Trade war, continued
China’s trade talks with the United States come as the Communist nation battles an economic slump
Traders and financial professionals work on the floor of the New York Stock Exchange ahead of the opening bell, May 8. Drew Angerer/Getty Images
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Stocks dropped this week after U.S. President Donald Trump threatened to impose higher tariffs on Chinese goods. Trump’s warning came after China backtracked on several key U.S. demands amid ongoing trade negotiations between the two countries—negotiations occurring as China grapples with an economic slump.
The Trump administration announced Monday that it would increase tariffs from 10 percent to 25 percent on $200 billion worth of Chinese goods beginning Friday morning. In tweets posted on Sunday, Trump said he also planned to tax another $325 billion worth of additional Chinese goods.
The Chinese Commerce Ministry responded to the planned tax hikes on Wednesday, saying, “The Chinese side deeply regrets that if the U.S. tariff measures are implemented, China will have to take necessary countermeasures.” Still, Chinese Vice Premier Liu He and other Chinese negotiators landed in Washington Thursday to resume trade talks. It seems unlikely they will reach a deal with U.S. officials during the two-day meeting.
Before the latest setback, many believed a deal was imminent, since both China and the United States had discussed lifting tariffs on the other’s goods. But Reuters reported that Beijing sent a diplomatic cable last Friday night with edits to the 150-page draft trade agreement. The new copy made changes in all seven chapters: It deleted important commitments, including commitments to change laws pertaining to forced technology transfers, currency manipulation, and the theft of U.S. intellectual property and trade secrets, according to the news agency.
U.S. Trade Representative Robert Lighthizer believes that changing Chinese law is vital to ensure that China keeps its side of the bargain. Yet Chinese negotiators claim laws are difficult and time-consuming to change, and they instead want to fulfill the Communist country’s pledges through administrative and regulatory actions.
![U.S. Trade Representative Robert Lighthizer, left, and Chinese Vice Premier Liu He.](https://www4.wng.org/Lighthizer_034E2889A-itokwWEcdwXm.jpg)
U.S. Trade Representative Robert Lighthizer, left, and Chinese Vice Premier Liu He. Mark Schiefelbein/AP
Lighthizer began investigating China’s intellectual property theft and forced technology transfers in August 2017 and last year began to place tariffs on Chinese goods. Beijing responded with its own tariffs. The escalation continued until December, when both sides decided to halt planned increases as they worked on negotiations.
The trade war comes at a time when China’s economy is slowing down. China had claimed 6.6 percent economic growth in 2018—its slowest annual growth rate since 1990—yet the real amount is likely much lower because China doctors its numbers: According to a Brookings Institute report, China overestimated its growth rate by about 2 percentage points between 2008 to 2016, with the miscalculation growing each year.
In order to avoid the tariffs, some companies are moving their factories from China to Vietnam, a country that has benefited from the trade war. In the first quarter of 2019, Vietnam’s GDP grew 6.79 percent while exports to the United States increased by 26 percent. Several companies making furniture, refrigerators, and car tires have moved production from China to Vietnam, South Korea, Taiwan, and Mexico, according to Panjiva, S&P Global Market Intelligence’s trade data firm.
Censored by CBS:
A new episode of The Good Fight, a CBS legal drama, focused on American companies engaging in self-censorship to appease China. But ironically, CBS itself censored part of the episode. The censored segment was a musical animated short about topics blocked on the internet in China, including Falun Gong, Tiananmen Square, and Winnie-the-Pooh (a character Chinese netizens believe resembles President Xi Jinping). CBS said it feared for the safety of its employees in China if the segment was included, according to Jonathan Coulton, a songwriter for the show.
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