Trade War with China

vincent said:

It is the demand from the Americans right from the beginning

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• The U.S. wants China to cut the two nations’ trade deficit by at least $200 billion by the end of 2020 from 2018 levels.
• Chinese purchases of U.S. goods will represent at least 75 percent of a commitment to a $100 billion increase in purchases of U.S. exports for the 12 months beginning June 1, 2018, and at least 50 percent of China’s commitment to an additional $100 billion increase in purchases of U.S. exports in the 12 months beginning June 1, 2019.

• China to immediately cease providing subsidies and government support that fuels excess capacity in industries targeted by the Made in China 2025 plan.
• Specific policies and practices linked to technology transfer are eliminated.
• A cessation of government-sponsored cyber intrusion and cyber theft.
• Strengthened intellectual property rights protection and enforcement.
• By Jan. 1, 2019, China will eliminate provisions of the Regulations on the Administration of the Import and Export of Technologies and the Regulations on the Implementation of the Law on Chinese-Foreign Equity Joint Ventures identified in the U.S.
• By July 1, 2018, China will withdraw its request for WTO consultations in United States – Tariff Measures on Certain Goods from China and take no further action on the matter
• The document also calls on China to take no retaliatory action in response to actions taken or to be taken by the U.S.

• A demand that China does not “oppose, challenge, or otherwise retaliate against the United States’ imposition of restrictions on investments from China in sensitive U.S. technology sectors or sectors critical to U.S. national security.”

• A demand that China does not distort trade through investment restrictions and any restrictions are narrow and transparent
• U.S. investors in China to receive “fair, effective and non-discriminatory market access and treatment, including removal of the application of foreign investment restrictions and foreign ownership/shareholding requirements.”
• China to issue an improved nationwide negative list for foreign investment by July 1, 2018. Within 90 days the U.S. will identify existing investment restrictions that deny U.S. investors market access. China is then to remove all identified investment restrictions on a timetable to be decided by both nations.

• By July 1, 2020, China will reduce tariffs on all products in non-critical sectors to levels that are no higher than the levels of the U.S.’ corresponding tariffs
• China to remove specified non-tariff barriers and recognizes that the U.S. may impose import restrictions and tariffs on products in critical sectors, including sectors identified in the Made in China 2025 industrial plan.

• A demand for China to improve market access in specified ways

• A demand for China to improve market access in specified ways

• Both countries to meet quarterly to review targets and reforms
• If the U.S. declares China is not complying with the framework, the U.S. can impose tariffs or other restrictions on Chinese products or restrict supply of services
• A demand that China does not “oppose, challenge or take any form of action against the United States’ imposition of additional tariffs or restrictions.”
• China to withdraw its WTO complaints regarding designations of China as a non-market economy and will refrain from future challenges
• Within 15 days of receiving written notice of a prohibited product that may have been transshipped through one or more countries, China will provide full details of every shipment. Failure to do so will trigger tariffs.
• If China fails to uphold commitments the U.S. will impose tariffs on imports from China and will confiscate counterfeit and pirated goods or levy tariffs to compensate for lost technologies and intellectual property.
• A demand that China does not take any retaliatory action in response.

• In an official document seen by Bloomberg News, China stated that measures to open up its economy will not be applicable to U.S. investors if the U.S. doesn’t meet China’s request on equal treatment of Chinese investment. Other requests of the U.S. included:
  • Lift bans on exports of integrated circuits to China.
  • Stop imposing 25 percent extra tariffs against Chinese products.
  • Open government procurement to Chinese technology products and services.
  • Give equal treatment to Chinese companies in national security review.
  • Adjust the export ban on ZTE. Corp.
  • Drop surrogate-country approach in anti-dumping, anti-remedy cases.
  • Not to initiate any Section 301 investigation against China in the future.
  • Open its e-payment market to Chinese companies.
  • Approve China International Capital Corp.’s application for a financial license.
  • Open the e-payment market to Chinese companies

SteelBird said:

a quick question: have Liu He and his delegation arrived in Washington?

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• Beijing has several options to put the squeeze on Washington if new threatened tariffs come into effect, observers say
• But China could be ‘too optimistic’ about riding out the storm

Beijing still holds trade war retaliation options against Washington even if the US raises tariffs on Chinese goods on Friday, according to Chinese analysts.

Chinese Vice-Premier Liu He is expected to arrive in Washington on Thursday for the latest round of negotiations, and he and his team are under immense pressure to prevent further increases in duties on Chinese exports to the United States.

At the weekend, US President Donald Trump

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on US$200 billion of imports from China from 10 per cent to 25 per cent on Friday.
That change will take effect on Friday, according to a special filing announced on Wednesday in the US government’s Federal Register.

In a statement, the Chinese Ministry of Commerce said it “deeply regretted” the latest development. It said Beijing “will have no choice but to implement countermeasures” if Washington imposed the higher tariffs, without saying what these measures would be.

The US president’s surprise tweet on Sunday roiled the Chinese stock market and caused the biggest single-day loss in three years. But Chinese analysts said Beijing still had an advantage – it could use the potential loss of China’s huge domestic market to rattle Wall Street and Trump’s rural support base.

Wang Yong, director of the Centre for International Political Economy at Peking University, said that hitting back with tariffs might not be a good option for China, given that China was running out of US goods to tax, and it would hurt Beijing’s efforts to boost domestic demand.

But it had other options to deal with further escalation in the conflict, Wang said.

“To increase tariffs would only increase the burden on Chinese customers,” he said. “Instead, China can limit its purchases and stop opening up its market to US firms.”

Among the sectors hardest hit under those conditions would be US agriculture, finance, energy and manufacturing, Wang said.

US soybean producers are already feeling the impact of tariffs.

