Posts Tagged ‘Xi Jinping’

China Is Confronting New U.S. Hostility. But Is It Ready for the Fight?

September 24, 2018

The Chinese leader, wearing a dark Mao suit, and the American president, in a black tuxedo, stood side by side with arms aloftat the Kennedy Center. Deng Xiaoping and Jimmy Carter smiled broadly as the orchestra played “Getting to Know You,” signaling the dawn of a new era of friendship and cooperation between their two nations.

Over the next 40 years, China and the United States built the most important economic relationship in the world and worked together on issues such as regional security, counterterrorism and climate change. Taking Mr. Deng’s lead, China played the junior partner, if not always deferential then at least soft-pedaling its ambitions and avoiding conflict with the much stronger United States.

Now, faster than many in either nation expected, that has all changed.

By  Jane Perlez
The New York Times

On Monday, the United States will begin taxing $200 billion in imports from China, the biggest round of tariffs to take effect yet in an escalating trade war. President Trump says the measures are necessary to fight an economic model that requires American companies to hand over technology in exchange for market access and provides state subsidies to Chinese competitors.

China’s strongman leader, Xi Jinping, presiding over an economy gaining quickly on the United States, has openly challenged American leadership abroad while dashing hopes of any political thaw at home. During this time, both Republicans and Democrats in Washington have turned on Beijing, accusing it of imperial ambitions in Asia, aggression in disputed waterspersecution of ethnic minorities and unscrupulous trade policies aimed at dominating the industries of the future.

In a fundamental shift, the Trump administration has formally described China as a “revisionist power” and “strategic competitor” in the past year. China has been saying similar things about the United States for even longer. But as relations have deteriorated in recent months, many Chinese are now asking if their country is really prepared to take on the world’s most powerful nation.

China has abruptly canceled not only trade talks that were planned this week in Washington but also military-to-military talks scheduled to begin Tuesday. The latter move was made to protest American sanctions imposed last week on a Chinese military department for buying warplanes and missile equipment from Russia.

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Donad Trump and Xi Jinping at Mar-a-Lago, April 6, 2017. Reuters file photo

In a sign of Beijing’s growing international influence, though, the Vatican and the Chinese government said Saturday that they had reached a breakthrough agreement on the appointment of Roman Catholic bishops in China, taking a step toward normalizing relations.

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As the acrimony and rivalry with the United States have intensified, the immediate worry in Beijing is how the Chinese public, accustomed to a fast-expanding economy, will handle the trade war, and what impact it might have on the ruling Communist Party’s overriding concern of domestic stability.

The government has sought to project confidence.

“Maybe the growth rate will slow 1 percent. We can accept it. That’s not terrible for us,” said Hu Xijin, the editor in chief of The Global Times, a state-run newspaper known for its nationalist tone. He added that Washington would soon realize that its mobile phone and auto manufacturers could not survive without Chinese customers.

Chinese workers at the entrance to a tunnel they are building for the China-Laos railway project near Vang Vieng, Laos, last year. Credit Adam Dean for The New York Times

“As long as our market is expanding economically and growing, China will win the trade war,” he said.

Charles S. Y. Liu, a private equity investor who sometimes advises the government, said the Chinese people were prepared to endure a protracted trade conflict.

“The Chinese are more tolerant of pain because we have been poor for so long,” he said. “Wealth has only arrived in the last decade.”

But many others are worried, and some have urged the Chinese leadership to seize the moment and shift the economy even further toward open markets and private enterprise rather than allowing an inefficient state sector to dig in.

“A closed approach will lead to a decline in the rate of national competitiveness,” wrote Yan Xuetong, dean of the Institute of International Relations at Tsinghua University, in a recent paper. He warned that China risked returning to the stagnation it suffered in isolation during the Mao era.

“When Trump adopts a protectionist strategy, China should have an open door and force the state-owned enterprises to reform,” Professor Yan added in an interview. But he said his advice was being ignored. “I get no reaction. Nobody listens to me.”

Other Chinese are arguing that the spike in hostility from the United States could have been avoided if President Xi had continued the policy of “hiding strength, biding time” followed by his predecessors and originally set by Mr. Deng.

Mr. Xi instead has flaunted two ambitious programs: the global infrastructure plan known as the Belt and Road Initiative and the effort to dominate advanced industries known as Made in China 2025, both of which have drawn criticism by the Trump administration.

