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Here's Why The China Trade Deal Fell Apart
Here's Why The China Trade Deal Fell Apart
by Tyler Durden
Wed, 05/08/2019 - 05:50
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Readers who have been paying close attention to every leak related to the ongoing US-China trade talks might remember this FT storyfrom six weeks ago about Beijing's penchant for returning trade-deal draft proposals to Washington riddled with red-line stikeouts.
We only bring it up now because, according to a play-by-play published by Reuters Wednesday morning, it appears President Trump finally lost his patience with Beijing when they returned a draft trade deal with strikeouts eliminating virtually all of the major concessions made during the past few weeks.
Though reports about Beijing's unwillingness to compromise had begun appearing with more regularity during the preceding week, according to Reuters, it appears Beijing was deliberately trying to provoke President Trump. And if this was indeed China's goal, it appears it succeeded.
Lighthizer and Treasury Secretary Steven Mnuchin said earlier this week that Trump's tariff threats were prompted by Beijing reneging on its promises. But they refused to disclose any details. It now appears that Beijing has gone back on practically all of the concessions it had made during the negotiations, including deals on currency stabilization, enforcement and market access for cloud-computing firms, to name a few.
But despite the steady stream of optimistic trade rhetoric, the only real surprise here - as one administration insider put it - is that it took this long for the White House to blow up the deal.
Though Vice Premier Liu He will visit Washington later this week, the notion that a deal can be salvaged, at least in the short term, looks almost impossibly remote. And it's not hard to see why.
Even as the standoff in the Pacific between the US and China has grown increasingly tense - thanks in part to Washington's belligerently pro-Taiwan (and its refusal to allow Beijing to have its cake and eat it, too when it comes to contested islands in the South China Sea) - Beijing has put on a happy face and parroted Washington's line that American military meddling in the region is a separate issue.
But as Washington prepares to sell billions of dollars in arms to Taiwan (only months after President Xi vowed to bring the errant province back under Beijing's control), it appears the Chinese might finally be losing their patience.
On Tuesday, Foreign Ministry spokesman Geng Shuang told reporters that Beijing had lodged "stern representations" with the US over a House bill expressing support for Taiwan. Beijing complained that this "severely violates" the longstanding "One China" policy and represents "gross interference" in China's affairs.
While the Communist Party might have been willing to countenance repeated American intrusions into the South China Sea, Xi earlier this year threatened to smite anybody who dares interfere with Beijing's plans for Taiwan.
Walking away from the trade-deal table might only be the beginning.
Here's Why The China Trade Deal Fell Apart
by Tyler Durden
Wed, 05/08/2019 - 05:50
2
SHARES
TwitterFacebookRedditEmailPrint
Readers who have been paying close attention to every leak related to the ongoing US-China trade talks might remember this FT storyfrom six weeks ago about Beijing's penchant for returning trade-deal draft proposals to Washington riddled with red-line stikeouts.
We only bring it up now because, according to a play-by-play published by Reuters Wednesday morning, it appears President Trump finally lost his patience with Beijing when they returned a draft trade deal with strikeouts eliminating virtually all of the major concessions made during the past few weeks.
Though reports about Beijing's unwillingness to compromise had begun appearing with more regularity during the preceding week, according to Reuters, it appears Beijing was deliberately trying to provoke President Trump. And if this was indeed China's goal, it appears it succeeded.
One administration insider said the changes "undermines the core architecture of the deal", particularly since Robert Lighthizer has prioritized an enforcement regime that's closer to something typically used for punitive economic sanctions than a trade deal.
Lighthizer and Treasury Secretary Steven Mnuchin said earlier this week that Trump's tariff threats were prompted by Beijing reneging on its promises. But they refused to disclose any details. It now appears that Beijing has gone back on practically all of the concessions it had made during the negotiations, including deals on currency stabilization, enforcement and market access for cloud-computing firms, to name a few.
But despite the steady stream of optimistic trade rhetoric, the only real surprise here - as one administration insider put it - is that it took this long for the White House to blow up the deal.
Though Vice Premier Liu He will visit Washington later this week, the notion that a deal can be salvaged, at least in the short term, looks almost impossibly remote. And it's not hard to see why.
Even as the standoff in the Pacific between the US and China has grown increasingly tense - thanks in part to Washington's belligerently pro-Taiwan (and its refusal to allow Beijing to have its cake and eat it, too when it comes to contested islands in the South China Sea) - Beijing has put on a happy face and parroted Washington's line that American military meddling in the region is a separate issue.
But as Washington prepares to sell billions of dollars in arms to Taiwan (only months after President Xi vowed to bring the errant province back under Beijing's control), it appears the Chinese might finally be losing their patience.
On Tuesday, Foreign Ministry spokesman Geng Shuang told reporters that Beijing had lodged "stern representations" with the US over a House bill expressing support for Taiwan. Beijing complained that this "severely violates" the longstanding "One China" policy and represents "gross interference" in China's affairs.
While the Communist Party might have been willing to countenance repeated American intrusions into the South China Sea, Xi earlier this year threatened to smite anybody who dares interfere with Beijing's plans for Taiwan.
Walking away from the trade-deal table might only be the beginning.
