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Finance & Economy

Trump to win more trophies from China in the 2018 trade war


China-Germany relation may get closer after the US-China trade war 2018 (picture from de.wikipedia.org)

US Treasury Secretary Steven Mnuchin is said to be visiting China beginning from May 3 Thursday.

It means the trade war negotiation is about to enter into the direct bargaining stage and, if done smoothly, a deal would be finalized very quickly. Trump’s victory appears to be too easy and more fruitful than anticipated.

The four offers by Xi Jinping at the Boao Forum in early April seem to be short of the American expectations. These four concessions are

[1] “Xi said China will significantly lower the import tariffs for vehicles and reduce import tariffs for some other products this year.”

[2] “China will adopt policies to promote high-standard liberalization and facilitation of trade and investment …”

[3] “Xi said China will strengthen protection of intellectual property rights.”

[4] “China will improve the investment environment for foreign investors … China will launch a number of landmark measures this year to significantly broaden its market access, Xi said.”

After the ZTE chip ban, some Hong Kong media reported that Xi (as President) will personally receive Mnuchin (as Treasury Secretary) which is an unusual international etiquette. Furthermore, Beijing may probably present additional cakes to sweeten the deal, such as relaxing the quota for Hollywood movies and reducing tariffs on imports of American vehicles etc.
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Here, at least two puzzles to which we need to pay serious attention.

First, why is it the Treasury Secretary, not the Commerce Secretary, to lead this delegation this time? The deal’s details would somehow reveal something but there may be some hidden agenda and some unannounced mutual understanding. A longer time horizon would tell. Whatever it may be, Trump’s victory is probably beyond trade deficit.

The second question is what impact would be generated from this 2018 trade war onto the US-China and EU-China relationships. A recent German article, for example, gives a brief idea about the “Germany’s dangerous Chinese addiction”. “Particularly Germany has a problem,” its author, an aviation and automobile industry specialist, says that “if the American-Chinese conflict actually worsens … The spiderweb of international trade could even punish Germany doubly or triply …”

As the US-China relation will inevitably deteriorate in the coming decades (do not forget the Taiwan issue), Beijing has been turning to other OECD nations for co-operation. The world order would be in different shape should there be one or more key OECD nations phasing out, for reasons related and unrelated to China, from this camp.

The opinions expressed are those of the author, and not necessarily those of China Daily Mail.

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About keith K C Hui

Keith K C Hui is a Chinese University of Hong Kong graduate major in Government and Public Administration and the author of "Helmsman Ruler: China's Pragmatic Version of Plato's Ideal Political Succession System In The Republic" (2013).

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