Are CPEC-linked Property Rate Hikes in Pakistan Short-lived?


Investment security figures as a major concern for foreign investors who contemplate benefiting from Pakistan’s emerging role in the global economic and trade designs of its domineering Chinese neighbour up north. The two countries signed a USD 46 billion China-Pakistan Economic Corridor (CPEC) agreement back in 2015. And since then, the Pakistani state and its administered peoples have considered CPEC to be the long-awaited saviour for their nation’s seemingly never-ending economic crises.

In the absence of an apparent and business-conducive regional environment, a number of investors have recently been left wondering whether the current CPEC-related property hikes in Pakistan are – indeed – short-lived. And according to most economic experts who are familiar with the turbulent financial history of the country, their reservations regarding the sustainability of the said price increments are warranted. Especially when the developments planned under the CPEC initiative are looked into individually – and not in their political and media-aggrandized totality.

Here is a quick overview of what CPEC holds for Pakistan in terms of property (and other infrastructural) developments.

CPEC-related infrastructural developments planned in Pakistan


According to a 2017 report featured on CNN International, CPEC – being an integral part of China’s One Belt, One Road initiative – has come with a ‘mega opportunity’ for Pakistan to develop its economy. The said article briefly makes mention of the projects planned under this corridor; which include, broadly, the development of road networks, railway lines, fibre-optic cable connections, a deep-sea port, solar farms, and coalmines.

As per the Pakistani government’s official CPEC website, the more prominent of these predominantly Chinese-sponsored concerns include:

  1. The main CPEC route (a 3,000 kilometres-long road connecting Gwadar with the China’s Xinjiang province)
  2. An upgrading of the existing Pakistan Railways Main Line (ML-1)
  3. The New Gwadar International Airport
  4. The development of Special Economic Zones (SEZs)
  5. A Gwadar Eastbay Expressway
  6. Water treatment plants, and facilities for water supply and distribution
  7. A ‘Pak-China Friendship Hospital’ facility
  8. A Gwadar ‘Livelihood Project’
  9. The Bao Steel Park, and the establishment of stainless steel, petrochemical, and other local industries
  10. The Gwadar University
  11. A Gwadar ‘Smart Port City’ Master Plan
  12. Matiari-to-Lahore & Matiari-to-Faisalabad transmission line projects
  13. Power plants in Port Qasim
  14. The Hydro China Dawood Wind Farm
  15. The Suki Kinari Hydropower Station
  16. Engro Thar Blocks I & II
  17. Coal-based power projects in Gwadar
  18. The Quaid-e-Azam Solar Park
  19. The Jhimpir Wind Park
  20. The Sachal Wind Farm
  21. The Karot Hydropower Station
  22. The Hub Coal-fired power plant
  23. The Western Energy Wind Power Project
  24. The Kohala Hydel Project

An ambitious construction gig!

Some of these projects have been already completed, while a majority are slated for construction & operation in the next couple of years. But knowing the unrelenting pace of Chinese industry, these other developments may come around into fruition perhaps sooner than is expected.

The impact of CPEC on Pakistan’s property market (as a whole)


For any foreign analyst bent on critically examining this causality, undermining the positive impact of the above-mentioned development projects on Pakistan’s property market would be unfair.

If we consider the case of the 3,000 kilometres-long CPEC Route alone, as soon as its section near Karachi (the country’s traditional port city) was finalised, the real estate situated in the adjoining areas experienced major price hikes due to a sudden outpouring of demand among property investors and developers. The same trends were further reported from all the major towns located along the said route.

While the CPEC Route is further divided into its Central, Eastern and Western sections (and will be developed as such), many other highways and road networks will be constructed in Pakistan in conjunction.

As a general property price appreciation principle, the development of road infrastructure is one of the major factors that trigger price hikes in any area; no matter how remote it is. So these consistent real estate investment breakthroughs, spurned by this created proximity, are not surprising. And this rule applies to all kinds of property, be it barren land incapable of much crops cultivation, agricultural land, or land that may be reserved for special purposes.

