China backing off previous commitments on trade deal as POTUS Trump digs in with new tariff hike

By Jon Dougherty

China and the U.S. had made substantial progress on reaching a new trade agreement that was beneficial to both countries but in recent days, according to U.S. trade negotiators, Beijing has backed away from them.

As such, POTUS Donald Trump has renewed his pledge to raise tariffs on hundreds of billions of dollars’ worth of Chinese goods by Friday — from 10 percent to 25 percent — even as both sides scramble to reach an agreement before them.

But there are headwinds to a deal that aren’t likely to be resolved before the president’s Friday deadline, and they are all emanating from China.

Agence France Presse reports:

China said Tuesday its top trade negotiator will visit the United States for talks with American counterparts this week even as Washington stepped up pressure with plans to hike tariffs and complaints that Beijing was backtracking on its commitments.

The commerce ministry confirmed in a brief statement that Vice Premier Liu He, President Xi Jinping’s trade pointman, would visit the US on Thursday and Friday.

The trip is taking place a day later than expected after President Donald Trump jolted global markets by announcing that tariffs on $200 billion in Chinese merchandise will more than double to 25 percent on Friday.

“China always believes that mutual respect, equality and mutual benefit are the premise and the basis for reaching an agreement. Adding tariffs will not solve any problem,” Chinese foreign ministry spokesman Geng Shuang said at a regular press briefing.

US officials noted earlier that the world’s two largest economies were close to an agreement but Beijing reversed course in recent days.


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“Over the course of the last week or so, we’ve seen an erosion in commitments by China, I would say retreating from commitments that have already been made in our judgment,” U.S. Trade Representative Robert Lighthizer said, according to various media reports Monday.

AFP:

Treasury Secretary Steven Mnuchin described the negotiations as 90 percent complete but told reporters that in recent days the talks went “substantially backward”, according to the media reports.

The question is, why?

At home, the Chinese Communist Party and President Xi Jinping are attempting to put a better face not just on negotiations but on the country’s ‘refusal’ to simply bow down to U.S. pressure. That’s necessary, say China analysts, because the country has several important dates coming this year that are significant in terms of Chinese pride and the government’s legitimacy.

Also, some analysts believe that China’s economy is withstanding the tariffs better than first believed.

The South China Morning Post notes, for instance, that the Chinese government has vowed there will be “no more concessions” to the United States:

The trip comes as uncertainty hangs over the negotiations after US President Donald Trump’s announcement that he would increase punitive tariffs on US$200 billion worth of Chinese products from 10 percent to 25 percent. It also comes amid Chinese state media reports that Beijing will not respond to Trump’s threats with concessions.

In a commentary published on its WeChat account on Tuesday, People’s Daily warned the US to “not even think about” concessions.

“When things are unfavorable to us, no matter how you ask, we will not take any step back. Do not even think about it,” the commentary said.

The article was first published through Taoran Notes, a social media account used by Beijing to signal the leadership’s thinking and manage domestic expectations.

Sources said President Xi Jinping earlier vetoed extra concessions proposed by his negotiators. “Xi told them ‘I’ll be responsible for all possible consequences’,” one of the sources said.

Shanghai-based political analyst Chen Daoyin said, “President Xi and his administration have a very firm stand, showing no signs of backing off in the face of challenges. Xi’s Chinese dream to make a stronger nation has also limited his team’s ability and flexibility to handle external issues.”

He added: “The latest Politburo meeting did not focus on economic stabilization as it had done in February. Leaders may feel the impact of tariffs on China’s economy is not as grave as expected.”

There is also an element of national pride at work here, per SCMP:

A diplomatic source told the Post that China tried to keep the trade war out of the spotlight when it hosted the Belt and Road Forum in late April, and Beijing needed to present a win in the trade talks in time for the 70th anniversary of the People’s Republic in October.

This year also marks the 30th anniversary of the Tiananmen Square protests and crackdown, and the centenary of the May Fourth Movement, a series of patriotic student protests against the Western imperialism in the aftermath of first world war.

In a research note, Simon Evenett, a visiting professor with Johns Hopkins University, and Gary Hufbauer from the Peterson Institute for International Economics, said that “seen from Beijing’s viewpoint, the downside from a failed deal and higher US tariffs is diminished now that Chinese stimulus plans are in place.”

“Plus, would President Xi risk making concessions in a year that is the anniversary of so many iconic Chinese events?” they said.

Notes Arthur Kroeber, research head of Hong Kong-based Gavekal Dragonomics, “brinksmanship” isn’t something that will benefit either side.

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“China’s revived economy has emboldened its negotiators to resist US demands to cut back industrial subsidies and forced technology transfers,” Kroeber said.

“Meanwhile, hardliners in the US – who include not just national security hawks but also labor bosses and Democratic Party leaders like Charles Schumer – have amped up their criticism that Trump is not extracting enough concessions from Beijing,” he added.

The portion of the deal that remains is enforcement — how the U.S. can ensure that China is living up to its agreements (and vice versa) without violating each other’s sovereignty.

That’s a huge deal in a year when China must save face. And while no one expects the Chinese to simply roll over, President Trump isn’t going to do that, either.

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[…] POTUS is set to impose an additional heavy round of tariffs on Chinese imports by Friday — as we reported today — if no trade deal can be […]

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Pilot Dave
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Pilot Dave

Public Enemy Number ONE – Chairman Mao’s government… Trump needs to stand strong against these international thieves

AT
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AT

The Chinese government cannot be trusted to live up to any trade commitments it makes anyway..let the tariffs begin.

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[…] POTUS is set to impose an additional heavy round of tariffs on Chinese imports by Friday — as we reported today — if no trade deal can be […]

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