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Trade Talks Between America and China End In Stalemate

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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.

Source:uk.reuters.com

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.”

Source: mobile.nytimes.com

Iranian President Goes To China – Nuclear Deal Talks

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According to China foreign ministry, Iranian President Hassan Rouhani will be coming to a regional summit for talks about the possibility of saving of Iran’s nuclear deal. The move has been made after the President of the United States, Donald Trump, decided to pull out America from the agreement.

This will be a working visit for President Rouhani as he will go to the summit of the Shanghai Cooperation Organisation which is China and Russia-led political, economic and security Euroasian organisation. Regional meeting will be held in Qingdao, China located in northern part of the country. While we did not get the exact date of the visit, we know that the event has been scheduled for the second weekend of June.

At this moment, Tehran is only an observer member, but they already sought to become a permanent member of the Shanghai Cooperation Organisation. With the sanctions imposed by West lifted it was reported that Iran could become a member of the bloc. Currently, this organisation consists of China, Russia, India, Pakistan and four Central Asia ex-Soviet republics.

Source:atimes.com

Before the nuclear deal was signed, Tehran was racing to finish their nuclear weapons program and to develop nuclear missiles. With the agreement that has been signed in 2015, Iran stopped the uranium enrichment process but also sent out its stockpiles to Russia. As a result, sanctions set by West were removed, and the Middle East country could return to trading and exports of oil.

While the deal that was signed didn’t completely stop Iran from using uranium, this was a good move for the entire world as it did stop them from developing a nuclear bomb. One of the problems with the agreement is that it prevents Tehran in creating atom bomb until 2025 after which they can continue the development. Of course, the terms could be renegotiated after that date, so the termination of the deal is considered to be a mistake by many.

Source:timesofisrael.com

With America out of the deal, we could see a lot of activity from European countries that will try to help Iran economically and thus persuade them to respect the terms. Since China is one of the signatories, it is considered that they will also work to ensure Tehran’s loyalty.

Source: cnbc.com

Trump’s Presidency Benefits China

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During the presidential campaign, Donald Trump accused China of damaging American workers by stealing what should have been their jobs. Even though he had some recurring promises in the campaign, he has shown the unpredictability during his term. Thanks to this, China has a chance to become a superpower more quickly than expected.

So far, Trump has crushing Beijing in the trade war in one moment, and he was saying that deals should be signed in another. He has been going on about $375 billion US trade deficit with China which distracts him from the real goals. Moreover, Trump’s relationship with Chinese President Xi Jinping also puts him in the negative position. His exclusion of the United States from the global warming issues and global trade give Beijing additional leverage, on top of that, it opens up the opportunity for them to occupy the US’s current position.

Source:newyorker.com

Because Trump rejected the Trans-Pacific Partnership trade deal, China can easily persuade the US allies in Asia that the promises made by America are empty. And while the Americans are quarreling in the White House, China spreads its influence in Asia and the South China Sea. In the new National Security Strategy, Beijing is considered to be the competitor to “American power, influence and interests.”

Aaron Friedberg, who was in the office of Vice President Dick Cheney and now works at Princeton University as a professor said: “While the administration at the bureaucratic level is trying to think and talk about long-term issues, the President himself is very focused on the short term.” China is now led by their strongest President in generations, and they are thinking decades and centuries in advance instead of just a few years.

Based on the evidence, Beijing has the edge over Washington in their relations recently. Although POTUS threatened to win the trade war against China he gave up on it because he realized that winning such war would be much more challenging than he thought. Ryan Hass, a former State Department, and National Security Council staff member said that Trump wanted to withdraw from taking action. He declared: “Whereas six weeks ago, the administration was running headlong at the trade issue, now it appears to be, at the most charitable interpretation, putting the pause button on things.”

The reception that the US reached with China wasn’t the best, which only showed that America was losing ground. Beijing was not forced to fold on some of the most bitter disputes with Washington even though it agreed to lower tariffs on auto imports. It only convinced Trump to pull back a threat to levy $150 billion in tariffs on Chinese products, but only after offering the purchase of US agricultural products.