“The same things can be done without such arrogance,” said Yun Sun, an analyst at the Stimson Center, a think tank in Washington. “I believe the Chinese policy community does wish to see more actions and more assertiveness but Xi went too far.”

President Xi and President Cyril Ramaphosa of South Africa attending a summit meeting of the Forum on China-Africa Cooperation in Beijing this month. Credit Pool photo by Lintao Zhang

The party has sought to censor criticism of Mr. Xi but there have been glimpses of anxiety online about the potential impact of the trade war as well as anger at the Belt and Road Initiative, which has earmarked hundreds of billions of dollars for overseas projects intended to lift China’s clout abroad.

Echoing a popular opinion on social media, a retired economics professor, Sun Wenguang, has argued that it is wrong to spend so much money in other countries given the problems that China faces at home.

“Some are too poor to see a doctor, some are too poor to have pensions after retirement, and some too poor to go to school,” Professor Sun said in an interview on the Voice of America last month. “Under such circumstances, if you still choose to throw money at other countries, domestic backlash is almost guaranteed.”

As he was speaking, the police entered his home and forced him off the phone.

Professor Sun’s criticism reflects a broader concern in China about the government’s efforts to win over allies. The subject is important because the United States has long touted its alliances as key to its national strength generally and its ability to counter China’s rise in Asia in particular.

China enjoys significant advantages in the region. It is the largest trading partner of almost every country in Asia while President Trump has strained relations with allies around the world. Even Japan, America’s most important ally in Asia, appears to be drifting closer to China as Mr. Trump threatens the nation with tariffs.

In a rapprochement between the two Asian rivals, Prime Minister Shinzo Abe is scheduled to travel to Beijing next month, the first visit to China by a Japanese leader since 2011.

“Trump said recently, ‘Japan, you’re next for tariffs,’” said Mr. Liu, the private equity manager. “Thank you, Donald Trump.”

But some say China is fumbling the opportunity presented by the Trump administration and alienating neighbors by throwing its weight around too aggressively. There has been a backlash in several countries against Belt and Road projects that have left governments in deep debt, created few jobs for local residents or damaged the environment. Others have raised an alarm about Chinese efforts to interfere in politics of smaller nations.

In an essay that has been widely shared on Chinese social media, a prominent Communist Party scholar warned against national arrogance and overreach, noting the fate of rising powers that succumbed to “recklessness and impetuousness” in the 20th century: Germany, Japan and the Soviet Union.

Workers from Sungrow connecting solar panels to custom-made buoys on the banks of a lake in a flooded coal mine in Liulong Village, China, last year. Credit Adam Dean for The New York Times

“I recall a topic hotly debated on line by young internet users: Who is really China’s enemy? Is it America? Japan? Russia?” wrote the scholar, Luo Jianbo, head of the China Foreign Policy Center at the Central Party School. “If we think about things coolly, perhaps none of them are. China’s enemy is itself.”

In many ways, the Chinese political elite has been caught off guard by how quickly relations have deteriorated with the United States, which has long been a source of envy and inspiration for many Chinese as well as a leading destination for education and immigration.

Chinese scholars often observe that new American presidents usually take a hard line against China but seek cooperation after realizing how the two nations need each other. President Trump has stunned them by defying that pattern.

“I personally feel surprised by the fact that Trump is taking such radical measures,” said Mr. Hu, the newspaper editor. “I initially thought it was a joke, but it turns out to be a real policy, putting tariffs on all these products.”

Some Chinese analysts have sought to explain the escalating conflict with the United States by focusing on the personal qualities of the nation’s two leaders. Mr. Trump is a viewed as a fickle, transactional businessman who may retreat after the midterm elections in November. They note he has repeatedly spoken out against China’s trade practices but said little about human rights or military issues.

Mr. Xi, on the other hand, is said to have invested too much politically in his signature programs to back down under foreign pressure.

“Personality matters in this relationship,” said Wu Xinbo, the director of the American Studies Center at Fudan University. “The biggest problem is Trump’s credibility.”

Though Beijing devotes tremendous resources to studying the United States, there seems to be little understanding that the hostility against China in Washington is bipartisan and extends beyond trade, and that many frustrated business leaders, once defenders of good ties with China, now favor tougher measures against it as well.

Teng Jianqun, director of American studies at the China Institute for International Studies, said the government needed to accept the new reality and tell the Chinese public that the coming struggle could be the beginning of a long fight for the country’s survival as a great power.

“We should let our people fully know that this trade war is not a short-term contest,” he said, “but a contest that will determine the future of the Chinese nation.”

