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China, US trade war: Scramble to put Trump, Xi trade trade deal

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Trump Xi Trade WarBusiness
Insider

  • China released a statement on Tuesday offering reassurances
    about the preliminary trade deal made between President Donald
    Trump and Chinese President Xi Jinping.
  • While the statement was light on specifics, the Chinese
    official attempted to assuage skepticism about the deal that
    helped contribute to a major selloff in US stocks.
  • The Chinese also made a concrete step toward addressing US
    concerns by releasing a new set of punishments for intellectual
    property theft.
  • But confusion over the deal and ineffective communication by
    the Trump team has left many worried.

China is trying to catch up to President Donald Trump’s trade
deal promises as questions linger about the agreement he made
with Chinese President Xi Jinping at the G20 summit.

After two days of relative silence, a spokesperson from China’s
Ministry of Commerce
offered a short statement
on the preliminary agreement
Tuesday night:

  • The official confirmed for the first time that China had
    agreed to the 90-day “timetable and road map” to negotiate
    a further trade deal with the US.
  • The
    official also said China is committed to
    implementing certain actions agreed to during the Trump-Xi
    dinner but did not provide specifics.


According to reports
, China is planning to reopen up its
markets to American soybeans and natural gas. US soybean farmers
in particular have been hard hit by the trade fight, as China’s
tariffs on US product have
choked off their largest market
.

But it was still unclear whether the tariffs on those American
goods would be eliminated, how much of each good China would buy,
and the timetable for the purchases.

Additionally, the official made no mention of the Trump
administration’s issues with China’s broader economic policies
such as intellectual property theft, forced technology transfers,
forced partnerships with Chinese firms, and more.

The statement from the Chinese comes after skepticism over the
deal began to grow, which helped contribute to a sharp sell off
in US stocks on Tuesday. Discrepancies between the US and Chinese
accounts on the meeting, Trump’s promise that China would lower
auto tariffs going unconfirmed by the Chinese, and a lack of
follow up from Beijing all cast doubts on the nature of the
negotiations.


Read more:

Trump calls himself ‘Tariff Man’ during raging tweetstorm on
China trade war»

Trump touted the Chinese statement in a tweet on Wednesday,
pointing to it as an example that China is serious about reaching
a more detailed agreement.

Very strong signals being sent by China once they returned
home from their long trip, including stops, from Argentina,”
Trump said. “Not to sound naive or anything, but I believe
President Xi meant every word of what he said at our long and
hopefully historic meeting. ALL subjects discussed!”

A small concrete step

The most concrete step toward fulfilling the agreement appears to
be an announcement from China’s National Development and
Reform Commission on
punishments for violating intellectual property

protections.

Chinese firms stealing US IP, either through counterfeiting
or coercing companies to hand over trade secrets, was a major
focus of the US Trade Representative’s initial investigation into
unfair trade practices. That investigation was the mechanism that
allowed Trump to impose the tariffs on China.

Beijing said there would be 38 different punishments for
violations of IP protections, including restrictions on
government contract opportunities and access to loans.


Read more:

Trump’s newest pick to lead the trade fight against China
reportedly took the Chinese by surprise and could be bad news for
a deal»

Eswar Prasad, a professor of trade policy at Cornell
University, told Business Insider that the announcement is
beneficial both for China — which is trying to encourage more
domestic innovation — and for the US-China trade tensions.

But Prasad warned that it depends on how strictly Beijing
enforces the rules.

“The vigor and consistency with which these regulations are
going to be enforced, especially in the case of state-owned
enterprises and large private companies, remains the key open
question,” he said in an email. “
China does not exactly
have a stellar record of keeping to its commitments to other
countries, especially in the context of industries that are part
of the government’s plan to restructure the economy towards
high-tech, high-value added sectors.”


trump xi jinping
President
Donald Trump with China’s President Xi Jinping during their
bilateral meeting, Saturday, Dec. 1, 2018 in Buenos Aires,
Argentina.


Pablo
Martinez Monsivais/AP



Derek Scissors, a resident scholar at the American
Enterprise Institute who previously advised the Trump team on
China, held a dimmer view.

“Punishment for IP violations was the major issue 10 to 15
years ago,” Scissors said in an email. “It has since been
emphatically replaced by the Chinese government actively seeking
to acquire IP — legally, through coercion, or through
cyber-theft. So this addresses about 5%” of the complaint.

Questions remain

While China seems to be trying to catch up to the Trump
administration’s pronouncements about the trade deal, the Trump
team is also struggling to gets its story straight, as
well.

The most obvious instance of crossed wires came Monday when
Larry Kudlow, Trump’s top economic adviser, said the 90-day delay
to tariff rate increases would start on January 1. The White
House had to scramble to correct the timeline, saying the
timeline actually began December 1.

But Kudlow’s slip is indicative of a
messy communications pattern
from the Trump team that has
only fueled confusion. Multiple members of the administration
spent the early part of the week walking back
Trump’s surprise declaration
that China would lower tariffs
on US-made cars, a deal that Kudlow later
admitted
was not set in stone.

And
Trump’s dubbing of himself as a “Tariff Man
,” as well as

general skepticism
that the two sides can reach an agreement
in such a short time means that the next 90 days of China-US
talks will be incredibly volatile.

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