Landowners who are lucky to have the main CPEC Route, or its connecting road networks, pass through their land are now looking at guaranteed long-term investment returns.

On an interesting side note, the heightened current and expected demand of property in Pakistan has given birth to many new online real estate portals, including the recently launched At the same time, the existing market contenders are keenly preparing to attend to the people seeking quick information on picking the right property investment options in the country (in the backdrop of CPEC).

How did Gwadar’s property market – specifically – respond to these developments?


Despite how vigorously the government’s infrastructure projects in Gwadar are being carried out at the moment, the real estate market in this port city remains active only a couple of times a year. Its performance flares up mostly when overseas Pakistanis return home for their annual holidays, or during the start and end of a given year. In other words, property demand here attains a noticeable boost when the city receives visitors.

Observing this trend, many hasty analysts tend to assume that the prices deflate during the remaining parts of the year. This conclusion, however, is not borne out by the ground reality.

A property investment gig in Gwadar is not a short-term affair, and most experienced investors are aware of this fact. For each property purchased for investment (non-residential) purposes here, the usual intention behind the decision to is to hold it for a medium to long-term duration – roughly spanning 3 to 5+ years. And since most of these investors normally come with good holding power, prices here don’t experience major drops in the absence of new stakeholders.

According to the stats maintained by, Pakistan’s leading real estate portal, property rates in Gwadar have gone up by 67.65% since July 2016. And if you’ve been following the country’s real estate market closely, you may recall that this was the same time when the former government introduced a new property tax collection regime that brought a considerable drop in aggregate real estate investment volume.

But even in these harsh investment conditions, Gwadar’s property market continued to battle on and retain much of its real estate value; a testament against the notion that the CPEC-related rates hike in Pakistan is short-lived.

How does the property market in Pakistan currently fare?


Due to the introduction of the new property tax collection mechanism introduced in 2016, real estate investments in the country (as referenced) have taken a major hit. Major price drops have been recorded in projects and locations that were previously considered to be ‘investor favourites’. And this development has nothing to do with CPEC, since the projects in question hold no direct association with the economic corridor.

As some token of providence, this situation conversely spurned genuine buyers to take the lead in buying property for their genuine residential (and not sales-oriented) needs. The high real estate demand among these end-users, in fact, has kept the market from experiencing a complete crash-like situation. And nowadays, instead of experiencing sharp price hikes based on speculative investment trends (as was previously the case), the market tends to record a gradual yet consistent rise in property rates across the country.

This trend has also been reported by non-Pakistani sources. A 2018 article published by Khaleej Times further goes on to detail how property buying stats shifted when the current government imposed certain sanctions on non-filers looking to buy some local real estate.

Cautious, yet zealous, expectations…


The current pace of market activity indicates that Pakistanis, for the most part, are aware of the rising worth of real estate in their country.

Their optimism, if you ask any typical middle class worker going about his (or her) daily routine, largely rests on the country’s economic transformation which CPEC promises to catalyse and usher in. And while these feverishly anticipated developments may not offer them many desirable gains in the short-term, the returns on investments in the long-term, they reckon, will be totally worth the wait.

It is clear that they have affixed their future with weighty expectations.

Only time will tell what will become of them.

Rising rates of the contest: Huawei Appeals to the Court for the USA


Recently the US authorities have forbidden national agencies to collaborate with companies, that use the equipment of Huawei Technologies (HT). It followed that HT appealed to the Texas District Court claiming that the US authorities are acting illegally, and the imposed limitations are unconstitutional. Guo Ping, a company executive, noted that the National Congress did not give any proofs to support the accusations.


The company considers unconstitutional the prohibitions to US national structures from buying HT equipment, appealing section 889 of the National Defense Act. Meanwhile, private companies of different size are asked to use reliable communication systems or even try free sip account as provided here.

