Thursday, 13 Dec 2018
World

The ceasefire between China and the United States hardly reduces the differences

BEIJING – US and Chinese cease-fire on tariffs gives companies and concerned investors a break, but there is no evidence that both parties have changed positions in the war against Beijing's technological ambitions, which threatens to curb global economic growth.

On Monday, Asian stock markets welcomed President Donald Trump's agreement to postpone a 90-day increase in US tariffs on Chinese products as the two sides negotiate. Chinese President Xi Jinping promised in exchange to buy more US exports.

The main index of the Chinese market increased by 2.7%, while that of Tokyo rose by 1.0%.

The result of the Xi-Trump weekend meeting in Argentina was "as good as we could expect," said the president of the American Chamber of Commerce in China, William Zarit, in a statement.

The main dispute, however, had not shown any progress: US pressure on Beijing to cancel the plans of the industry which, according to Washington, is based on theft and violates the obligations of opening the Chinese market.

"It is impossible for China to cancel its industrial policies or its major technological and industrial development plans," said economist Cui Fan of the Beijing University of Commerce and International Economics.

Trump's promise gives Xi political leeway after Beijing said the previous talks were impossible, while Washington "holds a knife" of tariff threats at the Beijing Gorge. But the two leaders still face a complicated mix of economic nationalists, free trade advocates and other conflicting forces at home.

Without progress, Trump will face renewed pressure from extremists to resume the escalation of the fight against tariffs.

In July, Trump imposed a 25% tariff hike on $ 50 billion of Chinese imports, following Beijing complaints against Beijing or pressure on companies to transfer their technology. Trump received an additional $ 200 billion worth of Chinese goods with a tariff of 10%, which was to increase to 25% on January 1st.

China has responded by increasing its own charges on imports from the United States.

US complaints are at the heart of a development strategy that Chinese leaders see as a path to global prosperity and influence.

They proposed to change the details but to reject the pressure for the abandonment of plans such as "Made in China 2025", which calls for the creation by the state of Chinese champions of robotics and robotics. Other areas.

These are "essential to Xi's core program to make China a superpower of innovation," said Michael Hirson, Jeffrey Wright and Paul Triolo of the Eurasia Group. This is linked to "intense geopolitical competition" with Washington.

Negotiators face an ambitious agenda and a 90-day deadline to make progress.

The weekend agreement says that "the dialogue will intensify", but China will have to "accept very substantial measures" to reach an agreement, said Rajiv Biswas of IHS Markit in a report.

Cui evaluated the chances of an agreement to "more than 50%" but said that he had no idea how long it could take.

Beijing had previously agreed to reduce its trade deficit with the United States by buying more soy, natural gas and other exports, but dropped it after Trump's tariff increases. Xi's weekend agreement goes in the same direction, pledging to buy an "un-agreed amount of agricultural, energy, industrial exports" and other US exports.

Xi's government has announced a series of changes this year that Washington and other trading companies may have hailed later. But they were eclipsed by the tariff battle.

While Beijing responded to US tariff increases by imposing penalties on soybeans, automobiles and other US products, it reduced tariffs on factory machinery and other imports from other countries.

The government has also pledged to relax the foreign ownership limits of automakers, insurance companies and other companies.

Business groups welcome these changes but complain about other rules limiting market access, including finance, logistics and agricultural technologies.

Businesses want a "real answer to these concerns, with measurable goals," said Kenneth Jarrett, president of the US Chamber of Commerce in Shanghai, in an email.

Threats of additional penalties in the United States are looming in the background.

Trump said he could consider raising tariffs on all remaining Chinese imports, about $ 267 billion worth of goods. US Trade Representative Robert Lighthizer complained last week that China's 40% tariff on US-produced motor vehicles exceeds the 27.5% imposed by Washington on Chinese vehicles.

Trump tweeted Sunday night that China had promised to give up 40% tariffs on the auto. The Chinese Ministry of Commerce has not yet answered Monday whether Beijing has made such a commitment.

China has its own requirements. Beijing is not satisfied with US limits on "dual-use" technology exports with possible military applications. Xi's government complains that Chinese companies are treated unfairly in US security reviews of proposed business acquisitions, even though almost all transactions are approved unchanged.

"China hopes that the United States will treat Chinese companies on an equal footing and ease restrictions on foreign investment and export of high-tech products to China," said Song Lifan, economist at Beijing Renmin University.

One possible measure of progress will be whether Beijing offers "significant concessions" on technology, said Hirson, Wright and Triolo of the Eurasia Group.

Without this, the extremists in Washington "will urge Trump to resume the escalation," they said. He is too determined to confront Beijing with technology "to easily escape these problems".

___

Henry Hou, AP researcher, contributed.

Copyright 2018 The Associated Press. All rights reserved. This material may not be published, disseminated, rewritten or redistributed.

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