Newsletter 38 - September 25, 2020
Welcome to Newsletter 38, this week’s edition of Trade War. Washington and Beijing lashed out at each other in the United Nations over COVID, with Moscow joining the fray backing China. With the choice for future head of the World Trade Organization narrowed to five candidates, all of them are keeping mum on the sensitive topic of the U.S.-China trade war, in hopes of not torpedoing their chances by offending the organization’s powerful players.
Meanwhile, China finally published its rules for an “unreliable entity list,” obvious retaliation to the earlier U.S. version and Washington’s targeting of Huawei, WeChat and TikTok. And with an unprecedented number of Chinese military jets flying across the unofficial midline in the Taiwan Strait in recent days, fears of an eventual military conflict are growing.
The troubled trinity of US, China and Taiwan
China has responded to the latest senior Washington official’s visit to Taipei - U.S. Undersecretary for Economic Affairs Keith Krach - with an onslaught of PLA jets flying crossing the unofficial midline in the Taiwan Strait, forcing Taipei to scramble its jets in response. I spoke to Melissa Chan about the military provocation and the troubled trinity of the U.S., China and Taiwan relationship on Wednesday on DW News Asia.
Following a speech at the U.N. by Chinese foreign minister Wang Yi that criticized the U.S. for what Wang suggested was its go-it-alone approach to developing a COVID vaccine, and equally critical statements by Russian foreign minister Sergey Lavrov, the venue erupted into some relatively rare unscripted vitriol.
“Shame on each of you. I am astonished and disgusted by the content of today’s discussion,” United States U.N. ambassador Kelly Craft said late in the virtual session. Some representatives are “squandering this opportunity for political purposes.”
That won a rejoinder from Chinese U.N. ambassador Zhang Jun: The U.S. is "abusing the platform of the UN and its Security Council" and "spreading political virus and disinformation, and creating confrontation and division. Such action would only undermine international efforts to tackle the pandemic," he said.
A grueling confessional period
The remaining five candidates for the World Trade Organization’s top job are avoiding voicing opinions on the ongoing U.S.-China trade dispute, in an apparent effort to not alienate either of the two countries, reports the South China Morning Post.
After surviving “a ‘grueling' confessional period, in which they were interviewed by representatives of the trade body’s 164 members,” each is “attempting not to alienate any of the powerful triumvirate of China, the European Union and the United States.” Next up: cutting the contenders down to two before finally choosing the global trade body’s next chief.
Speaking loudly and carrying a flimsy stick
Whether it is China’s GDP growth, its strengthening currency, or its trade surplus with the U.S. - the latter up almost 25% since the start of the Trump presidency - Beijing is beating Washington in the trade war, writes Bloomberg’s Andrew Browne.
“On just about every metric that matters, China is ahead. At every turn, Trump seems to have been outplayed and outsmarted throughout the global trade war that began shortly after he took office.”
Rules for China’s ‘unreliable entities’ list
China’s commerce ministry has issued rules for its own “unreliable entities” list, Beijing’s response to Washington’s earlier version, which has been used to punish companies including Huawei and engineering giant China Communications Construction Company for its involvement in dredging in the South China Sea.
While Beijing has not specified which companies could be targeted, state media in recent months has mentioned Apple, Cisco, Qualcomm, Boeing and Fedex, report the South China Morning Post and Reuters.
Vogue for challenging app bans in US court
With TikTok’s decision to follow the example of WeChat and sue the U.S. administration it is “becoming very vogue to challenge app bans in U.S. federal court,” tweets Wall Street Journal reporter Liza Lin.
“A federal judge gave the Trump administration until Friday afternoon to postpone a fast-approaching ban on U.S. downloads of the Chinese-owned video-sharing app TikTok, or defend the policy in a court hearing this weekend,” reports the Wall Street Journal.
“The download ban is set to begin at 11:59 p.m. on Sunday while authorities in the U.S. and China are reviewing a proposal by TikTok owner ByteDance Ltd. to preserve the app’s U.S. presence. With those talks unfinished, TikTok sued the administration and asked a judge to halt the ban.”
Beijing has set quotas in a massive program to transfer rural Tibetan laborers to work in factories and on construction sites within Tibet and in other parts of China, a policy that disturbingly mirrors practices used with Uighurs in Xinjiang, including the use of ideological training that aims to boost support for the Chinese Communist Party, writes Reuters’ Cate Cadell.
A COVID-19 hit to consumer confidence “could potentially generate a cycle of negative effects, where the Chinese population overall starts saving and stops spending, resulting in economic decline, followed by a further decrease in consumer confidence and a trend towards even steeper savings,” warns UC San Diego professor and former BCG consultant David Michael in an interview with the university’s 21st Century China Center.
Whether a country runs a trade surplus or deficit longterm has little impact on manufacturing employment, research by the Peterson Institute argues.
I am looking forward to talking about my book The Myth of Chinese Capitalism: the Worker, the Factory and the Future of the World, migrants and the labor movement. Register here in the link.
And in case you missed it…
I gave a book lecture and talk about China’s troubled economy and what it means for India, earlier this week at the Institute of Chinese Studies in Delhi, India. It was part of their Wednesday afternoon lecture series, a 50-year old tradition.