China responds to US threat with good faith

By Wang Cong Source:Global Times Published: 2019/5/7 22:33:40

Nation sends high-level trade team to DC despite threats



As US President Donald Trump continues to ratchet up the trade war with China, many household appliances, such as these Made-in-China washing machines and dryers in a New York City appliance store, are likely to see huge price increases. Photo: AFP



China on Tuesday took a conciliatory approach to what has been widely viewed as Washington's brinkmanship in a trade tussle with Beijing by sending a high-level trade negotiation team to the US even after repeated threats and tough rhetoric from US officials. 

While China showed its commitment to resolving the trade dispute through consultations, the dramatic change in tone of some US officials has cast a dark cloud over the prospect of a speedy trade deal, and China needs to prepare for all scenarios, Chinese analysts noted.

China's Ministry of Commerce (MOFCOM) on Tuesday announced that Vice Premier Liu He will go to the US from Thursday to Friday for the 11th round of trade consultations, at the invitation of US Trade Representative Robert Lighthizer and US Secretary of Treasury Steven Mnuchin.

After US President Donald Trump threatened, in a pair of tweets Sunday, to increase a 10 percent tariff on $200 billion in Chinese goods to 25 percent and impose tariffs on $325 billion in Chinese products, some foreign media had speculated that Liu might skip the planned talks.

Liu had planned to arrive in Washington on Wednesday for the talks, but after Trump's tweets, Chinese officials took some time to decide whether to send Liu, according to some US media outlets. Chinese officials did not release a specific date for the planned talks until Tuesday.

Tuesday's decision also came after Liu held a conference call with Lighthizer on Tuesday morning, Beijing time, the New York Times reported.

Good faith

MOFCOM's brief statements did not address the threats from the US president. But the announcement showed China's commitment to resolving the trade dispute that has rattled global markets through negotiations, analysts said.

"I think the Chinese side is going to the US to show its utmost sincerity and good faith," said Li Yong, deputy chair of the Expert Committee of the China Association of International Trade. 

"This is not only to get the US side to understand but also to show China's hard work in the trade negotiations."

At a routine press briefing on Tuesday, Geng Shuang, a spokesperson for China's Foreign Ministry, also reiterated China's commitment to the trade talks. 

"The Chinese side has always believed that mutual respect, equality and mutual benefit are preconditions and the foundation for reaching an agreement," Geng said. "It is normal to have divergences but China does not avoid conflicts and has faith in the consultations."

Geng also took aim at threats from US officials, saying that "imposing tariffs will not resolve anything."

Following up on Trump's threat, US officials on Monday declared that the US would increase tariffs on $200 billion in Chinese goods to 25 percent on Friday, according to the Wall Street Journal.

"This is more of a negotiating tactic," Song Guoyou, director of Fudan University's Center for Economic Diplomacy, told the Global Times on Tuesday, noting that the move is aimed at gaining greater leverage in the final talks. "It's about the extent of concessions made by the other side."

In issuing the threats, US officials cited that Chinese officials were trying to renegotiate agreed terms. In the Wall Street Journal report, Lighthizer accused Chinese officials of "retreating from commitments that have already been made," without providing details.

In an apparent bid to push back the accusations, Geng said that differences in the negotiating process are "very normal." 

"We don't know what's going on behind closed doors. But even if there is back-and-forth, that's normal, that's how negotiations work," Li Yong said. "It is irresponsible for them to take such an extreme action just because of this."

Preparing for the worst

Though some Chinese analysts believe that the tactic is unlikely to derail talks, given the two sides' eagerness to end the increasingly costly trade war as shown in efforts over the past few months, they also warned of a potential escalation and urged that China, while hoping for the best, also needs to prepare for the worst.   

"We have to focus on ourselves and must not let US pressure change the arrangements we have made to our bottom lines," Song said, adding that China should focus on carrying out already stated policies to stabilize economic growth and employment and boost confidence in the Chinese economy.

China has announced a slew of measures aimed at boosting economic growth and creating jobs, including stimulus packages, massive taxes and fee cuts to businesses and huge investments in job training. At the same time, China has taken concrete actions to reform its economy and further open the domestic market to foreign investments.

A number of indicators show the Chinese economy performed better than expected, growing 6.4 percent year-on-year. Consumption and investment, the two main drivers, also showed improvements.

In a show of strong resilience, after a widespread selloff on Monday, Chinese stocks closed higher on Tuesday, with the Shanghai Composite Index gaining 0.69 percent and the Shenzhen Component Index up 1.63 percent.

If there is further escalation, "it will have an impact on the Chinese economy, but the impact will not be as strong," Song said, pointing to solid economic fundamentals and adding that there will also be an impact on the US economy.

Contrary to US officials' claims that the tariffs will hurt only China, recent estimates show that if the US were to raise the tariffs to 25 percent, it would cost the US nearly 1 million jobs and reduce its GDP by 0.37 percent, according to Tariffs Hurt the Heartland, a lobby group representing over 150 US trade organizations.
Newspaper headline: China replies with good faith


Posted in: POLITICS,ECONOMY,CHINA-US

blog comments powered by Disqus