Luz Ding contributed research.

A version of this article appears in print on , on Page A1 of the New York edition with the headline: China, Facing U.S. Hostility, Vows to Come Out Swinging.

Hong Kong bans pro-independence party

September 24, 2018

Authorities in Hong Kong on Monday took an unprecedented step against separatist voices by banning a political party that advocates independence for the southern Chinese territory on national security grounds.
John Lee, the territory’s secretary for security, announced that the Hong Kong National Party will be prohibited from operation from Monday.

Lee’s announcement did not provide further details. But Hong Kong’s security bureau had previously said in a letter to the National Party’s leader, 27-year-old Andy Chan, that the party should be dissolved “in the interests of national security or public safety, public order or the protection of the rights and freedoms of others.” Chan had no immediate comment.

In this file photo taken on August 5, 2016, Andy Chan (R), leader of the pro-independence Hong Kong National Party (HKNP), gives a press conference at the start of a rally near the government’s headquarters in Hong Kong. (AFP)

That letter had cited a national security law that has not been invoked since 1997. The ban is likely to raise further questions about Beijing’s growing influence in the former British colony, which was promised semi-autonomy as part of the 1997 handover. Chinese President Xi Jinping and other officials have warned separatist activity would not be tolerated.

Chan, the National Party leader, had previously told The Associated Press that police approached him with documents detailing his speeches and activities since the party’s formation in 2016.

The party was founded in response to frustration about Beijing’s treatment of Hong Kong. Despite a promise of autonomy, activists complain mainland influence over its democratic elections is increasing.

Chan and other pro-independence candidates were disqualified from 2016 elections to the Hong Kong legislature after they refused to sign a pledge saying Hong Kong is an inalienable part of China. The Hong Kong National Party has never held any seats on the council.

The Associated Press

Pompeo on China trade war: ‘We are going to win’

September 23, 2018

Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes $200 billion worth of tariffs.

“We are going to win it,” Pompeo said in an interview on Fox News broadcast Sunday.

© AFP/File | US Secretary of State Mike Pompeo said that President Donald Trump “very much likes” his Chinese counterpart Xi Jinping but said he would press policies that “the American workers deserve”

“We’re going to get an outcome which forces China to behave in a way that if you want to be a power — a global power — transparency, rule of law, you don’t steal intellectual property,” he said.

Pompeo said that President Donald Trump “very much likes” his Chinese counterpart Xi Jinping but said he would press policies that “the American workers deserve.”

Even before Trump’s election, the United States has complained vigorously that China has been unfair to US businesses and has stolen technology by forcing firms to reveal secrets as a condition to operate in the fast-growing Asian economy.

But Trump has taken an increasingly hard line on trade around the world, with $200 billion in tariffs on Chinese exports set to take effect on Monday.

China has retaliated by hitting $60 billion in US products and the world’s two largest economies have already imposed tariffs of $50 billion on each other.

In a first, the Trump administration has also punished a unit of China’s defense ministry for buying fighter jets and missiles from Russia in defiance of sanctions on Moscow.


China’s ports buying splurge is worrying Europe

September 23, 2018

Far-reaching commercial activities raise question of whether port investments are linked to military purposes and represent a security risk in host countries

South China Morning Post

PUBLISHED : Sunday, 23 September, 2018, 7:31am
UPDATED : Sunday, 23 September, 2018, 3:28pm
 A Chinese navy ship visits Haifa port in Israel, where some are concerned about the security implications of Beijing’s involvement. Photo: Alamy

There is rising concern about whether China will use its commercial acquisitions of overseas ports for military purposes, under its drive to put civilian technology and resources to military use.

Under its trillion-dollar “Belt and Road Initiative” – a blueprint announced in 2013 to boost trade and connectivity in Asia, Africa, Europe and beyond – China has significantly increased its global investments, particularly in maritime infrastructure.

Pioneering Chinese companies such as Cosco Shipping Ports and China Merchants Port Holdings are on a march to acquire shares or sign deals to build terminals at seaports overseas.

Cosco began operating a container port in Piraeus in Greece in 2008, when the Greek government was near bankruptcy. Beijing has since become a big player in the European port business.

Cosco is among the Chinese firms agreeing deals to build terminals overseas. Photo: Xinhua

China has gained a foothold in Europe’s three largest ports: respectively Euromax in Rotterdam, the Netherlands, of which it owns 35 per cent; Antwerp in Belgium, in which it holds a 20 per cent stake; and Hamburg, Germany, where it is to build a new terminal.