Growing Support

The US authorities have called other governments to abandon the company`s equipment when creating fifth-generation mobile networks for security reasons. In their opinion, the company can collaborate with the intelligence service of China and use its equipment for cyber espionage. Also, US defense experts have expressed concerns about the company’s involvement in the submarine cables laying. They believe that the Government of China will be able to intercept traffic and even interfere with the Internet work with the HT equipment.


 NATO`s Respond

NATO is aware of the potential “security implications” of using Chinese 5G infrastructure and is currently evaluating possible risks.  Close consultations on this issue, in particular, the security of investments in 5G networks are holding,” stated NATO Secretary General Jens Stoltenberg.

The commander of NATO forces in Europe, General Curtis Scaparrotti, said that the North Atlantic Alliance could break the link with its German counterparts if they decide to work with HT in developing 5G.


Submarine Communication Cables

Struggling for the global networks control opened a new front in the US-China relationship. US defense experts are concerned about the vulnerability of submarine cable systems, which can be used for espionage. As Huawei is involved in the creation of the system, the situation becomes even more complicated.

While the United States take measures against HT to prevent it from creating 5G mobile communication networks, it is strengthening position in creating a submarine cables system that carries almost the entire amount of Internet information. Joe Kelly, a spokesperson for Huawei, noticed that the company is privately owned and “no government has ever asked for anything that would endanger its customers or business.”


 Plans for Future

The Chinese company has developed its own operating system in case of inability to use the Android OS and Windows due to a conflict with the US authorities.

The techno giant began its work on creating an alternative OS in 2012. It was a necessary measure for responding to the US investigation over HT and ZTE activities, suspected of spying for Beijing’s Government.

Huawei Technologies is still one of the world’s largest telecom companies. The annual revenue of the company reaches $ 100 billion, and net profit is over $ 7 billion.

Chinese New Year Traditions


China is one of the oldest countries in the world, with its history dating back thousands and thousands of years. China has at least eight different linguistic groups, with hundreds of dialects. China is a very big country in terms of population, and as we said, traditions date back thousands of years. With all those factors in play, traditions tend to be different at some parts of the country. Namely, Chinese New Year traditions are different in large parts of the country, are we are going to tell you all about them.

1.    Chinese New Year’s Eve Dinner

In Chinese tradition, the New Year’s Eve Dinner is the single most important tradition for Chinese people. Like most parts of the world, celebrating New Year’s Eve dinner is all about reuniting with family, especially for those that are coming a long way from home. During the course of the dinner, fish is mostly served, with dumplings being the most important dish. Other foods are served based on personal preference, but the former are especially important to parts of Northern China. Fish and dumplings are dishes that celebrate prosperity, and another important Chinese tradition is to celebrate New Year’s Eve at home, rather than at a restaurant or other food establishments.

2.    Fireworks

Fireworks are an important part of China itself. Chinese are especially famous for their magnificent display of fireworks (remember the Olympic Games in Beijing, China, 2008). This is because fireworks are used to drive away the evil spirits in Chinese traditions. After 12 pm on Lunar New Year 2019, fireworks are launched to celebrate the upcoming year, as well as, to protect them from the evil spirits. Old Chinese traditions state that whoever launches the fireworks, will bear good luck throughout the year.

3.    Shou Sui

A common Chinese phrase, Shou Sui means “after the New Year’s Eve dinner.” After dinner, people will stay up to enjoy the fireworks. An old Chinese legend says that a legendary mythical beast named “Year” will harm any man, woman, child, and animal, that it encounters during the New Year’s Eve. The legend also states that the beast is afraid of the color red, fireworks, and loud sounds, therefore, during the New Year’s Eve, thousands upon thousands of fireworks will be launched, lots of celebratory noise will be made, and red flames will be lit in order to protect themselves from the beast.

4.    New Year Market

After the start of the New Year, a common Chinese tradition states that a market will be set up in order to continue the selling of food, clothes, fireworks, and arts.