Trade expert William Reinsch said: “We have been taken again. Last summer they played us. They played us again.” We are not familiar with the details of the deal at this point, but Commerce Secretary Wilbur Ross will be sent to Beijing to sort things out. Meanwhile, Trump tweeted: “Our Trade Deal with China is moving along nicely, but in the end, we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.”

This even outraged some of the Republicans and Marco Rubio tweeted: “I have urged @potus to follow his initial instincts on China & listen to those in his administration who understand that a short-term trade deal that sounds good but poses long-term danger is a #BadDeal.”

Even though Trump is being criticized at the moment, he is right when he says that the presidents before him could work out the deal between the two countries. POTUS has also been criticized for calling Chinese president his friend, and on Wednesday, he said: “I have a great relationship with President Xi. He’s a friend of mine. He likes me. I like him. That was two of the great days of my life, being in China. I don’t think anybody has ever been treated better in China — ever in their history.”

Meanwhile, the White House negates the fact that Trump has gone soft on Beijing. “We finally have a President who is actually calling out China on their unfair trade practices — and not just calling them out, but actually doing something about it, and aggressively pushing forward in negotiations, something that we haven’t seen in decades,” White House press secretary Sarah Sanders said Wednesday.

Source: edition.cnn.com

Cancelling of Trump-Kim Meeting Helps Only China

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President of The United States, Donald Trump, decided to cancel the meeting with Kim Jong-un that was scheduled for June 12th. The news was a disappointment to some of America’s allies in Asia, but one particular country will be pleased with this development – China.

This announcement will stop the planned denuclearization of North Korea, a goal on which the US, South Korea, and North were working in previous months. Trump was the one advocating for this summit, but he changed his opinion entirely yesterday by saying: “Our very strong sanctions, by far the strongest in history, and maximum pressure campaign will continue.”

It is expected that China will use the halt in the NK/USA negotiations to strengthen its position in the dialog with America about the new trading deal. These talks will also be influenced by the North Korean reaction to what POTUS did. In years and months prior to this meeting, North Korea was a hostile nation which frequently tested ballistic missiles and conducted nuclear tests. But in recent months they changed their policy and were heading to a peaceful future, even releasing US prisoners and destroying one of their nuclear test sites.

Source: www.smh.com.au

Now, that Trump withdraws himself from the summit it remains to be seen how will Kim Jong-un react. It is possible that if he gets offended with this move that nuclear and ballistic missiles tests will continue and the region will once again be on its feet. But, if he decides not to proceed with these actions, his position in the region will be strengthened especially from Chinese standpoint. At the moment China is the North Korea’s most significant trade partner, and this relationship could only improve with recent development.

Adam Mount, a senior fellow at the Federation of American Scientists in Washington, said about Trump’s withdrawal: “Trump walking away from the summit lets North Korea meet all its objectives: public recognition, lighter sanctions, damage to US alliances and continued nuclear advancement.”

The cancellation of the meeting affects South Korea and its president Moon Jae-in the most, and Lee Byong-chul, a Senior Fellow at the Institute for Peace and Cooperation in Seoul, talked about this: “Moon Jae-in’s people must be panic-stricken by now because they have invested so much in the Trump-Kim summit. At home, they will face a gleeful political opposition who will ridicule them for being so naive.”

Source: www.smh.com.au

On the other hand, authorities in Japan are glad that summit is canceled, as they were of the opinion that the things were moving too quickly and without enough Japan involvement. Prime Minister of Japan, Shinzo Abe was afraid that NK and US would break a deal that suits their needs and which would be harmful to his country.

President Xi Jinping of China also thought that the conversation between Kim and Trump are going too fast and that it could do more harm than good for Beijing. But with the meeting being canceled, China now has space to broaden its influence on their neighbors. According to James Mann, it’s in China’s interest that summit gets delayed as long as possible: “It is in Xi’s interest not only to delay but to have the summit pending for as long as possible. The prospect of a deal without a deal itself gives China leverage over the US, especially on trade.”