A flood of Chinese investment helped to rejuvenate some of these ports. In Piraeus, for example, Chinese investment in 2016 led to increased trade: Piraeus was ranked seventh in Europe in 2017 by container throughput – up from eighth the year before – and recorded a 92 per cent increase in pre-tax profits.

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Euromax in Rotterdam

But it is not always smooth sailing when Beijing reaches out to ports overseas with its deep pockets.

In Israel, China is building two new ports, in Haifa and Ashdod. Local academics have urged the Israeli government to assess how much China can be involved in its economy without compromising its security interests.

Those who believe Israel should conduct a national security review of the Chinese contract include Shaul Chorev, a reservist brigadier general with the Israel Defence Forces, former Israeli navy chief of staff and chairman of the country’s Atomic Energy Commission.

“China’s leaders increasingly seek to leverage China’s growing economic, diplomatic and military clout to establish regional superiority and expand the country’s international influence,” Chorev said.

“The ‘Belt and Road Initiative’ is intended to develop strong economic ties with other countries, shape their interests to align with China’s, and deter confrontation or criticism of China’s approach to sensitive issues.”

There are increasing worries in the EU that China may use its involvement in European ports to exert political influence in individual member states, according to Frans-Paul van der Putten, a senior research fellow from Netherlands Institute of International Relations.

“China’s rapid advance into the European port sector has already created a backlash,” Van der Putten said. “It is one of the reasons European governments are increasingly suspicious of China’s economic influence, and why an EU-wide framework for foreign investment screening is being discussed.”

China’s port operation also triggered a backlash from the United States, because it threatened information and cybersecurity there, Gary Roughead, a former US chief of naval operations, said at a recent workshop organised by Israel’s University of Haifa and the Hudson Institute, a conservative US think tank.

“Chinese port operators will be able to monitor US ship movements closely, be aware of maintenance activities, have access to equipment moving to and from repair sites and interact freely with our crews over protracted periods,” Roughead said.

Chorev said China’s “integration of military for civilian use” – an approach introduced by President Xi Jinping after he took office in 2013 – had sparked fears about the security implications of China’s overseas port development.

China has embarked on an ambitious drive, modelling the US, to combine defence and civilian industries in the hope of them benefiting each other. It aims to make use of civilian technology and resources for military use to accelerate the modernisation of its army.

This could include drone technology, artificial intelligence and the Beidou navigation system, China’s answer to the US-developed Global Positioning System, which is expected to be ready in 2020 and will be used for both military and civilian purposes.

Military-civilian integration is among the goals China set out in its 13th five-year plan for 2016-20. Xi set up a new committee last year to champion integration of civilian and military investment in technology.

The Chinese military is also extending its presence abroad. It has established a military base in Djibouti, and is expected to establish one in Gwadar Port in Pakistan.

Zhang Jie, a researcher at the Chinese Academy of Social Sciences, wrote in an article in 2015 about the concept of “first civilian, later military”, in which commercial ports would be built with the goal of slowly being developed into “strategic support points” that could “assist China in defending maritime channel security and [control] key waterways”.

Port investments are vehicles through which China can cultivate political influence, constrain recipient countries and build infrastructure meant for military as well as civilian use to facilitate Beijing’s long-range naval operations, according to a report by the Centre for Advanced Defence Studies, a Washington-based think tank.

Van der Putten said the Chinese government would have to be careful to avoid creating the impression that its commercial port investments in Europe were linked to military purposes, in order not to antagonise European countries.

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Gwadar port, Pakistan

But Neil Davidson, a senior analyst of ports and terminals at Drewry, a London-based maritime research consultancy, said some of the ports, especially those in Europe, were still owned by non-Chinese entities.

“It also makes good business sense for Chinese players to acquire overseas port assets,” he said. “I don’t think European countries feel threatened, because in almost all cases the landlord function remains in the hands of the local countries.”

Hong Kong cardinal accuses Pope Francis of betrayal of the Catholic faith in “sell out to China”

September 22, 2018

A Hong Kong cardinal who has spearheaded opposition to the Vatican’s rapprochement with China called on Thursday for the Pope’s secretary of state to step down, saying any deal with Beijing would amount to a betrayal of the Catholic faith.

The Vatican and China have been in advanced talks this year to forge what would be an historic breakthrough and precursor to a resumption in diplomatic relations after 70 years, with Secretary of State Pietro Parolin among the chief negotiators.