5.    Red Packets

Many Chinese traditions focus around the banishment of evil spirits, and this one is no different. Namely, a red packet is a red envelope filled with money ranging from a few hundred to several thousand Yuan. These packets are given to married couples and elderly to young children, and it is said that the money inside will banish the evil spirits from their children, as well, as keep them healthy and give them longevity.

6.    Cleaning

In old times when bathing was not a common thing, people would bathe at the end of the year in order to welcome the New Year. In today’s age, Chinese people will do a full house cleaning in order to remove the old year and welcome the New Year.

Xinjiang Issue and China’s Public Image in Pakistan

Xinjiang Issue and China’s Public Image in Pakistan by Dr. Khuram Iqbal

On November 2nd, 2018, Pakistani Prime Minister Imran Khan is heading to China for a meeting with the top Chinese leadership. Besides concessional loans for Pakistan, both sides are expected to take stock of issues ranging from “Make in Pakistan” to Naya Pakistan Housing Project and Islamabad’s space program that aims to dispatch its first astronaut into space by 2022. Imran Khan is also likely to request Chinese assistance for his ambitious poverty alleviation program.

There are few loose ends with regards to CPEC that both sides will work to tie up. The PTI government intends to convince the Chinese side to priorities hydropower projects instead of coal-fired energy projects, including the western route project (Dera Ismail Khan-Yarik-Zhob road) in CPEC and most significantly revise the financing model of the $9 billion ML1 project on Build-Operate-Transfer basis. Previously, the multi-billion project under CPEC was to build on the Engineering-Procurement-Construction (EPC) model that shifts the entire financing risks to the federal government.

None of these issues is insurmountable. Beijing has already indicated that the new government’s demands are within the cooperation scope of the B&R initiative and China is willing to adjust the CPEC projects based on Pakistan’s needs. Laying to rest Malaysia-like speculations, Chinese Foreign Ministry spokesperson stated that China will make the PM’s visit a “complete success.” By assuaging Pakistan of her economic crises in a timely manner, and addressing her concerns on the mega-project, Beijing stands to strengthen its image of a “savior and an iron-friend” in Pakistani public opinion.

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There will certainly be no shortage of ardor when the leaders from both sides meet. One can also expect the sort of romantic sloganeering such as “higher than mountains, deeper than oceans, sweeter than honey and stronger than steel” that has become the hallmark of the bilateral relations. Behind this enthusiasm, however, looms a growing threat, which many in Pakistani and Chinese policy-making circles continue to overlook. Reports on Beijing’s purported forced re-education programs for Muslims of Xinjiang are depriving China of her hard-earned public goodwill in the country, where there are frequent displays of solidarity with Muslims suffering elsewhere in the world. The government’s inaction on such issues is often manipulated by terrorist organizations to expand their recruitment base among a large pocket of the Pakistani population, which considers its religious obligation to respond to the sufferings of Muslims anywhere in the world.  Xinjiang could have a similar radicalizing impact on Pakistani population as other international issues such as Palestine, Kashmir, Afghanistan, Iraq, and Chechnya have always had.

Although mainstream Urdu media often avoids adverse reporting on China, some segments of the country’s English press have been vocally opposing Chinese counter-terrorism approach as “heavy-handed.” Moreover, with the advent of social media Pakistani public is also exposed to Western media campaign criticizing China for forcefully re-educating millions of Muslims in thousands of schools established during recent years across Uighur Autonomous Region. Such a systematic media campaign can potentially revive pan-Islamism in Pakistan and galvanize public support for the Muslim minority chafing under Chinese policies. There is also a genuine fear that militant groups may manipulate anti-China mantra to justify targeting CPEC-related projects in the future.

