We have now crossed into the second half of the 90-day negotiating period, and continue to barrel on toward a deal that falls far short of what U.S. Trade Representative Robert Lighthizer and other American hardliners want, but is also quite possibly enough for Trump to accept as a win.
Lighthizer is disappointed with the lack of “any progress” on “structural issues,” such as intellectual property, economic espionage, and technology transfer in joint ventures, according to Republican Senator Chuck Grassley, quoted in Reuters. But he “commented positively on China’s soybean purchases,” apparently, which have resumed but not yet reached anywhere close to pre-trade-war levels.
Oil purchases may also have resumed: “Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September,” Reuters separately reports.
Lighthizer’s office is operating with just 30 percent of its staff during the current U.S. government shutdown, CNBC reports.
The trade war helped fuel a 90 percent drop in direct investment from China to the U.S. from 2016 to 2018, data from the Rhodium Group shows. Such investment in 2018 reached just $4.8 billion, whereas it totaled $29 billion in 2017 and $46 billion in 2016, CNBC reports. The effects of the trade war and political tension between the U.S. and China continue:
“China asked some state-run enterprises to avoid business trips to the U.S…the State-Owned Assets Supervision and Administration Commission…has told some firms to only take secure, company-issued laptops meant for overseas use if traveling is necessary…the warning extended to the other countries in the Five Eyes intelligence-sharing pact: the U.K., Canada, Australia and New Zealand,” per Bloomberg (porous paywall).
“The U.S.-China trade war has delayed but not derailed Chinese automaker GAC Motor’s plans to enter the American market…company president Yu Jun, speaking at Detroit’s North American International Auto Show, said the dispute is a factor in moving its U.S. product launch from the end of this year — as it announced at last year’s show — to June 2020,” the AP says.
Liú Hè 刘鹤, China’s top economic official, is confirmed to visit Washington, D.C., with a delegation on January 30-31, several days in advance of the weeklong Lunar New Year holiday in China (春节 chūnjié) from February 4 to 8, according to the South China Morning Post.
That’s it for trade war news today. A few pieces worth reading on U.S.-China relations broadly are listed below:
- Why Trump’s America is rethinking engagement with China / FT (paywall)
This piece, by Demetri Sevastopulo, suggests that a lot of it has to do with military supremacy, and China’s militarization of the South China Sea. Xi’s term limit elimination was also a “turning point” for Americans viewing China’s political system as regressive. A few quotes:
Underscoring how the [military technology] gap between the US and China has shrunk, General Paul Selva, vice-chairman of the joint chiefs of staff, warned in June that “if we sit back and don’t react, we will lose our technological superiority in 2020.” The Pentagon is also concerned about the vulnerability of its military supply chains because of components made in China…
Washington is raising red flags about activities aimed at stealing US technology — whether via Chinese nationals working in American university labs or cyber espionage. One person familiar with the situation says US officials realised how much more vigilant they needed to become when they discovered just how much similarity there was between the Chinese J-20 stealth fighter jet and the American F-35…
“People I’ve known for decades have given up on China,” says Susan Shirk, chair of the 21st century China Center at the University of California San Diego. “There’s a widespread view in the academic community that the overreaching China has done both domestically and internationally is hard-baked into the system and that there’s no hope of getting them to adjust their behaviour to our interests and values.”
- If you’re interested in U.S.-China military affairs, see this piece in the Diplomat recommended by Access member Mackenzie Lange — “How does China’s air force learn and adapt to new circumstances?” — based on a RAND report, Defeat, Not Merely Compete: China’s View of Its Military Aerospace Goals and Requirements in Relation to the United States.
- Assessing U.S.-China relations 2 years into the Trump presidency / Brookings Institution
By David Dollar, Ryan Hass, and Jeffrey A. Bader.
- Opinion: China is a dangerous rival, and America should treat it like one / NYT (porous paywall)
By Derek Scissors and Daniel Blumenthal, both scholars at the American Enterprise Institute. They argue: “After years of unsuccessful talks and handshake deals with Beijing, the United States should change course and begin cutting some of its economic ties with China. Such a separation would stop intellectual property theft, cut off an important source of support to the People’s Liberation Army and hold companies that are involved in Chinese human rights abuses accountable.”
Previously in SupChina’s trade war coverage: