As of the start of 6/2019, it
seems a trade war between the U.S. and China is not avoidable. I hope they will
compromise and avoid the trade war. It is unlikely after China published their
paper in several languages. It tells her citizens and the world that they
cannot compromise further as their base lines have been crossed. Hence, if
China backs up, it would be a slap on their face. President Trump will not back
up either.
According to a Chinese government
white paper, the unreasonable demands led to the collapse
of trade talks in May, 2019. From the U.S. side, the collapse was due to the
later re-negotiation of early clauses that had been both agreed.
No one knows exactly why the
negotiation collapsed except the negotiators. I commented on some leaks here
and some based on speculation.
1. U.S.
wants 100 billion cut in trade deficit for the first year. China would agree on
this. However, a total of 200 billion in the following years is harder for
China, but it is workable.
2. China
will not subsidize industries for companies involved in “Made in 2025”. Every
country subsidize their industries including agriculture and research by the
U.S. government. China can accept it but is it always impossible to enforce it
and China would ask the U.S. to do the same.
3. The
U.S. wants China not to import components on specific industries. It is more on
my own speculation. It is the same of banning Google and chip companies to sell
software / components to Huawei. That is not acceptable to China. With this, it
is better for China to go to a full-fledge trade war. Google’s apps could kill
China’s mobile sales to Europe as they do not want to use China’s censored data
such as China’s equivalent Wikipedia.
4. The
U.S. wants China to cut down cyber spying on U.S. companies. All companies are
spying against each other. China can promise to try their best. Other than
this, it is not acceptable and it is impossible to enforce it.
However, on 6/8/2019, Xi called
Trump ‘a friend’. It is a complete reversal of the previous attitude. It could
be the hawk members is losing ground after Xi found out that China did not have
all the trump cards. The trade war could be settled under our terms. This is my
sincere hope. It is painful for me as my adopted country and my native country
(I was born in Hong Kong) are fighting against each other. Today (6/25/2019) is
close to the important meeting in G20 between the two.
However, based on past history,
China may violate most terms as they did on the promises of providing South
China Sea traffic for all countries to some extent and not stealing secrets.
We will be more isolated if Trump
insists on trade wars with many of our trade partners. Many countries would
help the U.S. and China to cross ship products to avoid tariffs.
The harms have been done. China
will prepare better today for the future trade war. The days of sharing our
chips and technologies with China will be gone if not already. China will
swallow their pride and accept Trump’s rules (the one who has gold will make
the rules). Trump will most likely avoid the trade war to gain his chance of
being reelected. He will not want to be the person responsible to pull China
and Russia together.
Links
Chinese white
paper on trade.
For more current articles, google “China trade war”.
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The above is from my new book "Trade War with China". Click here.
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The above is from my new book "Trade War with China". Click here.
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