Is Trump’s trade deal a nothingburger? - SupChina
Free

We're a new type of news publication

China news you won't read elsewhere.

Weekly Newsletter

Get a roundup of the most important and interesting stories coming out of China.

Podcasts

Sinica, TechBuzz China, and our 6 other shows are the undisputed champs of China podcasts. Listen now.

Feature Articles

Interactive, web-based deep dives into the real China.

Premium

Join the thousands of executives, diplomats, and journalists that rely on SupChina for daily analysis of the full China story.

Daily Newsletter

All the news, every day. Premium analysis directly from our Editor-in-Chief Jeremy Goldkorn.

24/7 Slack Community

Have China-related questions and want answers? Our Slack community is a place to learn, network, and opine.

Free Live Events & More

Monthly live conference calls with leading experts, free entry to SupChina live events in cities around the world, and more.

"A jewel in the crown of China reporting. I go to it, look for it daily. Why? It adds so much insight into the real China. Essential news, culture, color. I find SupChina superior."
— Max Baucus, former U.S. Ambassador to China

Free

We're a new type of news publication

China news you won't read elsewhere.

Weekly Newsletter

Get a roundup of the most important and interesting stories coming out of China.

Podcasts

Sinica, TechBuzz China, and our 6 other shows are the undisputed champs of China podcasts. Listen now.

Feature Articles

Interactive, web-based deep dives into the real China.

OR… for more in-depth analysis and an online community of China-focused professionals:

Learn About Premium Access Now!
Learn More
Minimize
Learn More
Minimize

Is Trump’s trade deal a nothingburger?

Part of the SupChina Weekly Briefing newsletter. Subscribe for free

nothingburger

Photo credit: SupChina illustration by Derek Zheng

From the White House: On December 13, the Office of the U.S. Trade Representative released a statement announcing a “phase one trade agreement” between the U.S. and China. The statement was not modest about boasting of the Trump administration’s achievements:

The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange.  The Phase One agreement also includes a commitment by China that it will make substantial additional purchases of U.S. goods and services in the coming years.

U.S. Trade Representative Robert Lighthizer further claimed that the deal will “nearly double US exports to China over the next two years.”

The Beijing side of the story: However, in Chinese state media, a U.S. commitment to cut its tariffs on China is the only concrete commitment in the text. There is also an ominous paragraph that makes clear this is not a done deal yet, as it still requires “legal review, translation and proofreading.”

The bottom line: The trade deal doesn’t amount to much, per Scott Kennedy, who researches Chinese business and economics at the Center for Strategic and International Studies:

…by [the Trump] administration’s own metrics, the trade war has not paid off. Total U.S.-China trade and direct investment have slowed, but these changes reflect the diversion of trade to others, not the movement of manufacturing back to the United States. Moreover, far from abandoning its efforts to achieve technological independence, China is doubling down on what it calls “self-reliance.” The deal’s apparent big winners, U.S. farmers, were not in harm’s way before the trade war, and they likely would have sold just as much in aggregate to China had the trade war never commenced.

Beyond the “gain” of returning to the pre-trade-war status quo, mutual trust between the two governments is lower than ever. After 529 days of spiraling tensions, it “will become harder than necessary to find ways to cooperate with the Chinese on pressing regional and global issues such as climate change,” Kennedy points out.

Just in the last week, two stories have made it clear that the stakes of U.S.-China rivalry are only getting higher:

  • “The American government secretly expelled two Chinese Embassy officials this fall after they drove on to a sensitive military base in Virginia,” the New York Times reported, adding, “The expulsions appear to be the first of Chinese diplomats suspected of espionage in more than 30 years.”
  • Beijing ordered all government offices and public institutions to remove foreign computer equipment and software within three years. The Financial Times notes that the order “is the first publicly known instruction with specific targets given to Chinese buyers to switch to domestic technology vendors, and echoes efforts by the Trump administration to curb the use of Chinese technology in the US and its allies.”
Share

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.