Is China winning against President Trump when it comes to trade?
Negotiators secure delay on tariffs while conceding little
China has called President Donald Trump’s bluff.
Chinese negotiators left Washington this weekend with a significant win: a willingness by the Trump administration to hold off for now on imposing tariffs on up to $150 billion in Chinese imports. China gave up little in return, spurning the Trump administration’s nudges for a concrete commitment to buy more goods from the United States, and avoiding limits on its government-led efforts to build new high-tech Chinese industries.
The trade fight is far from over. And large Chinese technology companies in particular could still be vulnerable if the United States decides to start punching again, with administration officials appearing to back away from Trump’s pledges to help ZTE, a Chinese telecommunications company hit with severe U.S. penalties.
Still, the latest round of negotiations showed that a confident China could be more than a match for divided U.S. negotiators who have made often discordant demands. Trump, who proclaimed this year that “trade wars are good, and easy to win,” and his advisers may find that extracting concessions from China is much harder than they expected it would be.
China’s propaganda machine took a victory lap after the talks, proclaiming that a strong challenge from the United States had been turned aside, at least for now.
“Whether in Beijing or Washington, in the face of the unreasonable demands of the United States, the Chinese government has always resolutely fought back, never compromised, and did not accept the restrictions set by the other side,” the official Xinhua news service said in a commentary Sunday.
On Monday, Trump defended the approach, promoting the talks as a success. On Twitter, he said barriers would “come down for the first time,” and China will “purchase from our Great American Farmers practically as much as our Farmers can produce.”
But U.S. negotiators were dealing with a China eager to show its strengths. During last week’s talks, China for the first time sent a strategic bomber to an island reef in the South China Sea, an area where Beijing has laid claims of sovereignty.
China’s success partly comes from its ability to stick to a single strategy in trade. Even as Beijing has shown a willingness to talk and make peace offerings in the form of multibillion-dollar import contracts, it has held fast to its refusal to make any commitment for a fixed reduction in its trade gap with the United States. The trade imbalance between the countries has actually widened since Trump visited Beijing in November.
Beijing also has not bent on its Made in China 2025 initiative, an industrial modernization program that Washington and U.S. business groups complain forces foreign companies to share their best technology while potentially creating statesponsored rivals.
China said Monday that it welcomed more talks.
Chinese propaganda was quieter on signs that the Trump administration may be backing away from Trump’s pledge to help ZTE, which Washington moved to punish for breaking U.S. sanctions on Iran, North Korea and other countries.
A ban on selling U.S.-made chips and other equipment to ZTE has brought the company’s factories to a halt. But on Sunday, Treasury Secretary Steven Mnuchin said the United States was not prepared to revisit the penalties and that Trump wanted to be “very tough” on ZTE.
China’s problems in the area of technology could get worse. U.S. officials are investigating whether a much bigger Chinese tech company, Huawei Technologies, also flouted U.S. trade controls. Huawei has said it adheres to international conventions and local laws.
Despite that vulnerability, China has plenty of negotiating strengths.
White House trade officials have more expertise with trade law, but China has a small but cohesive team of negotiators who have streamlined Beijing’s ability to make economic policy decisions, a benefit in evaluating the impact of any concessions to the United States. Policy decisions that once took a month can now take as little as a day, said a person with a detailed knowledge of the process who insisted on anonymity because of the political sensitivity of the issue.