China looks certain to play hardball when Team Trump arrives in Beijing for trade talks as early as this week. Flexibility had been the buzzword bandied around Chinese diplomatic circles in an attempt to avoid the row spiraling out of control.
But behind the scenes, a tougher line has emerged when it comes to two of Washington’s key demands.
These go to the very heart of the White House’s philosophy and involve cutting the United States’ record US$375.2 billion trade deficit by at least $100 billion and curbing China’s plans to move into advanced technologies.
“[We] will never yield to unreasonable US trade requirements, such as ensuring US competitiveness at the cost of China’s technological progress,” the Global Times, a radical state-owned newspaper aligned to the official mouthpiece of Beijing, the People’s Daily, stated in an editorial.
“China has the right to develop its own high-tech industry based on respect for IPR [intellectual property rights] and to buy IPR from others through fair trade. The US can neither contain China’s high-tech development nor breach basic rules of trade to achieve its purposes,” it added.
President Xi Jinping’s team, which is likely to be led by his trusted economic adviser and vice-premier Liu He, is expected to stand firm when Robert Lighthizer, the US Trade Representative, Larry Kudlow, a senior adviser to President Donald Trump, and the Treasury Secretary Steven Mnuchin gather around a rather large table.
They might even have translated copies of Trump’s The Art of the Deal strategically placed in front of them, just as a reminder to Washington’s big guns, which will probably also include Commerce Secretary Wilbur Ross and Peter Navarro, the assistant to the president for Trade and Manufacturing Policy.
“I don’t expect a comprehensive deal,” Ruan Zongze, the executive vice-president of the China Institute of International Studies, which is the policy research arm of China’s Foreign Ministry, told the New York Times. “I think there is a lot of game-playing here.”
What is certainly not a “game” is the raft of proposed sanctions which have been rolled out in the past few months in a tit-for-tat tariffs war. These involved more than $100 billion worth of goods from steel and cars to microchips and electronic components, and even nuts and wine.
Thrown into this mix has been Trump’s intellectual property rights issue with China, which was bubbling beneath the surface until Huawei was dragged into the dispute last week.
The US Justice Department is investigating the Chinese smartphone and telecom giant for suspected violations of Iran sanctions after banning fellow tech conglomerate ZTE last month from buying US-made components for seven years in a similar case.
Naturally, these moves are seen by Beijing as an attempt to wreck the country’s prestigious high-tech sector.
“China has to maintain its strategic vigilance. The US has fundamentally changed its strategy toward China and defined the latter as a rival,” Sun Lipeng, an assistant research fellow with the Institute of American Studies at the China Institutes of Contemporary International Relations in Beijing, said in an opinion piece for the state-controlled media.
“The series of trade moves Trump took recently show that the US wants both economic interests and superiority of economics and technology to curb China’s rise. Trade disputes between China and the US will be unavoidable in the future,” he added.
If this latest altercation between Beijing and Washington drags on, playing hardball could end up being a national pastime.