The Vatican may send a delegation to China before the end of this month. If the meeting goes well, the two could reach an agreement on the appointment of bishops, a Chinese state-run newspaper reported earlier this week.

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Cardinal Joseph Zen

Cardinal Joseph Zen, the most senior Catholic cleric on Chinese soil, said he believed the two sides were making a “secret deal”, although he acknowledged he had no connection with the Vatican and was “completely in the dark”.

“They’re giving the flock into the mouths of the wolves. It’s an incredible betrayal,” he said.

He described Parolin, the highest ranking diplomat in the Vatican, as someone who despised heroes of faith.

“He should resign,” Zen told Reuters at his home on a wooded hillside on Hong Kong island.

“I don’t think he has faith. He is just a good diplomat in a very secular, mundane meaning.”

Zen, who at times knocked his knuckles on the table to make a point, stopped short of calling on Pope Francis to step down, saying: “I would not come out to fight the Holy Father, that is my bottom line.”

The Vatican did not immediately respond to a request for comment on Zen’s remarks.

At a time when the Vatican is also under pressure for purportedly covering up a sex abuse scandal in the United States, with one archbishop even calling for the Pope to resign, Zen suggested this China deal would further add to the Church’s vulnerability.

“The consequences will be tragic and long lasting, not only for the church in China but for the whole church because it damages the credibility. Maybe that’s why they might keep the agreement secret.”

China’s roughly 12 million Catholics are split between an underground Church that swears loyalty to the Vatican, and the state-supervised Catholic Patriotic Association.

The potential deal has divided communities of Catholics across China, some of whom fear greater suppression should the Vatican cede greater control to Beijing, but others want to see rapprochement.

Zen said he believed only half the underground church in China would accept a deal and was concerned how the remainder might react.

“I’m afraid they may do something irrational, they may make rebellion,” said 86-year-old Zen, a former bishop of Hong Kong and the most outspoken critic of the Pope’s China strategy.

Pope Francis has rejected criticism that the Holy See may be selling out Catholics to Beijing’s communist government.

Zen said he believed any deal with atheist China would deal a significant blow to Pope Francis’ credibility.

“It’s a complete surrender. It’s a betrayal (of our faith). I have no other words, said Zen.

(Reporting by James Pomfret and Anne Marie Roantree; Additional reporting by Philip Pullella in Rome; Editing by Richard Balmforth)



Vatican announces historic deal with China on bishops — “Pope Francis is being crucified in the media”

September 22, 2018

The Vatican on Saturday announced an historic accord with China on the appointment of bishops in the Communist country in what could pave the way for the normalisation of ties between the Catholic Church and the world’s most populous country.

Beijing immediately said it hoped for better relations, while Taiwan said its ties with the Vatican were safe despite the deal with China.

There are an estimated 12 million Catholics in China divided between a government-run association whose clergy are chosen by the Communist Party and an unofficial church which swears allegiance to the Vatican.

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Pope Francis

The Vatican has not had diplomatic relations with Beijing since 1951, two years after the founding of the communist People’s Republic.

The preliminary agreement with China “has been agreed following a long process of careful negotiation and foresees the possibility of periodic reviews of its application,” the Vatican said in a statement issued as Pope Francis began a visit to the Baltic states.

“It concerns the nomination of Bishops, a question of great importance for the life of the Church, and creates the conditions for greater collaboration at the bilateral level,” it said.

Vatican spokesman Greg Burke, speaking in the Lithuanian capital Vilnius, told reporters the aim of the accord “is not political but pastoral, allowing the faithful to have bishops who are in communion with Rome but at the same time recognized by Chinese authorities.”

China said the “provisional” agreement was signed in Beijing by vice foreign minister Wang Chao and a Vatican delegation headed by the under secretary for relations with state, Antoine Camilleri and added that the two sides “will continue to maintain communication and push forward the improvement of bilateral relations.”

The Vatican is one of only 17 countries around the world that recognises Taipei instead of Beijing but Pope Francis has sought to improve ties with China since he took office in 2013.

– ‘Strategic, naive’ –

Previous attempts to restore ties have floundered over Beijing’s insistence that the Vatican must give up recognition of its rival Taiwan and promise not to interfere in religious issues in China.

But the Taiwanese foreign ministry said Taipei would not lose its only diplomatic ally in Europe despite the agreement and said it hoped the Holy See would also make sure Catholics on the mainland “receive due protection and not be subject to repression”.

Analysts warn that Beijing could use the accord to further crackdown on Catholic faithful in China.

