Photo: Tom Brenner, New York Times
Next week, on January 30-31, vice premier Liú Hè 刘鹤 will visit Washington, D.C. for high-level trade talks. His delegation was supposed to be preceded this week by a preparatory visit of two mid-level officials: Wáng Shòuwén 王受文, vice-minister of commerce, and Liào Mín 廖岷, vice-minister of finance. That visit was canceled, the Financial Times reports, by the Trump administration in a show of displeasure over “a lack of progress on ‘forced’ technology transfers and potentially far-reaching ‘structural’ reforms to China’s economy.”
The FT says that structural issues “could ultimately derail the talks,” and they certainly could, but this cancellation also doesn’t necessarily change the trajectory towards Trump accepting whatever deal comes to him after Liu He and U.S. Trade Representative Robert Lighthizer hash it out. (See last Friday’s Access email for more on the current trend away from further tariffs raises, and towards a [rather unambitious] deal for U.S.-China economic relations.)
The New York Times adds:
Trump administration officials have been debating whether they can push more tariffs on China without facing significant repercussions. China’s economy is already slowing, in part because of the tariffs, and any further weakening could hurt global economic growth and the United States economy, which is itself showing signs of cooling.
Also: “it is unclear whether China will pressure the Trump administration to drop its efforts to extradite” Meng Wanzhou, a scenario which could be just as likely to derail trade talks as Trump changing his mind on structural economic issues.
Other trade-war-related links for today, starting with two charts about China’s economic slowdown tweeted out by FT reporter Tom Hancock:
Chart of the day: China's economic slowdown (including in some areas of consumption) appears to be driven by Beijing slowing credit growth…something which IMF, World Bank etc urged it to do. pic.twitter.com/s2q59hbwxO
— Tom Hancock🌊 (@hancocktom) January 20, 2019
China's reported 6.6% growth rate still continues to defy what is usual for economies with similar income-levels…. pic.twitter.com/FcWDNZS89A
— Tom Hancock🌊 (@hancocktom) January 21, 2019
- Economic slowdown
China’s 2018 growth slows to 28-year low, more stimulus seen / Reuters
Donald J. Trump on Twitter: “China posts slowest economic numbers since 1990 due to U.S. trade tensions and new policies. Makes so much sense for China to finally do a Real Deal, and stop playing around!”
China’s Slowdown Looms Just as the World Looks for Growth / NYT (porous paywall)
China’s overseas investment to slow, says Sinochem / FT (paywall)
- Made in China 2025 chugs along
China’s Plan for Tech Dominance Is Advancing, Business Groups Say / WSJ (paywall)
“In a joint report to the U.S. Trade Representative, the U.S. Chamber of Commerce and the American Chamber of Commerce in China say Beijing’s ambitious plan to become a global technology leader is being widely implemented, casting doubt on efforts by Chinese officials to play down its significance.”
From last summer: SupChina’s explainer on Made in China 2025.
- China artificially boosting imports: Probably illegal
The Trade Deal China Wants Isn’t Just Bad, It May Be Illegal / Bloomberg (porous paywall)
It was reported last week that China offered to buy $1 trillion in U.S. exports over six years to solve Trump’s pet issue: the bilateral trade deficit.
But James Bacchus, a former chief judge for the World Trade Organization, argues in Bloomberg that China has “legal obligation under the WTO treaty not to favor imported products from one WTO member over like imports from any other WTO member,” so this proposal would “most likely be illegal.”
- China giving Ivanka Trump trademarks: Totally legal
China grants Ivanka Trump 5 trademarks amid trade talks / AP
- The backlash in Washington
How China misread the US on trade during Donald Trump’s early days, according to Ronnie Chan / SCMP
As mentioned by many observers in the Twitter threads reacting to this story, Chan puts way too much emphasis on Trump’s tweets, and not enough in particular on Xi’s decision to end term limits, as being responsible for Washington’s souring on Beijing.
James Palmer, Asia editor of Foreign Policy, also has thoughts: “The truth is that a lot of China watchers should have caught up to the nature of Xi-ism years ago – and CCP goals even before that. But the end of term limits, the Xinjiang concentration camps, and the Kovrig kidnapping have pulled a lot of folk to where they should be.”
- Criticism of the system
Chinese pro-market economist Wu Jinglian warns of ‘state capitalism’ dangers / SCMP
- Influence in the middle of the Pacific
The Pacific islands in middle of US-China battle for influence / SCMP
Read on SupChina Access: A brief guide to China and the Pacific island nations
Previously in SupChina’s trade war coverage: