Economic Spat Between US, China Could Move Into Political Sphere

The US-China trade negotiations have entered a new stage that is unlikely to end with the US taking a step towards lowering import duties on Chinese goods. An expert from the Russian Institute for Strategic Studies (RISI), Mikhail Belyaev, has expressed such a forecast in an interview with Sputnik.

US President Donald Trump said that from 10 May he would increase tariffs on Chinese goods by $200 billion from 10 to 25 percent. He also did not rule out the introduction of a levy on a new batch of Chinese goods worth $325 billion.

Donald Trump's Twitter post on Sunday appeared three days before a new round of trade talks was due to start in Washington on 8 May with the participation of China’s top trade negotiator, Vice Premier Liu He. Previous consultations ended on a positive note on 1 May in Beijing. The parties noted significant progress, and most experts expected that the final trade agreement could be worked out at the Washington round of negotiations.

Meanwhile, the US president wrote on Twitter that trade negotiations with China are moving “too slowly”, as the Chinese side is trying to make changes to an almost ready-made agreement. The sharp change in the assessment by the American side of the negotiations and the threat to impose new tariffs on Chinese goods with a total worth of $525 billion, RISI expert Mikhail Belyaev explained as being a result of the US intention to trade with China on the basis of a “new reality”.

“This is putting additional pressure on China. China is not satisfied with this. It wants to increase its exports to all countries, including the United States as its main trading partner. The United States is threatening to introduce new tariffs when almost all agreements have been reached. This is being done in order to fix this level of duties for future trade, believing that duty-free trade with China is fraught with great negative consequences for the US economy. The USA is deliberately taking this step to consolidate the ‘new reality’ in trade. Therefore, I believe that the trade negotiations have entered a new stage, where they are unlikely to end up with the US taking a step towards lowering duties on Chinese imports. This will mean further confrontation between the United States and China. Trade will continue to go on according to the new realities, at the level reached during the negotiations. At the same time, the economic contradictions between the US and China will apparently move into the political sphere”.

An expert with the World Trade Centre of the China Institutes of Contemporary International Relations (CICIR), Xu Feibiao, regarded the US president’s statements as an attempt to achieve unilateral benefits by applying maximum pressure on China.

“Trump once again applied the ‘maximum pressure’ tactics on the US-China trade negotiations. This suggests that the current US trade talks with China do not seem to meet his expectations. Trump's ‘maximum pressure’ indicates that he hopes to get the most from this in the upcoming 11th round of trade talks. Moreover, the US presidential election is about to enter a new cycle, so he is seeking to achieve his goals in negotiations with China. Trump's threat influenced the behaviour of the markets, causing tremendous volatility. In particular, the Chinese stock market plummeted on Monday. China and the United States have a strong desire to conclude an agreement, but there are differences in how to achieve it. The United States wants to achieve this goal through ‘maximum pressure’ for the sake of the greatest benefit”.

Many observers believe that the US president has sharply increased pressure on China in order to force it into a trade deal. Changes in the tone of Trump, who at the end of last week noted progress in the trade negotiations, led to a new escalation of tensions between the major economies of the world.

The Wall Street Journal, in its first reaction to the situation, suggested that China is considering the possibility of cancelling trade talks this week in Washington. The news outlet reported that Trump's statement took Chinese officials by surprise. Citing anonymous sources, the South China Morning Post reported that Liu He could still go to the US, but would shorten his trip. The Hong Kong English-language newspaper also suggested that the visit could be cancelled altogether. Meanwhile, according to information available to the editor-in-chief of China's Global Times newspaper, Hu Xijin, the Chinese delegation could still travel to the United States. This will be seen as the goodwill of the Chinese side, he wrote on Twitter.

Chinese Foreign Ministry spokesperson Geng Shuang, for his part, made it clear that the threats of the American side to introduce new and increase existing tariffs do not remove the negotiations from the agenda.

“At present, the Chinese delegation is preparing to travel to the United States to participate in the consultations”, the Chinese high-level official said. He noted that the Chinese side hopes for joint efforts with the American side to move towards each other on the basis of mutual respect, to seek and reach an agreement that meets the interests of mutual benefit and the common good.

This is in the interests of not only the Chinese, but also the American side, as well as meets the expectations of the international community.

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