What needs to be done to avoid such a scenario. Firstly, Beijing needs to come openly about her counter-terrorism policies in Xinjiang. There are, no doubt, number of reasons to be fully on guard. Multiple factors had contributed to making the Uighur area a hotbed of extremism.  Beijing’s deliberate use of this region as a recruiting and training ground for anti-Soviet Jihad during the Cold War, Soviet Union’s attempts to use Uighurs to split China, Xinjiang’s close geographic proximity to Afghanistan, and years of neglect by the central government made Xinjiang as vulnerable to extremism as Pakistan’s tribal frontiers. To avert the minutest possibility of Xinjiang turning into “China’s Syria or Libya,” the Chinese authorities adopted a strategy that reflects a fine combination of hard and soft CT measures. As far the hard measures are concerned, Chen Quanguo, the party secretary of Xinjiang and the man known as the architect of Beijing’s Xinjiang Strategy, established thousands of centers to for “de-extremification” of the vulnerable population through education in law, Marxism and vocational training. His approach is often termed “heavy-handed” by the international observers. But the official narrative rebuts such claims by citing a sharp decline in acts of terrorism since he took charge in August 2016.

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Initially, Chinese authorities refused to admit the existence of such facilities and defended their CT policies through a series of op-eds in a number of Chinese news outlets. However, a few weeks ago, Shohrat Zakir, chairman of the Government of Xinjiang Uygur Autonomous Region, acknowledged the “vocational education and training program” to fight “three evil forces of extremism, terrorism, and separatism.” Similarly, last week a group of reporters affiliated with “Global Times,” the mouthpiece of Communist Party of China was taken to these facilities. The tabloid reported that “trainees receive free vocational training to improve their command over the country’s common language, national laws and regulations, and vocational skills, among others.” The Western media saw these reports as Chinese cover-up and damage control attempts to avoid further embarrassment ahead of UN review on November 6, 2018.

As the West and China lock horns on the issue of Xinjiang, Pakistani government may come under increased pressure to adopt a stance that does not only appease the religiously inclined domestic constituency but also safeguards its relations with China. Shielding public from “anti-China narrative” is certainly not going to work.  With a growing chorus between policymakers, media houses, and academia of the two countries, there is a need for a frank exchange of views on the issue of Xinjiang, which according to Chinese narrative can serve as a case study on countering extremism through development and re-education.

As Pakistani public is increasingly exposed to diverse views on China, CPEC and Xinjiang through traditional and social media,  it’s going to take a lot more than good intentions to sustain a friendship that is “higher than mountains, deeper than oceans, sweeter than honey and stronger than steel.”

Article written by Dr. Khuram Iqbal.

Russia and China are Killing US Dollar


According to Russian Foreign Minister Sergei Lavrov, countries which are under the sanctions should start doing business in their national currencies, as he suggested on Tuesday. Other than Russia, countries which can opt for such a move are also Iran and Turkey, and this means that the days of the US dollar as the international reserve currency could come to an end.

The person who will be the happiest about it is President Donald Trump. Why Trump?

Yale economist Robert Triffin explained in the 1950s that when a currency is the international reserve currency, it runs a current account deficit. In case of a replacement, it is more likely to have trade surpluses, which is what happened when the US dollar replaced the British pound in the 1920s and which is what POTUS aims for.

Currently, all over the world, nations use the dollar as the currency to trade with each other. When purchases oil from Iran, they use the US dollar to complete the transaction. Basically, more US$ flow out of the country than it flows in and that creates a big current account deficit.

With the dollar as the international reserve currency, we have a thing called “monetary seignorage.” In other words, it is what the US government earns with all of those dollars circulating around the world, outside of the US. It is a minimum cost to print money whereas countries which use $ such as China and Russia pay the full value of it in goods and services.

But not everyone wants to see the dollar as the world’s currency. As China claims, the international role of the US dollar was one of the things that caused the financial crisis ten years ago. There was a chance back then for another currency to replace it, but none did.

Let’s jump to the present. Last week, Trump reimposed sanctions on Iran and he said that any company which is doing deals with the Iranians in dollars would also be hit by sanctions. Also under sanctions are several Russian companies.

