Vice-Premier Liu He will be made ‘an offer he can’t refuse’ when China’s trade team arrive in Washington, probably as early as Tuesday. In an unprecedented reversal of policy, President Donald Trump has promised to help crisis company ZTE “get back into business” after a US ban crippled the Chinese telecom giant.
His pledge came just days before trade talks resume after last month’s opening session in Beijing ended in deadlock.
Using his favorite communication media, Twitter, he confirmed he was working closely with President Xi Jinping to resolve the issue.
“Too many jobs in China lost,” he tweeted. “[US] Commerce Department has been instructed to get it done!”
While this sort of shock proposal is part of his The Art of the Deal philosophy, it also has shades of one of his favorite movies, The Godfather, in which Vito Corleone makes a business associate “an offer he can’t refuse.”
It is also part of Trump’s charm offensive with Xi, who he regards as someone he can do business with after building a strong working relationship.
President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
“I believe President Trump’s frequent friendly remarks about General Secretary Xi are meant to indicate that US-China friction is not personal,” Derek Scissors, a resident scholar at the American Enterprise Institute, said in a South China Morning Post report. “It’s strictly business.”
Remarkably, that was another line from The Godfather.
Still, Trump’s move came straight out of left field, despite reports at the weekend that ZTE paid US$2.3 billion last year to US exporters, including Qualcomm, Broadcom, Intel and Texas Instruments.
More importantly, the news came less than a month after the US Commerce Department banned the Shenzhen-based group from buying US-made components, such as semiconductors, for seven years, effectively wrecking its supply chain.
Problems, in fact, started to pile up for ZTE as soon as the US ruling highlighted how the company had violated a sanctions settlement involving illegal exports to Iran. For those offenses, it was fined $892 million after pleading guilty to the original charges.
Then last week, the Chinese telecom giant confirmed it was shutting down “major operating activities” after a stark announcement to the Hong Kong Stock Exchange.
With more than 75,000 staff, ZTE operates in about 160 countries, while its telecom equipment runs through the “digital backbone of a great swath of the developing world.”
Before the US components ban, it was providing services for 100 million users in India, 300 million users in Indonesia and 29 million users in Italy, an unnamed official told the Reuters news agency.
“China and the United States are working well together on trade, but past negotiations have been so one-sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,” Trump wrote in a second Twitter posted on Sunday. “But be cool, it will all work out!” he added.
Certainly, his ZTE statement will ease tensions between the world’s two biggest economies.
In a tit-for-tat trade dispute, which has been simmering since the start of the year, the US and China have already wheeled out proposed tariffs on a range of imported products, worth a combined $100 billion.
The White House has even threatened to raise the ante by proposing further duties on another $100 billion-worth of goods.
At the heart of the row has been China’s ballooning trade surplus with the US, which stood at a record $375.2 billion last year and $58 billion between January and March in 2018.
Xi’s core “Made in China 2025” policy, which aims to turn the country into a technological powerhouse, has also come under scrutiny.
“The threat of a full-fledged trade war between China and the US might have receded thanks to the recent Sino-US trade talks. But many still fear China would suffer a bigger blow if a trade war indeed breaks out,” Chen Haiming, the director of the Center for Global Governance at the Xiamen University of Technology, said in the state-owned China Daily.
“The facts are different. Since many US companies could lose access to the Chinese market and products in the event of a trade war, US citizens, in general, would have to not only pay more for consumer products but also face pay cuts or lose their jobs.”
China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries. But be cool, it will all work out!
— Donald J. Trump (@realDonaldTrump) May 13, 2018
Yet this opinion piece failed to mention the ZTE development and was probably written before Trump’s gesture, suggesting a communication breakdown between The Publicity Department of the Central Committee of the Communist Party of China, or Beijing’s propaganda department, and senior editors at China Daily.
Indeed, the White House’s dramatic intervention appears to have caught the ruling Communist Party off guard, as well as the Washington media.
“President Trump’s decision couldn’t have arrived at a better time,” the normally hardline, state-run Global Times reported in an editorial. “Many Chinese saw ZTE’s ordeal as the result of evil wrongdoing carried out by the US as was the speculation among international businesses. This latest development offers a new angle for analyzing US intentions.”
Maybe, but it is still looking unlikely that when Liu’s delegation finally sit down with US Treasury Secretary Steven Mnuchin’s team an all-encompassing deal will be hammered out.
What will be on the table is a ‘shopping list’ of American goods and products that Beijing is willing to buy in a move to bring down the US trade deficit.
“Liu He’s upcoming visit to Washington indicates that a negotiated settlement remains the most likely eventual outcome, despite uncertainty on the path to reaching it,” said a report from Everbright Sun Hung Kai, a financial services company.
Figuring out the White House’s next move might prove more difficult for Liu than navigating the labyrinth of Beijing bureaucracy. At least, he has had plenty of experience in that.
