For those with a superstitious nature, you might want to dig out a lucky charm.
Round 13 of trade talks between the United States and China resume on Thursday and are due to wrap up the following afternoon.
In Washington, Vice-Premier Liu He and his negotiating team are likely to put forward a narrow agenda. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will probably raise a few eyebrows before clutching the odd rabbit foot.
Already hopes are fading that the discussions will lay the groundwork for a breakthrough deal to end the year-long row. Still, an uneasy ceasefire, or interim agreement, with limited objectives and a pledge to continue dialogue is a possibility.
Last month, China’s official state-run news agency Xinhua reported that Liu’s shortlist would address the “US trade deficit, market access and investor protection,” relating to intellectual property rights. Nothing appears to have changed since then.
“[Washington] should give the interim trade deal concept serious thought,” Zhao Minghao, a senior academic at the Charhar Institute in Beijing, said. “China will never give in to American pressure … The two sides should dance the minuet to further reduce misjudgments.”
But the approach that it ‘takes two to tango,’ might just end up in a ballroom blitz.
Human rights
On Monday, the US Department of Commerce announced it would blacklist 28 Chinese companies after they were accused of human rights violations against Uighurs and other Muslim minorities in Xinjiang, an autonomous region in Northwest China.
At least one million ethnic people are being held in vast detention camps, according to the United Nations. Beijing has called them “vocational training centers” to combat extremism. “[We] cannot and will not tolerate the brutal suppression of ethnic minorities within China,” Wilbur Ross, the Secretary of Commerce, said.
Included in the list are eight high-tech groups such as Hikvision which specializes in facial-recognition software, hardware and robotics. Major artificial intelligence players Megvii Technology and SenseTime have also been singled out.
Blacklisted firms will now be banned from buying American components, such as semiconductors, and blocked from selling telecom or tech equipment in the US.
John Honovich, the founder of surveillance video research company IPVM, told The Guardian newspaper in London that the impact on Chinese companies would be “devastating.”
“There is no such thing as these so-called ‘human rights issues’ as claimed by the United States,” Geng Shuang, a spokesman for China’s Ministry of Foreign Affairs, said just hours after Washington’s decision. “These accusations are nothing more than an excuse for the United States to deliberately interfere in [our] internal affairs.”
Economically, the row between Beijing and Washington has acted as a brake on global growth. In the US, manufacturing activity in September dropped to a level not seen since the Great Recession in 2009 as the dispute stymied exports, a survey from the Institute for Supply Management revealed.
For China, the downturn has continued across a broad range of sectors, from retail sales to industrial output, which plunged to a 17-year low in August. Big-ticket items such as new car sales have stalled while residential property prices have also suffered as consumer debt increased.
Services sector
On Tuesday, data showed that the services sector grew at its slowest pace in seven months in September. The Caixin/Markit PMI fell to 51.3 last month, the weakest since February, compared to 52 in August. But it still stayed above the 50-point mark, which separates expansion from contraction.
“China’s economy showed signs of marginal recovery in September,” Zhong Zhengsheng, the director of macroeconomic analysis at CEBM Group, said. “However, the rising costs of labor and raw materials restrained business confidence.”
To combat the downturn, Beijing has pressed ahead with a technology-fueled infrastructure drive centered around Huawei’s 5G ground-breaking networks. Up to August, the poster child of the “Made in China 2025” program had shipped 200,000 base stations around the world, according to the Shenzhen company.
Huawei has already been dragged into the trade conflict after being blacklisted in the US for breaking Iran and North Korean sanctions, as well as having alleged links to Beijing. The high-tech giant has denied those accusations.
Yet technology and President Xi Jinping’s state-run model are at the very heart of what has quickly developed into a new economic Cold War. “Everything will be on the table,” Larry Kudlow, the White House economic adviser, told a media briefing last month, referring to the talks later this week.
How this will fit in with Liu’s limited brief is open to debate. But what is not “on the table” is China’s state-sponsored blueprint, according to Zhang Shuhua, the director of the Institute of Information Studies at the Chinese Academy of Social Sciences. “China’s progress has provided an alternative to the Western development model,” he said.
Even so, President Donald Trump is hoping the threat of tariff hikes to 30% on Chinese imports worth US$250 billion will focus minds in Beijing. They are due to kick in on October 15 if round 13 proves to be an unlucky number.