Cheng Xiaohe, a North Korea expert at Renmin University in Beijing, said: “The cancellation may offer China an opportunity to do something to salvage the aborted meeting.”

Source: www.smh.com.au

President Trump believes that recent meeting between Xi and Kim was the reason that NK decided not to abandon its nuclear program as quickly as it seemed they would.

One of the reasons for why Trump canceled the meeting was the “tremendous anger and open hostility displayed in North Korea most recent statement.” On Thursday NK released official statement which was a warning to the US: “The United States must choose between encountering North Korea in a meeting room or a nuclear-to-nuclear showdown.”

On Tuesday Trump said: “There was a different attitude by the North Korean folks after that meeting. I can’t say that I’m happy about it.”

Source: www.smh.com.au

Political analysts disagree with Trump by believing that North Korea changed their stance without outside influence, from the fear for their survival. Most officials in the North think that deal of the denuclearization must allow them to retain some sort of nuclear arsenal for their safety.

But, a possibility remains that Xi had a word in it because, without a deal between NK and the US, they have leverage on both the situation in North Korea and their trade talks with the United States.

Source: www.smh.com.au

China ready to cut U.S. Trade Deficit by $200 Billion

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In an effort to stave off a trade war, China has made an offer to President Donald Trump to cut U.S. trade deficit by $200 Billion by 2020. This was one of Trump’s original requests made by Treasury Secretary Steven Mnuchin during his visit to Beijing last week.

Chinese Vice Premier Liu He made the offer on his return visit to Washington. Last year, United States deficit with China was $375 billion.

Source:scmp.com

According to some experts, like Victor Shih, a professor at the University of California in San Diego, that offer will be hard to implement.

“Even with a drastic reallocation of Chinese imports of energy, raw materials, and airplanes in favor of the U.S., the bilateral trade deficit may reduce by $100 billion,” Shih said. “A $200 billion reduction would mean a drastic reduction in Chinese exports to the U.S. and a dramatic restructuring of the supply chain.”

Another demand Trump administration has made is the opening of China’s market and implementing measures that will deal with the theft of the intellectual property.

“American ownership of its own companies in China must be permitted,” Trump economic adviser Larry Kudlow said. “We are going to have serious talks dealing with a difficult trade situation that needs to be fixed.”

Source:canadianmanufacturing.com

A trade war would hurt both countries and is something both Beijing and Washington are eager to avoid. There is no doubt that this proposal is one of the positive signs that it can be averted.

“By making a significant offer to the U.S. it indicates that China is taking the negotiations very seriously,” Shane Oliver of Sydney’s AMP Capital Investors Ltd said. “Much will depend on the details and time period and later in terms of the implementation.”

President Trump’s last week’s decision to review penalties against Chinese company ZTE is also considered a positive move and something that will go a long way to placate Chinese leadership.

Source: fortune.com

Did President Trump just save ZTE?

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As we all know, Samsung and Apple are still two biggest companies when it comes to modern phones. Whether you are an android fan or a fan of the iOS, there is no doubt that you have seen how both of them look. These are the giants of this market.

Well, the one company that is trying their best to match up with the giants is ZTE. But, it’s kind of hard for them to do that when they have a huge ban in the US.

ZTE is actually the fourth-largest smartphone maker in the States and has been in trouble lately as the US Commerce Department issued a denial order which is preventing US businesses from providing services or even selling hardware to Chinese tech giant. We are talking about a seven-year ban here that actually forced ZTE to say goodbye to some of their “major operating activities.”

Source:automobilnews.eu

But don’t you worry, here comes President Trump, ZTE’s newest ally! He has tweeted out that he is working with the President of China, Xi Jinping, on getting back into business this massive Chinese phone company. He wants to find a way to make everything work and he wants to do it fast.

