition in Africa
    U.S. to counter China, Russia influence in Africa: Bolton / Reuters
    Onye Nkuzi on Twitter: “If China did not exist, John Bolton and Trump’s Africa policy would not exist. So what John Bolton outlined is not an ‘Africa policy’, but the African component of America’s China policy. The past is their inspiration. They plan to refight a Cold War against Russia and China.”
    Steve Herman on Twitter: “Billions of dollars of US aid have not stopped terrorism, radicalism and violence and have helped #China and #Russia take advantage of African states, says @AmbJohnBolton. US ‘will not longer tolerate this pattern of aid without effect.’”
    Lyle Morris on Twitter: “This is some of the starkest language I’ve seen from a senior U.S. official about China and Africa. Drawing clear lines in the sand.”
    Evan Feigenbaum on Twitter: “My two cents from experience in other regions: US ‘lines in the sand’ that tell third countries to write China out of their economic story get zero traction. Other governments are not stupid and will ask why the US takes an interest only in the context of competition with China.”

Previously in SupChina’s trade war coverage:

Trade war, day 160: Is Beijing softening Made in China 2025?