Cracks, confusion and the US-China trade war truce

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Optimism about a new round of talks has turned to pessimism amid mixed signals from Washington and Beijing

By Gordon Watts –Asia  Times

Euphoria has been replaced by pragmatism. Less than 96 hours after United States President Donald Trump announced a 90-day trade war truce after a dinner date with China’s head of state Xi Jinping in Buenos Aires, cracks and confusion have started to appear.

Initial optimism of a new round of talks has turned into pessimism with the White House struggling to explain the details of the deal while Beijing has officially reverted to simple platitudes.

The positive sentiment reflected in international markets earlier this week appears to have evaporated and has been replaced by an atmosphere of uncertainty.

Concerns about the vitality of the global economy, including the US, has only added to the gloom after an update by the International Monetary Fund at the end of last month.

“China has long advocated the use of talks to resolve trade disputes with the US, but it is also confident of tackling any challenges in the event of the disputes not being amicably settled,” Mei Xinyu, a researcher at the Ministry of Commerce’s International Trade and Economic Cooperation Institute, wrote in an opinion piece for the leading state-run English language newspaper, the China Daily, on Wednesday.

“The [economic] shadow looming over the US is likely to prompt Washington to resort to more trade protectionist measures, which will make it even more difficult for it to agree to a final deal between China and the US in the coming 90 days,” Mei added. “In the future, therefore, China should prepare to negotiate trade deals, as well as deal with ‘trade conflicts’ with the US.”

The official statement from the Ministry of Commerce was certainly more upbeat but lacking in substance.

Major issues

“We are confident about the implementation [from the meeting],” an unnamed spokesperson said.

“In 90 days, economic and trade teams of both sides will actively push forward the consultation following [a] clear timeline and [a] roadmap,” the official Xinhua agency reported without providing more details.

Major issues at the heart of the dispute are intellectual property violations, cyber theft and Beijing’s state-backed economic model.

Solving these problems will probably take delicate diplomacy and more than 90 days.

So far, the State Council, China’s de facto cabinet, has made the first move by announcing plans to crack down on IP infringements.

“This is an unprecedented regulation on IP violation in terms of the scope of the ministries and severity of the punishment,” Xu Xinming, a researcher at the Center for Intellectual Property Studies at China University of Political Science and Law, said. “[This offers] a security net of IP protection.”

Still, overnight there were mixed signals coming out of Washington just three days after Trump trumpeted an “incredible” deal, despite conflicting accounts from American and Chinese officials. These included an announcement that Beijing would remove tariffs on imported US cars, which has yet to be confirmed by Beijing.

He further muddied the waters on Tuesday when he warned on Twitter that “I am a Tariff Man.” “When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” he said.

Trump also hinted that the 90-day ceasefire could be extended, sowing more seeds of doubt on Wall Street.

 

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