Lavrov visited Turkey and he told at the press conference that “unilateral enforcement measures are illegitimate in international affairs,” which is a clear reference to the sanctions imposed by the USA. “One way to counter these illegitimate barriers and restrictions is we can use national currencies on our bilateral trade,” he concluded.

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According to Lavrov, Russia has already switched to local currencies when they strike trade deals with countries such as China and Iran. He also believes that a large number of other countries will start doing the same. “I strongly believe that abuse of the role the U.S. dollar plays as an international currency will eventually result in its role being undermined,” Lavrov said. “A growing number of countries — even those not affected by US sanctions — will more and more stay away from the dollar and will rely on more reliable partners using their (own) currency.”

To some extent, Lavrov is right. But will the Chinese be content when they receive the payment in Turkish lira, knowing that the currency will be worth much less by the time the ship reaches its destination? What the US dollar has that no other currency can guaranty: It is safe, dependable and easy to exchange.

We mentioned that this change in role for the US$ is making Trump happy. While he may be thrilled with lower trade deficits because the dollar loses its role of being the international reserve currency, this is not going to happen soon. We will still have to wait for a major change when it comes to the international currency and at the moment none can replace the US dollar.

Largest Trade War Ever – Trump Hits Chinese Imports, Beijing Quick To Respond


China is the biggest trade partner of the U.S., and after President Donald Trump imposed tariffs on imports from China, he started a trade war between two of the most important economies of the world. Washington set a 25% tariff on $34 billion worth of goods coming from the Far East country, and it started on Friday, at 12:01 a.m. ET. As a result, foreign ministry representatives from Beijing stated that additional duties would be imposed on the U.S. made goods.

As soon as POTUS announced that there could be additional tariffs on Chinese products, Beijing responded saying that they will counterattack and among the first to be hit are the car manufacturers and soybeans. There is a long list of products that Trump presented, and this is done as he isn’t pleased with the trade deficit that the U.S. has with China.

One more thing that the United States officials mentioned about China and the way some of its companies are doing their business is the predatory tactics that are quite unfair as it requires from the U.S. companies to share tech so that they could access the market of China. These allegations were rejected by Beijing.

For many economists and analysts, this trade war is a big mistake as it will mostly hit consumers. Here is what Josh Kallmer, executive vice president for policy at the Information Technology Industry Council, a trade association for the communications technology industry said: “The decision to impose tariffs on Chinese goods will harm American consumers and businesses without addressing discriminatory and systemic Chinese trade practices and policies.” He continued by adding “It is troubling that the (Trump administration) continues to assume that the imposition of tariffs will convince China to resolve complex trade issues, and irresponsible to downplay the impact on American workers and businesses.”

The trade deficit of the U.S. towards China hit the record in 2017 at $375 billion, and they are in front of Canada and Mexico when it comes to trade with Washington. On the other hand, the European Union is the biggest political bloc in terms of trade with about $1.1 trillion in goods and services exchanged in 2016.

It is clear that we are at the brink of the largest trade war in history as Trump is ready to clash with China and he already damaged his relationship with longtime allies Canada, Mexico, Europe, etc. William Zarit, chairman of the American Chamber of Commerce in China said: “There are no winners in a trade war.” He also added that both sides need to sit down and find a solution.


What Mystery Illness That Attacked US Embassy Staff In China


A mysterious illness has reportedly affected the US embassy staff in China, and as a result, the decision was made to remove several people from the positions. This situation is quite similar to what happened with a few staff members in Cuba.

The Cuba embassy was hit last year by this mysterious illness when a total of 24 US employees reported problems. These were described as “auditory sensations,” and it caused brain injuries. It was speculated that some agency or government might be responsible for these attacks that could have been conducted with some type of sonic weapon.

All this comes at the moment when US and China relations are at a quite low level due to the possibility of an intensification of a trade war. Only a few days ago, the State Department issued a warning to its personnel that one employee of their China embassy reported “subtle and vague, but abnormal, sensations of sound and pressure.”