Welcome to the "SHREWD" world of one slick operator———Donald John Trump———-the first MODERN day President blessed with a Jewish gift———-called Yiddish-a-kup———there will be no trade war with the Middle Kingdom because it would destroy President Trump’s Pesidency (in large part thanks to the Fair Maiden—the SCUM, corrupt, in the bag Mainstream Media and the SCUM elite behind the Media) instead boys and girls the Chinese will sue for peace. Can you imagine if Madam Peron was President———-the Chinese would have gotten whatever there heats desired——-look at our last three Presidents——–all stupid Politicians——–all sell outs——-all losers——–a prime example is the Iran deal that Obama and Kerry made———a dummy makes a deal like that——–not a yiddish-a-kup President like Donald John Trump—————it is a great time for the "Global Economy" because Trump and Xi know how to make nice and make business!!!
THANKS BIBI !! I APPRECIATE YOUR WORDS ALL ZIONIST ARE JEWISH HEADS. DA MACHT DER GELT!! MOZELTOFF!!!
The ban on ZTE is also a sanction on all American suppliers of ZTE, including Qualcomm. These American suppliers are losing one of their most important, if not their most important client. As a result of the ban of ZTE, these American suppliers cannot remain in business. They have to close down and these closures will have important consequences on the other clients of these suppliers. In other words, by banning sales of components to ZTE, Trump punishes not only ZTE but also these American suppliers and the other clients of these American suppliers, many of which are American companies. In short, USA will use more jobs than China. The Chinese workers can easily find jobs in other companies in the same or a different field, but the American workers will remain jobless to many years, even decades. This is the reason for Trump to undo the ban on ZTE. But it is too late because ZTE knows it can no longer count on American suppliers. Though the re-connection between ZTE and the American companies can be made now, in the medium and long run, ZTE will develop its own components and will steadily reduce its purchases from American companies.
I’m open to seeing the good side of Mr. Trump’s presidency, but we can only see the results as time passes. What will the long-term results of all this be? I hope we aren’t seeing short-term minimal gain for long-term maximal pain. Mr. Xi has apparently told the Party that they now have to develop their own versions of the most advanced tchnology, since the US is not a reliable trading partner.
Any real danger from China would come from their deep resentment of 200 years of being taken advantage of by Western countries. In the West, our main intention should be to erase this feeling, not energize a desire for revenge. Of course, we should have established less open terms of trade decades ago, putting fair duties on goods from countries where wages are not set freely, for example. Now it is time to welcome a new member to the family of advanced nations, not to tell them they aren’t welcome.
On another matter, I wait to see if Mr. Trump’s Jerusalem move and associated killings will convince Palestinians they are finally beaten, as Mr. Goldman recommends.
This disproportionate penalty on ZTE is turning US technology into modern day opiate. This cold turkey treatment is killing ZTE. The message is don’t stuck with US substance dependency. You must develop your own core technology. Global trade is weaponized and mutual win-win economic development sacrificed.
WM Wong,
I do not think that the ban on ZTE will kill ZTE. ZTE is too big to be killed. The Chinese government will support it. In the short run, ZTE will be crippled; but, in the long run, ZTE will become stronger. Its products will use almost 100% Chinese components made either by ZTE itself or by other Chinese companies.
The greatest losers will be the American companies that supply components to ZTE. These companies will be forced to close down because they are losing one of their main, if not their main, clients. Trump has just realized his mistake. He is now trying to salvage the situation by going back on the ban. To fool the stoopid American, Trump argues that he is doing so because China will be losing too many jobs. In fact, USA will be losing more jobs as a result of the ban on ZTE and the Americans workers who will lose their jobs will not be able to find new jobs whereas the Chinese workers who will lose their jobs will be able to find new jobs.
As always, your Yiddish what ever only know the line under your nose. I am sure Chinese are hppy to let you losers control everthing that you thought you entitle too. One wonder why after over 2000 years….
Yes, mess up US’s biggest customers, allies, and you can still fee to Palatine….
Watts said " Made in China 2025 " policy aims to turn China into a technological powerhouse. This is not true. The policy is to bring China’s technology to world level. This does not mean being a " powerhouse. " Has Watts confirm with the Chinese authorities that china wants to become a " powerhouse" ?? Please read the policy carefully and do not insinuate extraneous conclusions from it. This is the problem with western writers and journalists. This bad habit creates a lot of ill will and hatred.
Just as in the military, China wants to build up a modern military for defence and deterrence but does it need to be a super-power to do this ??
The urge of the USA to be the dominating power will precipitate the downfall of USA. By trying to counter China 2025 plan, USA will make China to aim at even more lofty objectives, just like by trying to force North Korea to give up its nukes will force North Korea to keep its nukes even closer to themselves. It is better for USA to accept the fact that China may become its equal like it is better for USA to accept the fact that North Korea is a nuclear power.