Jonathan Sullivan, director of China Programs, Asia Research Institute at University of Nottingham, described the accord as “a strategic move on China’s part; and a naive one on the Vatican’s.”

According to the expert, China’s Communist “Party will frame the deal as the Vatican’s seal of approval to the state-run Catholic Church, at a time when Christian believers are facing a severe crackdown on their beliefs and practises.

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“Ultimately, the Party would like to subsume all forms of worship under state organs that make it easier to manage and ensure that everyone’s primary loyalty is to the state,” Sullivan told AFP.

The announcement came as Pope Francis arrived in Catholic Lithuania to honour victims, including Catholic priests and bishops, of the region’s Nazi and Soviet occupations.

The ponfiff’s four-day trip to the northeastern edge of the European Union and NATO alliance brings him geographically close to Russia, where Vatican diplomats have been trying for years to arrange a papal visit.

The pontiff will visit mainly Protestant Latvia on Monday and secular Estonia on Tuesday as all three Baltic states mark 100 years of independence this year.

But the celebrations risk being overshadowed by a fresh wave of devastating claims of sexual abuse by clergy across the globe.


“Pope Francis is being crucified in the media”


Trump Gaining Allies in Trade War Against China

September 19, 2018

Trump pressure on partners pays off as they succumb to the art of the deal

South China Morning Post

PUBLISHED : Wednesday, 19 September, 2018, 9:16pm
UPDATED : Wednesday, 19 September, 2018, 11:19pm
US President Donald Trump has touted the success of trade negotiations with US allies which could leave China exposed in the trade war. Photo: EPA

China risks standing alone against the United States in US President Donald Trump’s trade war, with its allies showing signs of compromise, a former American trade official has warned.

Wendy Cutler, vice-president of the Asia Society Policy Institute and a former deputy US trade representative, made the assessment from the sidelines of the World Economic Forum in Tianjin, northeast China, following sustained pressure from Trump on US allies to compromise in trade negotiations.

Trump has touted the success of negotiations with Mexico to revise the North American Free Trade Agreement, while Canada is showing signs it may make concessions in its Nafta talks with the US. In July, meanwhile, the EU and US reached a deal pledging zero tariff and zero barriers on non-car products.

Former deputy US trade representative Wendy Cutler warns China risks standing alone against the US in Donald Trump’s trade war. Photo: Bruce Yan

Despite efforts by South Korea and Japan to diversify trade patterns, Seoul is about to sign a trade deal with Washington in the coming weeks and Tokyo, a close ally, is also on Trump’s agenda in trade talks.

“So with all of these trading partners, it looks like the Trump administration is close to finding a path forward, a way to resolve differences,” Cutler said.

She said she expected the US administration would be able to focus more on China and probably ask its allies to “support the US position on China and to work with the US to urge China to open its market and to reform”.

China’s major trading partners share US concerns about the sluggish progress in opening Chinese markets significantly, as well as heavy state interference in the economy and technology, which may squeeze foreign business out of China.

Observers are bracing for the growing likelihood that the trade dispute may last for some time as both China and the US have refrained from backing down first.

The two countries have engaged in a series of retaliatory moves, imposing 25 per cent tariffs on US$50 billion worth of each other’s imports.

In a further escalation this week, the US announced it would impose 10 per cent tariffs on an additional US$200 billion worth of Chinese products from September 24, with the tariff rate increasing to 25 per cent on January 1 next year unless China makes concessions. China responded by imposing tariffs on US$60 billion worth of US goods.

“We all need to get prepared for a world where there will be significant tariffs in place between the two countries for the foreseeable future,” Cutler said.

Chinese Vice-Premier Liu He is reported to be organising a meeting to discuss China’s response to the latest US trade tariffs. Photo: Reuters

Chinese Vice-Premier Liu He was reported to be organising a meeting to discuss the response to the latest US tariffs which have fuelled concerns about an already slowing Chinese economy.

There have been suggestions China may go beyond using tariffs, using instruments such as regulatory harassment of US firms operating in China, or even depreciating the yuan and dumping Chinese holdings of US Treasury bonds.

Cutler warned China faced a “conundrum” as such moves could further provoke the Trump administration and add to the difficulties of finding a negotiated solution.

The opening up of the “Made in China 2025” sectors, however, could send a signal to the US about China’s seriousness to resolve the issue, she said.

A former assistant US trade representative speaking on the sidelines at the World Economic Forum said he expected China would move very cautiously to avoid further escalating the situation.