When the trade war erupted in July, China slapped a 25 per cent tariff on the US crop as part of its efforts to weaken Trump’s support among rural farmers.

Chinese customs data released on Wednesday showed that China increased soybean imports in April by 10.7 per cent to 7.64 million tonnes, but most of the cargoes were Brazilian beans and some US shipments were delayed, according to a Reuters report.

China has

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of US beans since a

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in December, but another 6 million tonnes of anticipated purchases could be in jeopardy.
A statement released by the American Soybean Association on Tuesday said Trump’s announcement was a “worst case” for soybean growers. It called on the Trump administration to hold off on additional tariffs and conclude trade negotiations with China.

“After so many threats and missed deadlines for concluding negotiations, this ongoing uncertainty is unacceptable to US farmers,” the association’s president Davie Stephens said.

“With depressed prices and unsold stocks forecast to double before the 2019 harvest begins in September, we need the China market reopened to US soybean exports within weeks, not months or longer.”

Also at risk are promises that China would take another step in opening its US$44 trillion financial sector, with plans to remove limits on ownership in local banks, scrap size requirements for foreign firms that operate onshore, and allow overseas insurance groups to set up units in China.

Another Chinese trade specialist who advises Beijing said retaliation would be “unavoidable” if Trump went ahead with the tariffs. China could hit back by banning exports of key components, intermediate materials and equipment that US manufacturers depended on for the country’s advanced manufacturing sector.

“The trade war will escalate, and China has many cards at its disposal,” the specialist said. “The US is reliant on components manufactured in China and they will not be able to find substitutes for them. This would mean US consumers would suffer.”

Both sources said China was banking on the resilience of its economy to weather further trade war hits, saying the US’ long economic expansion had peaked and the country would soon start to feel the pinch.

China’s exports shrank in April but imports surprised with their first increase of 4 per cent in five months, indicating that domestic demand rebounded slightly in April.

But Kaiyuan Capital managing director Brock Silvers said Beijing might be too optimistic about its bargaining power.

“China’s economy has stabilised thanks to its stimulus measures, but new confidence may prove short-lived. The economy is still problematic – Beijing’s massive credit increase may only be a temporary balm – and many analysts have talked about a possible slowdown later this year,” Silvers said. “A waiting game on trade is thus much riskier for China than for the US, where the economy remains extremely robust.

“Should China respond with new tariffs, trade talks could go on an extended hiatus.

“China’s best bet should still be a quick trade resolution while economic tailwinds continue.”

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China on Wednesday night hit back at repeated threats by US officials to slap higher tariffs on billions of dollars' worth of Chinese goods, vowing that it will take "necessary" countermeasures if forced.

"If the US side implements the tariff measures, the Chinese side will have no choice but to take necessary countermeasures," China's

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(MOFCOM) said in a statement, without elaborating on the specific measures.

The MOFCOM also expressed "deep regret" at the US move to escalate the yearlong trade conflict, which, it said, "is not in the interests of the people of the two countries, as well as the world."

The statement came just a couple of hours after media reports emerged about a move by the US to follow up on earlier threats from President Donald Trump and other US officials.

The US government on Wednesday morning filed a public notice on its federal register website, saying it would increase a 10 percent tariff on $200 billion worth of Chinese goods to 25 percent starting on Friday.

The latest exchange of threats between the world's two biggest economies marked a serious escalation in the trade war, which until Sunday had shown signs of cooling as officials on both sides worked for a trade agreement. The drastic turn of events also left any prospect for a speedy trade deal elusive.

Despite threats from the US, China has exercised calm and restraint and decided to send a high-level negotiation team, led by Vice Premier Liu He, to Washington for a new round of talks on Thursday and Friday. It was not immediately clear when Liu would arrive in the US.

"[China's] seriousness about the negotiations is not a sign of weakness," said Bai Ming, deputy director of the Ministry of Commerce's International Market Research Institute.

Many tools

While the MOFCOM statement did not reveal countermeasures China would take, there are many tools at China's disposal to inflict pain on the US economy, Chinese analysts said on Wednesday.

"The most direct countermeasure would be to raise tariffs on US products," Bai told the Global Times, noting that there is still room for China to do so.

In responding to US tariffs, China has also slapped tariffs of 5 percent and 10 percent on a total of about $110 billion worth of US goods. And analysts said that China could increase those tariffs to 20 percent and 25 percent.

However, some Chinese analysts pointed out that China could also take other measures, since China has a massive trade surplus with the US and might be unable to catch up with the US in a tit-for-tat tariff war.

"China has many countermeasures prepared for the further escalation of a trade war including increasing tariffs on US exported agricultural products, and adjusting the holding of US treasury bonds," Dong Shaopeng, a Beijing-based analyst who covers stock markets and macroeconomy, told the Global Times.

Mei Xinyu, a research fellow at a think tank affiliated with the Chinese Ministry of Commerce, also warned that China might take aim at US stocks and foreign exchange markets, one of the backbones of the US economy.

Mei also indicated that China should hit the US on other areas rather than focusing on tariffs on products. "We cannot let the other side decide the battleground and form of the trade war," he said.

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Icmer said:

I'm not sure why people here are upvoting a draft from last year that we already know was immediately rejected in Beijing. There are very few specifics released regarding the provisions that were added in the last several months of negotiations and which were recently presented to Xi.

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Xsizor said:

Why is bloomberg showing it then? Wouldn't a well known source like Bloomberg know that this is in fact outdated ? I think this document is in fact the real deal ( unless and until a new document surfaces from a reputed source).

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Xsizor said:

Yes, I do know about a revised 160 page deal BUT...where is it ? I'm convinced that Lightizher wouldn't have put up with a drastically different draft.

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