U.S. President Trump spent much of his UN speech on China

The U.S. and China have planned another negotiation round in the second week of October, but specific details were forthcoming from neither side, nor did they reveal any specific areas of progress made during preparatory deputy-level talks. China has bought a “considerable” amount of soybeans and pork from the United States ahead of the talks, the Ministry of Commerce (MOFCOM) confirmed. “China and the U.S. are currently maintaining close communications and preparing for positive progress in the high-level economic and trade talks, the Ministry said. The U.S. government is also still expected to raise tariffs on USD250 billion of Chinese goods from 25% to 30% on October 15.

In his address to the UN General Assembly in New York, U.S. President Donald Trump launched a forceful and lengthy attack on China over its trade policies. The past two decades had proven “completely wrong” the theory that China’s accession to the World Trade Organization (WTO) in 2001 would lead to a liberalization of its economy, the strengthening of protections of private property and the rule of law, Trump said. “Not only has China declined to adopt promised reforms, it has embraced an economic model dependent on massive market barriers, heavy state subsidies, currency manipulation, product dumping, forced technology transfers and the theft of intellectual property and also trade secrets on a grand scale,” Trump said.

Trump used the example of a Chinese state-owned company’s alleged theft of U.S. memory chip maker Micron’s designs to argue that China’s pursuit of economic growth was coming at the expense of U.S. interests. He also said that China, as the world’s second largest economy, “should not be permitted to declare itself a developing country in order to game the WTO system at others’ expense”, the South China Morning Post reports. UN Secretary-General Antonio Guterres warned that the international community must do “everything possible to avert a great fracture” between the U.S. and China.

Chinese delegates at UN General Assembly expressed “resolute opposition” to Trump’s speech, including remarks on the situation in Hong Kong. “We urge the U.S. side to respect China’s sovereignty, stop interfering in China’s internal affairs and stop making irresponsible statements,” Ministry of Foreign Affairs Spokesman Geng Shuang said at a press briefing. Ambassador Ma Zhaoxu, head of China’s delegation at the UN General Assembly, said there was “no such thing as China joining the WTO at the expense of other countries’ interests”. The delegation also denied the allegation of forced technology transfers and said Trump’s unilateral move to start a trade war harmed not just China but the global economy. “China does not want a trade war but will never concede on issues of principle,” they said.

Speaking in New York after Trump’s address, China’s Foreign Minister Wang Yi said China-U.S. relations had “once again come to a crossroad”, adding that “to say some kind words about U.S.-China relations needs courage for the time being”.

A day after his speech at the UN Trump said that a deal to end the trade war with China “could happen sooner than you think”. But in previous months optimism has proved to be premature. The possibility of another breakdown in talks and an escalation of tensions weighed heavily on the minds of companies operating in China, said Don Williams, Managing Partner and Chief Representative at the Sheppard Mullin law firm in Shanghai. “My clients fear escalation of tensions and don’t really have a true ‘plan B’,” said Williams, adding there was particular concern among his consumer-focussing clients that deepening bilateral friction could cause a backlash from Chinese buyers. If the Chinese government chose to stoke the patriotic sentiment of the public, said Williams, “American companies and brands could suffer significant damage and it may take a very long time to reverse that.”

The Hong Kong Trade Development Council (HTDC) said that Hong Kong’s exports would shrink 4% by value due to the U.S.-China trade war in the worst performance since 2009 when they plunged 12.6% during the depth of the global financial crisis. The forecast marked a significant downgrading of a previous prediction that exports would grow 2% in 2019. China’s Customs Administration published a detailed breakdown of trade data showing that shipments from the mainland to Hong Kong fell 7.7% in the first eight months of this year, compared to the same period in 2018. China’s overall overseas shipments rose 0.2% between January and August, indicating a weakening of the city’s role as a primary conduit for Chinese transshipments to consumer markets in the U.S. and European Union. China’s exports have been on the rise to Singapore, up 3.5% this year to date, and Vietnam where they have risen 16.5%. Nicholas Kwan, HTDC Research Director, said the trade war was the biggest reason for Hong Kong’s gloomier export outlook.

The U.S. Treasury Department is imposing new sanctions on six Chinese entities and five persons that it accuses of knowingly transferring oil from Iran in violation of the U.S. oil embargo. “And we are telling China, and all nations: know that we will sanction every violation,” Secretary of State Mike Pompeo said.