Timothy Stratford, now managing partner in law firm Covington & Burling’s Beijing office, said he believed the Chinese government had come to the conclusion that the Trump administration was very serious about addressing issues stemming from the systemic differences between the two countries.

“Now that this new round of tariffs is being imposed by both sides, the most realistic goal for our countries to focus on next would be to agree on a moratorium on any further sanctions – so that each side has a chance to evaluate the impact of the existing tariffs and consider the best path forward,” he said.

“This would probably require them to agree on a process, agenda, and time frame for negotiations in the systemic issues.”

China Ready To End Trade Tariffs With U.S.

September 19, 2018

Sources in Beijing tell Peace and Freedom that China is prepared to announce a “win” in the trade war.

Without making any concessions or admitting any fault, China will announce its intention of moving forward to secure “free and fair trade” for all from Beijing through Europe and to the United States.

Xi Jinping, who has wisely stayed out of the trade dispute thus far, will be the winner, vowing to abide by WTO rules, end unfair trade practices and agree to international norms on intellectual property.

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Xi’s message masters are already working on his first statement — made to get the attention of the international community and Donald Trump and put in place a cease-fire on tariffs.

Then the negotiating process can begin. And in the arena of negotiations, China believes it has the upper hand over Trump — who also believes he has the upper hand.

With China’s equity markets and currency down, it knows it has to make some changes before more nations outside the U.S. lose interest in China trade and investments.

Already, Europeans are becoming nervous about China’s monster economy and China’s voracious Belt and Road appetite of eating smaller economies and presenting them with a bill for the debt.

Europe knows it cannot stop the Belt and Road but it can be the gateway western hub of all trade with China — if it plays its cards right.

The key is to save face. Xi can blame his Commerce Ministry and Li Keqiang for any past misunderstandings while taking credit for his wisdom in solving a difficult problem.

Donald Trump will take himself for the winner — at least until the results of any agreements which could be years away become clearly known to all.

In the meantime, China can get its markets going again while negotiations with the likes of Steven Mnuchin and Robert Lighthizer get moving in earnest.

China believes it can be the master of it all.

Related image

See also:

Europe Turns Down Chinese Offer For Grand Alliance Against The US



China Likely To Pull Out of Trade War Peace Talks With Trump Administration

September 18, 2018

Plans to send vice-premier Liu He to Washington for negotiations are being reviewed after the US President escalated the dispute

South China Morning Post

PUBLISHED : Tuesday, 18 September, 2018, 11:37am
UPDATED : Tuesday, 18 September, 2018, 4:36pm

China is likely to cancel its tentative plans to send President Xi Jinping’s top economic adviser to Washington after his US counterpart Donald Trump announced new tariffs on US$200 billion worth of Chinese products, a government source in Beijing said on Tuesday.

According to the source, who declined to be identified as the plans have not been made public, China is reviewing its earlier plans to send a delegation, headed by Vice-Premier Liu He, to Washington next week.

One precondition for the talks was that the Americans would show sufficient goodwill but the US president’s decision on Monday to escalate the trade war by slapping 10 per cent tariffs on almost half of all Chinese exports might have scuppered the talks, the source added, although a final decision has yet to be made.

A US business representative in China said Trump’s latest threat would be seen in China as “holding a gun to its head”.

“If the vice-premier does go to the US, we can reasonably suspect he has a reasonable offer, but at this point, I would think the likelihood is low,” the representative said.

Liu was set to convene a meeting in Beijing on Tuesday morning to discuss the government’s response to Trump’s decision, according to Bloomberg News, which cited an unidentified source.

China’s Ministry of Foreign Affairs and Ministry of Commerce confirmed last week that China had received an invitation from US Treasury Secretary Steven Mnuchin and “welcomed” the gesture from the US side.

Beijing has always insisted that it would retaliate if Trump moved ahead with any fresh tariffs.

Last month when the US published a provisional list of Chinese products worth about US$200 billion that it would target with the latest tariffs, China responded with a list of US$60 billion of American products that would be targeted for retaliatory tariffs of between 5 and 25 per cent.

Trump’s decision to impose fresh 10 per cent tariffs, starting from next Monday, before increasing them to 25 per cent on January 1, marked a significant escalation of the trade war between the world’s two largest economies.

The two sides have already imposed two previous rounds of 25 per cent tariffs on shipments worth US$50 billion a year.

