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(Andrew Harnik)
As a Chinese trade delegation arrived in Washington this week, Beijing announced it would accelerate the introduction of a new foreign-investment law designed to address some of the Trump administration’s complaints.
The move, which came just hours before Chinese officials were due to meet their American counterparts for two days of talks, seemed to suggest something important: Chinese President Xi Jinping is hoping to find an end to the U.S.-China trade war.
Currently, the two countries are observing a truce in that war. President Trump has set a deadline of March 1 for hashing out a deal that would rebalance U.S. trade relations. If an agreement can’t be struck, he said, he will install more tariffs on Chinese goods — something Xi is keen to avoid, The Washington Post’s David J. Lynch and Anna Fifield reported, because he fears an economic slowdown.
But while there is optimism that resolution may be at hand, there are also indications that tensions could heat up instead.
The case against Chinese telecom giant Huawei may be the biggest stumbling block. On Monday, the Justice Department announced criminal charges against the company and one of its top executives, Meng Wanzhou. The allegations included bank and wire fraud, attempts to violate U.S. sanctions on Iran and the theft of intellectual property from a rival firm.
There have been concerns about Huawei’s business practices and its links to the Chinese government for years, but even seasoned China watchers were surprised by the damning details in Monday’s indictment.
“Whatever the outcomes of the cases,” wrote The Post’s Emily Rauhala, “the allegations presented Monday look sure to shape U.S.-China relations, adding a layer of uncertainty to trade talks this week and setting a more combative tone for months, if not years, to come.”
The ramifications may go far beyond U.S. courts. Even before the indictments were announced, a number of countries, including the United States, had banned Huawei from being involved in installing 5G networks, the next generation of cellphone systems.
“Considering just how patently unethical Huawei looks, money isn’t the only thing it stands to lose — international trust in the company is eroding already,” wrote Chris Velazco in an article for Engadget that was simply titled: “How screwed is Huawei?”
Steve Dickinson, writing for China Law Blog, suggested the Huawei case is a sign foreign companies and governments are increasingly unafraid of retaliation if they take action on Chinese intellectual-property theft. “With the deterioration of US-China relations, this concern seems to be melting away and decades of pent-up resentment against China’s IP practices could well spill out in a cascade of claims from the US and the EU and others,” he wrote.
But that could still be a dangerous tactic. The Chinese response to Meng’s arrest has shown how Beijing is willing to use its own justice system in diplomatic and trade disputes.
Two well-known Canadians, Michael Kovrig and Michael Spavor, were detained in China shortly after Meng was taken into custody in Vancouver on Dec. 1; another Canadian was sentenced to death not long after. China has not yet targeted U.S. citizens, but there’s no guarantee that will last.
Additionally, seemingly positive developments in the U.S.-China trade war may also prove to be less than they seem. Beijing’s new foreign-investment law is noteworthy, but the speed with which it is happening could actually work against foreign firms.
“While the current draft responds to some longstanding criticisms from foreign firms, vowing to protect their intellectual-property rights and ban coerced technology transfers, it contains vague language on national security reviews, government expropriation and other matters officials could use against foreign firms,” the Wall Street Journal’s Chao Deng wrote.
In an article for the Atlantic, Beijing-based journalist Michael Schuman offered a bleak prognosis for the upcoming U.S.-China talks. “The trade dispute is about far more than tariffs and deficits. It is a contest of two very different national ideologies,” Schuman wrote.
“What is ‘unfair’ in American eyes is simply a matter of daily business in China,” he added. Schuman was talking specifically about unfair business practices, but what he said could probably apply to other areas: criminal justice, politics and religion. This is perhaps why Trump, as controversial as he is, he has found himself on the same side as many liberals in pressuring China.
President Trump and Chinese President Xi Jinping leaving an event at the Great Hall of the People in Beijing in 2017. (Nicolas Asfouri/AFP/Getty Images)
One of the most surprising of them is George Soros, the billionaire and boogeyman of many right-wingers around the world. At last week’s World Economic Forum in Davos, Switzerland, Soros offered a lengthy criticism of China. “China isn’t the only authoritarian regime in the world, but it’s undoubtedly the wealthiest, strongest and most developed in machine learning and artificial intelligence,” Soros said.
But Soros also had little hope that the Trump administration would push back against China’s trade practices in a way that would have a long-lasting impact. “Regrettably, President Trump seems to be following a different course: make concessions to China, and declare victory while renewing his attacks on U.S. allies,” he said.
That’s an outcome China may be counting on. “Our base case is that China, eager to avoid 25 percent tariffs, packages together enough concessions for the U.S. to declare a win,” Tom Orlik of Bloomberg Economics predicted earlier this week. “A risk to that scenario is that China calls President Trump’s bluff.”
The big question in that scenario is whether Trump — mindful of the upcoming election and his recent defeat in shutdown negotiations — would escalate the trade war. Either way, the problems underlying it would remain unresolved.
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This story was originally published by Washington Post
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