Trade war, day 357 — a tentative truce with impossible preconditions? - SupChina

Trade war, day 357 — a tentative truce with impossible preconditions?

Based on sources in Beijing and Washington, the South China Morning Post reports that the U.S. and China “have tentatively agreed to another truce in their trade war in order to resume talks aimed at resolving the dispute.” According to the article:

  • Press releases will be sent out “in advance of the meeting between Chinese President  Xí Jìnpíng 习近平 and U.S. President Donald Trump at the Group of 20 summit in Osaka, Japan.”
  • The agreement would avert Trump’s threatened new tariffs on an additional US$300 billion of Chinese imports.

But the Wall Street Journal has a less sunny report based on comments from “Chinese officials with knowledge of the plan”:

  • Xi plans to present Trump “with a set of terms the U.S. should meet before Beijing is ready to settle a market-rattling trade confrontation, raising questions of whether the two leaders will agree to relaunch talks.”
  • One precondition that will not please many in Washington is that “Beijing is insisting that the U.S. remove its ban on the sale of U.S. technology to Chinese telecommunications giant Huawei.” Another precondition is the lifting of all punitive tariffs, and dropping “efforts to get China to buy even more U.S. exports than Beijing said it would when the two leaders last met in December.”

Other news from the techno-trade war:

  • Huawei denies PLA ties: The company “does not have any company-sanctioned projects cooperating with China’s military and does not customize products for use by the country’s armed forces,” the tech giant’s legal chief told CNBC. This comes after a Bloomberg report(porous paywall) yesterday that said several Huawei employees “have collaborated on research projects with Chinese armed forces personnel, indicating closer ties to the country’s military than previously acknowledged by the smartphone and networking powerhouse.”
  • America’s ports are dependent on Chinese cranes, so a new round of tariffs “would mean unexpected cost increases for vital port modernization projects around the United States, damaging local economies and imperiling U.S. hopes of keeping pace with foreign rivals,” according to the Washington Post.
  • Some Chinese exporters are shifting production to low-cost nations in Southeast Asia to dodge the American tariffs. Reuters profiles two such companies, a clothing manufacturer and a tire company.
  • A ship carrying Canadian canola “has been traveling back and forth in the waters around Xiamen port for four weeks after leaving Vancouver on May 7,” reports Bloomberg via the Hindustan Times. The ship cannot dock because “Chinese authorities have been repeatedly carrying out quality inspections on the cargo.”
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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.

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