He even stated that the Commerce Department has been instructed to get things done quick, fast and in a hurry.

ZTE has been working hard on getting that denial order overturned. Their biggest hopes were the bilateral trade talks between US and China. Now, it seems that they have President Trump on their side, which is a huge plus for the Chinese company.

It is a bit of a surprise that Trump of all people has stated that he is concerned about Chinese people losing jobs since he was the one to say that protecting the jobs of the American people is something that he wants to focus on.

Anyway, this is a strange situation. We’ll have to wait and see the results of Trump’s and ZTE’s efforts.

Source: cnet.com

The Missiles in the South China Sea Should be Scarry!

According to the reports, China has deployed surface-to-air missiles and anti-ship cruise missiles in the Spratly Islands chain that is located in the South China Sea. This is just another move that Beijing made, along with the installing the jamming equipment in the region that is there and designed to disrupt all radar systems and all attempts at communication.

Source:abc.net.au

This anti-ship cruise missile system is land-based and it is believed to be the famous YJ-12B, which is good enough and strong enough for China to strike surface vessels within the 295 nautical miles range. HQ-9B missiles are the surface-to-air-missiles that are able to reach great distances. They can engage targets at ranges of 160 nautical miles. Intelligence assessments say the missile platforms have been moved in the past thirty days, which is pretty interesting.

The White House is well-aware of what the Chinese are doing and they have stated that there will be both short-term and long-term consequences for their moves – mainly for Beijing’s militarization of the South China Sea.

What about Pentagon? Well, The Pentagon is also pretty concerned about China’s actions. They have stated that China actually benefits from America’s military presence in the region.

Source:newindianexpress.com

Dana W. White, the Defense Department spokeswoman, has explained that the US has always had concerns about Beijing militarizing these islands. She pointed out that East Asia country has always been the beneficiary of the free navigation of the sea. The US Navy has been the one that constantly guaranteed that.

When you take a look at this situation, the deployment of the missiles is a huge provocation. If they don’t move these systems from their bases, the other regional powers like the United States, Japan, and Australia are going to be angry, they are going to talk a lot less and take a lot more actions.

Source: nationalinterest.org

US and China begin negotiations aimed at avoiding a trade war

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Led by the Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer, the US delegation will be staying in Beijing until Friday, trying to iron out the kinks in the relations between the two countries caused by the mutual accusations and tariffs threats that could put a serious hamper in both economies.

US President Donald Trump is optimistic about the outcome and has tweeted on Wednesday: “Our great financial team is in China trying to negotiate a level playing field on trade!”

Unfortunately, not everyone agrees with Mr. Trump.

Michael Camunez, CEO of consultancy Monarch Global Strategies, is somewhat skeptic about a deal being made. “I don’t expect any grand bargains being struck,” he said. Camunez remarked that the US delegations don’t feel unified and that their platform is unclear. These are the weaknesses Chinese are sure to exploit.

There are several aspects of the trade deal Mr. Trump has promised to address in his campaign. The most glaring one is a huge trade deficit, reaching a staggering $375 billion last year. Even a Chinese promise of increasing its US imports by $50 billion would be considered a win for the Trump team, but the trouble is that there simply aren’t that many goods manufactured in the USA Chinese want to buy. Those that they do want, like high-tech electronics, are denied to them, due to security concerns.

Another objection Mr. Trump often used in his campaign against China is the theft of intellectual property. He was adamant that China must take steps to reduce and eventually stop this practice.

Source:scmp.com

Finally, there is the question of increased access to the Chinese market. This is the point that Chinese are most likely to agree with and allow foreign companies greater access to its market by changing regulations. There are already steps being taken in that direction, with an act allowing foreigners to own and control Chinese financial institutions, but the amount of the red tape included is so big that so far only one company has managed to meet the requirements.

It remains to be seen how Mr. Trump will react if negotiations fail and his tariffs package is put into action.

Source: money.cnn.com