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Little hope for G20 as trade war drags on

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china us flags
A US flag is tweaked ahead
of a news conference.

JACQUELYN
MARTIN/AFP/Getty Images


  • A win at this week’s meeting between the US President Donald
    Trump and Chinese President Xi Jinping at the G20 summit in
    Buenos Aires could be unlikely, as accusations between the
    dueling superpowers drag on.
  • A Sydney-based China expert fears Trump’s understanding
    of the consequences of a full-blown trade war are
    inconsequential because he “simply doesn’t care.”
  • Regional tensions are already high after China fired
    back at the president, following his administration’s latest
    accusations of corporate espionage.
  • The US’s top trade representative has updated his
    investigation into China’s alleged theft of US intellectual
    property, technology and trade secrets.
  • Both sides would like to find a way to step back, but their
    hardline constituents are unlikely to accept any loss of face.

Any remaining optimism for the long-awaited meet between US
President Donald Trump and Chinese President Xi Jinping at the
G20 summit in Buenos Aires later this week have taken a big hit
as the dueling superpowers fall deeper into a trade war.

The stakes have risen sharply in recent weeks just as relations
between the US and China have skirted new lows.

The US and China have been engaged in a trade war since July,
with tariffs and takedowns flying back and forth with an
increasing intensity. The consequences stretch well beyond the
economies of the two global superpowers.

Professor James Laurenceson, the deputy director of the
Australia-China Relations Institute (ACRI) at the University of
Technology in Sydney told INSIDER that the upheaval in
once-reliable trade between the US, China and the trading nations
caught in the middle, is incrementally undermining US legitimacy.

“These have the potential to make louder broader questions around
the value of US leadership in the region,” Laurenceson said.

Countries in the Asia-Pacific are among those directly hit with
US steel tariffs and, perhaps more importantly, indirectly via
tariffs imposed on Chinese goods that so many Asia-Pacific
regional supply chains feed into.

Trump
earlier this week
pledged to raise tariff rates on hundreds
of billions of dollars in Chinese imports as early as January
2019. Even the most staunch US security allies like Australia
have spent years effectively staking out a position on trade that
now stands at polar opposites with the US’s position.

“While the countries of the region, without fail, emphasize the
importance of the World Trade Organization to resolving disputes,
President Trump and the most influential voices in his
administration consider it anti-US,” Laurenceson said.

“Whether President Trump understands the consequences of an
escalating trade war is secondary to the fact that he simply
doesn’t care.”

The base case for war


qingdao trade containers port
Containers
are unloaded at Qingdao Port on November 8, 2018 in Qingdao,
Shandong Province of China.

VCG/VCG
via Getty Images


Writing in The
Interpreter
for the Sydney-based think tank, The Lowy Institute,
nonresident fellow Dr. Merriden Varrall said that while it would
be nice to picture a rosy reimagining of Washington and Beijing
coming together, defusing the ticking trade tensions, maybe even
forestalling Trump’s promised escalation of tariffs, the chasm
dividing the two sides just yawns wider.

“Despite the hope, there is little reason to be optimistic that
such a deal will be made, or, if it is, last long. The domestic
political imperatives for each leader are at least as weighty as
any economic logic,” Dr.
Varrall said
.

Public pressure in the form of the hardline constituents that
form the core power base of both presidents are working hard to
ensure Xi and Trump blink last and least in Buenos Aires.

This is perhaps among the reasons why the self-described
dealmaker in the White House told The Wall Street Journal on Monday
that he would stick to a promise to slap broad new tariffs on
Chinese imports if no deal emerges from Argentina.

The potential for relations to fall apart sometime over the
weekend are higher when the two sides choose to trade barbs,
rather than goods. Instead of concentrating on finding a trade
breakthrough, the opposing administrations are intensifying
hostilities in the lead-up to the summit.

Last week, US trade representative Robert Lighthizer released a
statement calling out China for its ongoing “unfair,
unreasonable, and market-distorting practice.”

In return, a roundly annoyed Ministry of Finance and Commerce
(MOFCOM) made very clear its feelings about Trump, after the
ill-timing of the trade investigation update.

According to The Wall Street Journal, with just days away from
meeting with Xi,
Trump vowed anew
to paint tariffs all over whatever remaining
imports are coming out of China, should the two sides fail to
reach agreement.

The United States Trade
Representative
(USTR) is on point for an investigation into
what it says is
China’s theft and manipulation of US intellectual property
,
unwelcome technology transfers and the trade in corporate
secrets.

In its latest update made available last week,
Lighthizer said
China has not only failed to check the
“unfair” practices that have blistered bilateral trade relations,
but has apparently stepped up its operations.

The 50-page report goes on to cite a long menu of cases that have
targeted the US, Europe, Japan, Australia, and other nations
across a whole slew of industries.

“China conducts cyber intrusion and cyber theft hand-in-hand with
the physical theft of intellectual property, many times with the
use of insiders,” the report claims.

Here is USTR’s report in
full.

Add oil! (加油!)


China burning
People
burn incense in the rain to worship the God of Wealth at Guiyuan
Temple on the fifth day of lunar new year on February 20, 2018 in
Wuhan, Hubei Province of China.

VCG/VCG via Getty Images

It’s been four months now that the US and China began to slap
tariffs on each other’s goods. So far, $US360 billion worth of
goods has been subject to duties.

Pouring oil on the fires ahead of this week’s critical meeting
between Trump and Xi, MOFCOM on Friday
called on the US to put a stop to its “destructive” policies
.

In the face of that criticism, MOFCOM said that these latest
accusations from the US were “totally unacceptable” and ignored
the facts.

“By putting domestic laws above international laws, the United
States has broken its commitment to all members of the World
Trade Organization and has disregarded and damaged multilateral
rules of the World Trade Organization,” Gao Feng, a ministry
spokesperson, said.

Dig in


US china nuggets
Chinese McNuggets. Dig
in.

AFP/Getty
Images


But on the issue of corporate espionage, China appears to have
dug in, the USTR report suggests.

And the US is firing back.

Late last week, the Trump administration
reached out to its key allies
and urged them not to allow the
Chinese tech-giant and telecommunications provider, Huawei,
access to critical infrastructure.

On Wednesday the New Zealand government rejected an application
from the national telecom provider, Spark, to involve Huawei in
the rollout of the country’s next-generation 5G network, on
national-security grounds,
The New York Times reported.

Trump in an interview with The Wall Street Journal asserted the
only US-China deal that appeals to him is “China has to open up
their country to competition … otherwise, I don’t see a deal
being made. And if it’s not made, we will be taking in billions
and billions of dollars,” Trump said,
according to a transcript of the conversation
published on
Monday.

The US president’s latest assertions are not likely to sit well
with Xi, as
China’s prospects for avoiding the so-called middle-income
trap
that has affected emerging economies throughout history
continues to loom imposingly on Xi’s economic horizon.

Trump and Xi are reportedly set for a working dinner at the
summit that runs Friday and Saturday, in what is likely to be one
of the most important economic meals in modern history.

Answers, in one form or another, will come when the two sides
meet face-to-face again this week.

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