Newsletter 25 - June 22, 2020
Welcome to the latest edition of Trade War. The biggest news of the week was the allegation that Donald Trump promised to go easy on China, in exchange for Chinese leader Xi Jinping agreeing to buy more American agricultural products, a move the U.S. president saw as supporting his November reelection prospects. This is the charge made by Trump’s former National Security Advisor John Bolton in his new book The Room Where it Happened.
Bolton also writes in an article excerpted from his book in the Wall Street Journal, that Trump earlier backtracked on putting sanctions on telecom maker ZTE, a move that would have destroyed the Chinese company. The reversal aimed to improve chances of getting a trade deal with China signed; Trump later offered to ease up U.S. pressure on Huawei, for the same reason. He also asked for China’s help in buying wheat and soybeans, in order to strengthen his support amongst U.S. farmers, in a June meeting last year he had with Xi in Osaka, Japan.
Trump pleads with Xi
Trump “turned the conversation to the coming U.S. presidential election, alluding to China’s economic capability and pleading with Xi to ensure he’d win. He stressed the importance of farmers and increased Chinese purchases of soybeans and wheat in the electoral outcome,” Bolton writes in the Journal.
Tiananmen Square Massacre: “Who cares about it?”
In two of his more explosive allegations, Bolton writes that Trump told Xi that he “should go ahead with building the camps [in Xinjiang], which Trump thought was exactly the right thing to do,” and that on the 30th anniversary of the Tiananmen massacre in 2019, Trump refused to issue a White House statement, saying “who cares about it? I’m trying to make a deal. I don’t want anything.”
Just after the news broke that Trump asked China for more agricultural purchases to improve his reelection prospects, Beijing has announced plans to do exactly that: have its state-owned buyers work to meet the phase-one purchase obligations, Bloomberg News reports.
Earlier after Secretary of State Mike Pompeo met with China’s top diplomat Yang Jiechi in Hawaii he tweeted that Yang had “recommitted to completing and honoring all of the obligations” of the phase-one deal.
That won’t be easy: “China purchased only $4.65 billion in the first four months of the year, data from the U.S. Department of Agriculture show. That’s only 13% of the goal set in the trade deal and almost 40% below the same period in 2017,” Bloomberg News reports.
‘Complete decoupling from China’
Meanwhile, in keeping with the usual erratic approach seemingly favored by the White House, the president tweeted on Thursday that the U.S. could still potentially pursue a “complete decoupling from China,” Bloomberg reports.
China’s bare-knuckled geopolitical fistfights
A violent clash between China and India disputing the two countries high Himalayan border left 20 Indian soldiers and an unknown number of Chinese soldiers dead, The Guardian reports.
“China’s coronavirus mask diplomacy has given way to bare-knuckled geopolitical fistfights with a growing array of its neighbors,” write Lindsey W. Ford and Julian Gewirtz in Foreign Policy. Recently “it clashed with India in one of the worst border flare-ups in decades, escalated standoffs with Vietnam and Malaysia in the South China Sea, pressured Taiwan with nighttime drills in the Taiwan Strait, and threatened Australia with boycotts of wine, beef, barley, and Chinese students.”
And policymakers are increasingly alarmed
The White House says growing China power “harms vital American interests and undermines the sovereignty and dignity of countries and individuals around the world.” The EU, has called China a “systemic rival” and “economic competitor.” Australia has banned Huawei’s 5G technology. Meanwhile in Asia, Vietnam calls China’s maritime tactics “unilateral actions, power-based coercion, violation of international law, militarization.”
“Countries are realizing that China’s rise and ensuing departure from tenets of domestic and foreign policy, instilled during the era of former Chinese leader Deng Xiaoping, break from their own views. Policymakers are increasingly alarmed,” write Paul Haenle and Lucas Tcheyan of the Carnegie Endowment for International Peace.
Not a market economy
After years of pushing for formal designation by the World Trade Organization for market-economy status, China has given up, reports Bloomberg News.
It matters because the designation would have given China “stronger footing with commercial partners while also curtailing their ability to retaliate [against China] over trade disputes.” Now the EU and others have “greater legal certainty to combat low-price Chinese exports with artificially high tariffs.”
‘No question’ Huawei routed data to China
Ex-Google CEO Eric Schmidt said in an interview with BBC Radio and reported by CNBC, that it is certain Huawei routed data to China. “There’s no question that information from Huawei routers has ultimately ended up in hands that would appear to be the state,” Schmidt said. “However that happened, we’re sure it happened.”
Victims of hostage diplomacy?
Meanwhile in China two Canadians have been charged with espionage; Michael Spavor and Michael Kovrig were arrested on December 10, 2018, just days after the arrest in Canada of Huawei executive Meng Wanzhou.
“The decision to prosecute the men, who have been widely described as victims of ‘hostage diplomacy,’ comes after a British Columbia court denied an initial application for Ms. Meng to be released from Canada, where she is fighting extradition to the U.S.,” writes Nathan Vanderklippe of the Globe and Mail.
Living in her Vancouver mansion
And compare the timelines below showing the treatment of Huawei’s Meng in Canada, and the Canadians held in China, in this AFP graphic.
In case you thought China was using COVID-19 as an opportunity to snap up cheap assets around the world, that’s not what the numbers show, argues Rhodium Group’s Thilo Hanemann.
“The Commerce Department was not amused. It tried again this May, forbidding the sale of U.S. technology not only to Huawei, but also HiSilicon’s suppliers,” writes the Washington Post’s Eva Dou in this interesting profile of Huawei’s chip maker.
“The Chinese Politburo carefully cultivates an image of China for the world to see. It is the China of sleek skyscrapers ... author Dexter Roberts presents a radically different portrait: it could be called ‘the real China’”, writes Frank Schell in a review of The Myth of Chinese Capitalism for Mumbai’s Gateway House.
GWU’s Sigur Center for Asian Studies "New Books in Asian Studies"series lecture next Thursday. Please join if you have time. Details in link below.