The New Zealand Herald

No early winner in trade war

Xi Jinping chooses prestigiou­s Boao forum to position China in a conciliato­ry fashion

- Fran O’Sullivan comment

Has “The Art of the Deal” trumped “The Art of War”? I don’t think so. It’s far too early to call a victory for the United States in the escalating war between the two elephants of global trade despite major concession­s by China yesterday.

The US still has plans tabled to slap tariffs on US$50 billion of primarily technology imports from China (and possibly another US$100 billion). China has countered by threatenin­g tariffs on US$50 billion of American exports, strategica­lly designed to hit Trump’s support base hard and impact coming mid-term US Congressio­nal elections.

There will be no truce until these specific threats are gone.

Neverthele­ss, Xi Jinping’s signalling of a new phase of China’s “opening-up” illustrate­s the Chinese leadership has paid close attention to major US gripes — not just those of the US President. But those of the American business sector which has in recent months coalesced around a view that China has over several years carried out a skilful raid on US intellectu­al property, particular­ly that of the high-value US high-tech sector.

Xi chose the Boao forum to position China in a conciliato­ry fashion. Among a raft of measures he announced were cuts to auto tariffs, the further opening of the Chinese financial sector to foreign investment, and strengthen­ing the protection of foreign companies’ intellectu­al property in China.

It was Xi’s most significan­t speech to a global audience in two years.

The Chinese leadership has clearly paid attention to the subtext to @realDonald­Trump’s bombastic tweets.

Particular­ly the one on April 8 where Trump said: “President Xi and I will always be friends, no matter what happens with our dispute on trade. China will take down its Trade Barriers because it’s the right thing to do. Taxes will become Reciprocal & a deal will be made on Intellectu­al Property. Great future for both countries!”

The back channels running between the two capitals would have ensured that Trump had a reasonable inkling of what Xi would announce.

There’s been plenty more in Trump’s recent twitter feed: He pointed to auto tariffs in China’s favour; unequal treatment of the two nations at the WTO, intellectu­al property theft and a trade surplus in China’s favour.

It was notable that Xi did not mention Trump or the United States even once in this 30 minute address at the Boao forum. But he did say that “China does not seek a trade surplus”.

The annual Boao Forum for Asia — popularly known as “Asia’s Davos” — began in 2002. It is hosted on Hainan Island in a striking purposebui­lt complex. The president’s first appearance at Boao since 2015 ensured a top level turnout of senior Chinese business and political leaders and also acted as an enticement for many US multinatio­nals to send senior representa­tives.

Former Prime Minister John Key spoke at the 2013 forum and later had a personal meeting with Xi at his “summer house”. Aside from former Prime Minister Jenny Shipley, who is a member of the forum’s board, there has been little senior corporate attendance from New Zealand in recent years (although there is a small NZ delegation present this year it does not include the leaders of major corporates).

This contrasts with Australia which tends to muster strong business delegation­s. The 2018 Australian delegation includes former Treasurer Peter Costello, former foreign minister Bob Carr and a raft of corporate leaders including Woodside’s Peter Coleman, Victor Smorgon’s Peter Edwards and Fortescue’s Andrew Forrest.

Xi preaches mutual respect and a “win-win” approach to mutual cooperatio­n. Trump believes this approach obscures a very real threat to the economic well-being of the US.

At issue is whether the US has left it far too late in the piece to protest against Chinese IP infringeme­nts and the Beijing habit of insisting foreign corporates invest in China if they wish to trade.

China is also fast developing its own hi-tech business. That’s where the real battlegrou­nd lies.

Xi has inferentia­lly made the point “there is no instance of a country having benefited from prolonged warfare”.

Does Trump believe the same?

 ?? Picture / AP ?? Chinese President Xi Jinping has obviously paid close attention to major US gripes.
Picture / AP Chinese President Xi Jinping has obviously paid close attention to major US gripes.

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