Mixed expectations for Xi-Trump meeting
June 25, 2019 Category Foreign trade, Weekly
U.S. and Chinese trade negotiators are scrambling to put a plan together for the meeting between President Xi Jinping and his U.S. counterpart Donald Trump in Osaka, Japan at the end of the week. The trade negotiators have not talked in the six weeks since the talks collapsed in early May, but a phone conversation between Xi and Trump, during which the two confirmed their meeting in Osaka, has rekindled the process. Eleven rounds of talks have brought both sides close to consensus on most parts of a deal, it is believed, but the remaining differences will be difficult to resolve.
Companies and experts warned that intensifying Sino-U.S. trade disputes could lead to a breakdown of the global value chain, as the United States Trade Representative (USTR) started a seven-day public hearing on the proposed additional tariffs on about USD300 billion worth of Chinese exports. The hearing was held from June 17 to 21, and continue from June 24 to 25. More and more data point to the U.S. and China reversing a decades-long trend of increased interdependence that some called ‘Chimerica’, and beginning to decouple. While low- to medium-end manufacturing is relatively simple to disentangle, there are chasms and barriers appearing all over the U.S.-China economic relationship, suggesting that a broad-based break-up may be under way, even in more complex sectors.The decoupling of investment is already clear. Last year, Chinese acquisitions of American companies plunged 95% from their peak in 2017 after the U.S. Congress gave the Committee on Foreign Investment in the U.S. authority to broaden the scope of its reviews of Chinese acquisitions on national security grounds.
Earlier this month, more than 600 U.S. companies and trade associations including Walmart, Target and Costco sent a letter to U.S. President Donald Trump, warning that tariffs on Chinese exports will have a longterm negative impact on U.S. businesses. “We remain concerned about the escalation of tit-for-tat tariffs. Tariffs are taxes paid directly by U.S. companies, not China,” the letter said, stressing that escalated trade tensions were not in the U.S. best interests and both sides would stand to lose.
Li Daokui, Director of the Academic Center for Chinese Economic Practice and Thinking at Tsinghua University, said that “Sino-U.S. trade relations are a vital part of the global value chain. Damaging Sino-U.S. relations, in fact, damages the global production and value chain”. Tara Joseph, President of the American Chamber of Commerce in Hong Kong (AmCham), said it would be a “real shame” if Hong Kong became a pawn in the U.S.-China trade war. Hong Kong’s GDP growth slipped to 0.6% year-on-year in the first quarter of 2019, the slowest pace in a decade.
A trade agreement between China and the United States is “within reach” as long as Donald Trump and Xi Jinping have the “courage” to compromise. “Let them get to the word ‘yes’ – we have an agreement”, Craig Allen, President of the U.S.-China Business Council, told a seminar at Renmin University in Beijing. In a carefully worded speech, Allen listed the U.S. concerns behind the lingering trade tensions and called on Beijing to address them, saying it would benefit the country in the long run. “There is a need for continued economic reform and opening and 2019 would be a great time to do that,” Allen said. “China should not have a nationalist industrial policy, nor should America, we should work together,” he said.
China and Britain have clinched GBP500 million worth of deals as Chinese Vice Premier Hu Chunhua visited London. In the light of the ongoing trade war with the U.S., China appears eager to re-establish the “golden era” with Britain, an idea that started during Xi’s state visit in 2015. While in London, Hu co-chaired the latest China-UK Economic and Financial Dialogue with Chancellor of the Exchequer Phillip Hammond and officiated at the launch of the long-awaited London-Shanghai Stock Connect project, which enables companies listed in Britain to sell shares in China. Britain has hailed the deals with China as a diplomatic success amid the business uncertainties looming over Brexit. Britain also secured permission from China to export beef by the end of the year at the earliest, ending more than two decades of a Chinese government ban implemented in response to the BSE outbreak.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world