Trump has further threatened that if China retaliates to the latest measures, then the US will “immediately pursue phase three”. This would mean imposing further tariffs on another US$267 billion worth of Chinese products – effectively covering almost all Chinese exports to the US.

Imperialism Will Be Dangerous for China

September 18, 2018

Beijing risks blowback as it exports surplus economic capacity to Africa and Asia.


A man walks by a propaganda poster in Beijing, Aug. 28.
A man walks by a propaganda poster in Beijing, Aug. 28. PHOTO: ANDY WONG/ASSOCIATED PRESS

China’s real problem isn’t the so-called Thucydides trap, which holds that a rising power like China must clash with an established power like the U.S., the way ancient Athens clashed with Sparta. It was Lenin, not Thucydides, who foresaw the challenge the People’s Republic is now facing: He called it imperialism and said it led to economic collapse and war.

Lenin defined imperialism as a capitalist country’s attempt to find markets and investment opportunities abroad when its domestic economy is awash with excess capital and production capacity. Unless capitalist powers can keep finding new markets abroad to soak up the surplus, Lenin theorized, they would face an economic implosion, throwing millions out of work, bankrupting thousands of companies and wrecking their financial systems. This would unleash revolutionary forces threatening their regimes.



Under these circumstances, there was only one choice: expansion. In the “Age of Imperialism” of the 19th and early-20th centuries, European powers sought to acquire colonies or dependencies where they could market surplus goods and invest surplus capital in massive infrastructure projects.

Ironically, this is exactly where “communist” China stands today. Its home market is glutted by excess manufacturing and construction capacity created through decades of subsidies and runaway lending. Increasingly, neither North America, Europe nor Japan is willing or able to purchase the steel, aluminum and concrete China creates. Nor can China’s massively oversized infrastructure industry find enough projects to keep it busy. Its rulers have responded by attempting to create a “soft” empire in Asia and Africa through the Belt and Road Initiative.

Many analysts hoped that when China’s economy matured, the country would come to look more like the U.S., Europe and Japan. A large, affluent middle class would buy enough goods and services to keep industry humming. A government welfare state would ease the transition to a middle-class society.

That future is now out of reach, key Chinese officials seem to believe. Too many powerful interest groups have too much of a stake in the status quo for Beijing’s policy makers to force wrenching changes on the Chinese economy. But absent major reforms, the danger of a serious economic shock is growing.

The Belt and Road Initiative was designed to sustain continued expansion in the absence of serious economic reform. Chinese merchants, bankers and diplomats combed the developing world for markets and infrastructure projects to keep China Inc. solvent. In a 2014 article in the South China Morning Post, a Chinese official said one objective of the BRI is the “transfer of overcapacity overseas.” Call it “imperialism with Chinese characteristics.”

But as Lenin observed a century ago, the attempt to export overcapacity to avoid chaos at home can lead to conflict abroad. He predicted rival empires would clash over markets, but other dynamics also make this strategy hazardous. Nationalist politicians resist “development” projects that saddle their countries with huge debts to the imperialist power. As a result, imperialism is a road to ruin.

China’s problems today are following this pattern. Pakistan, the largest recipient of BRI financing, thinks the terms are unfair and wants to renegotiate. Malaysia, the second largest BRI target, wants to scale back its participation since pro-China politicians were swept out of office. Myanmar and Nepal have canceled BRI projects. After Sri Lanka was forced to grant China a 99-year lease on the Hambantota Port to repay Chinese loans, countries across Asia and Africa started rereading the fine print of their contracts, muttering about unequal treaties.

Meanwhile, China’s mercantilist trade policies—the subsidies, the intellectual-property theft, and the coordinated national efforts to identify new target industries and make China dominant in them—are keeping Europe and Japan in Washington’s embrace despite their dislike of President Trump.

China’s chief problem isn’t U.S. resistance to its rise. It is that the internal dynamics of its economic system force its rulers to choose between putting China through a wrenching and destabilizing economic adjustment, or else pursuing an expansionist development policy that will lead to conflict and isolation abroad. Lenin thought that capitalist countries in China’s position were doomed to a series of wars and revolutions.

Fortunately, Lenin was wrong. Seventy years of Western history since World War II show that with the right economic policies, a mix of rising purchasing power and international economic integration can transcend the imperialist dynamics of the 19th and early 20th centuries. But unless China can learn from those examples, it will remain caught in the “Lenin trap” in which its strategy for continued domestic stability produces an ever more powerful anti-China coalition around the world.

Appeared in the September 18, 2018, print edition.