These reports were taken seriously, but they still do not know the cause. It is advised to anyone who encounters anything unusual to move to a safe place. This includes any changes and “unusual acute auditory or sensory phenomena.” It was noted that Cuban staff members had brain injuries and one official in China was diagnosed with mild brain trauma.

In case that unusual symptoms occur, any member should inform medical staff. It is said by the State Department: “if they note new onset of symptoms that may have begun in association with experiencing unidentified auditory sensations.”

At both locations in Cuba and China, the US dispatched special teams to investigate these mysterious attacks. America didn’t accuse any of the government, and Cuban officials denied any involvement in this case.

A sonic attack can cause symptoms such as headaches, vertigo, permanent hearing loss, dizziness, vomiting and in severe cases, even brain damage.


Trade Talks Between America and China End In Stalemate


On Sunday, China and the United States ended the trade talks that took place in Beijing. The number of announced deals is zero, and Beijing officials refused to commit to buying more American goods. The US will continue with imposing further tariffs on Chinese export goods.

Chinese news media distributed the official statement that said: “If the United States introduces trade measures, including an increase of tariffs, all the economic and trade outcomes negotiated by the two parties will not take effect.”

Now, the Trump administration has China’s industrial policies to worry about. Furthermore, the problem with the Chinese telecommunications company ZTE remains unresolved, which harms both countries. The American export promotion team was led by Commerce Secretary Wilbur Ross and he was joined by senior officials from the Treasury and the Agriculture Department. The United States Trade Representative Office has threatened to impose 25 percent tariffs on $50 billion a year in Chinese goods, while the aluminum tariffs that are already imposed will remain in power. Interestingly enough, the top officials from this office were not present.

Meanwhile, Trump wrote on Twitter: “When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!” However, Beijing officials would not pledge additional purchases and they demand Americans to solve their border trade issues. China is ready to strike back if the US imposes the tariffs. In that case, Beijing would block an equal value of soybeans and other goods that come from the United States.

The dispute is obviously the main issue, but the Chinese officials are concerned about ZTE, a telecommunications giant which employs 70,000 people. The company was forced to shut down its operations almost completely because the American government agency, the Bureau of Industry and Security ordered the US companies to stop selling software and microchips to ZTE.

Around three weeks ago, Trump wrote a tweet in which he expressed concern about the American sanctions on ZTE. When Mr. Ross and his team arrived in the Beijing, China has become optimistic that they could finally solve the issue without any major obstacles and sacrifices.

“Chinese officials know these talks are precarious, but may underestimate the domestic political cost Trump now sees in lifting the ZTE ban without major concessions from China,” said Andrew Gilholm, the director of China analysis at Control Risks, a political and security consulting firm. “If the ban stays, Beijing’s retaliation will definitely go up a gear.”

Meanwhile, the state media in China explained why the sales ban is imposed on ZTE. The company has ties to Iran and North Korea. Such connections do not cast the best light on the country because Beijing claimed that China’s enforcement of international sanctions against North Korea was one of the reasons the upcoming summit between Donald Trump and Kim Jong-Un was organized.

According to the Chinese news outlets, the ZTE decision was made by Mr. Ross’ Commerce Department. They suggested that the decision is nothing more than a bargaining ploy, which is a part of trade negotiations. The Bureau of Industry and Security is a part of the Commerce Department, but despite that, its autonomy is considerable. The agents of the bureau carry guns and badges, and they have played a huge role in preventing Iran and Iraq from fully developing the nuclear weapon.

James Zimmerman, a former chairman of the American Chamber of Commerce in China and current partner in the Beijing office of the law firm Perkins Coie says: “Trump’s strategy does no favors for the moderates like trade negotiator Liu He who are eager to take China down a more manageable path of market and financial reforms, and such reforms would indeed be good for U.S. commercial interests.”


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