Does escalation mean the end of a US-China trade deal?

10 May, 2019, 14:58 | Author: Frank Williams
  • Mnuchin Liu He Lighthizer

Previously Beijing said it would retaliate if the tariff hike is implements while Trump had insisted China "broke the deal". Negotiators were to meet at 5 p.m. I did get, last night, a very lovely letter from President Xi.

While the USA president said a trade deal was still possible - adding that he had received a "very beautiful" letter from Chinese President Xi Jinping - he repeated his warning.

"It is hoped that the United States and the Chinese sides will work together.to resolve existing problems through co-operation and consultation", it said in a statement.

The editorial concluded that the trade war is bound to be a "big lose-lose for both the United States and China". -China trade would reduce global gross domestic product by 0.5 per cent by 2020, Oxford Economics Chief U.S. Economist Gregory Daco said in a research note Thursday, adding that "if the bilateral tensions spiral into a full-blown global trade war we would expect this to trigger a global recession". We can't have that. Trump said Sunday he might expand penalties to all Chinese goods shipped to the United States.

Reuters on Wednesday revealed the extent of the rift that has opened between the two countries, reporting that a draft trade agreement text sent by Beijing on Friday night was riddled with changes that marked reversals in Chinese commitments that undermined core USA demands. Hong Kong's main benchmark fell 2.4% and the Shanghai composite index lost 1.5%.

Earlier this week the Dow Jones industrial average traded 660 points lower before recovering on Tuesday.

China has retaliated with steep tariffs on United States agricultural imports, especially soy beans, although the Trump administration paid $12 billion in compensation to help hurting United States farmers.

In fact, top US trade negotiator Robert Lighthizer and Treasury Secretary Steven Mnuchin this week accused the Chinese of already reneging on concessions they'd made earlier in the negotiations.

"China deeply regrets that it will have to take necessary countermeasures", said a Commerce Ministry statement.

More news: India monitoring costs of importing non-Iranian oil

Despite the public acrimony, local Chinese officials who want to attract American investment have tried to reassure companies there is "minimal retaliation", said Parker. Lighthizer has also stressed Beijing must agree to a transparent dispute resolution regime. "We'll see. It was their idea to come back".

"It was way past time to confront China on many of these problems", said Michael Wessel, a member of the congressionally created U.S.

The questions we have, however, center on where the president is leading us on trade and what impact that could have on the economic engine.

"Even with this latest escalation, both sides have a strong interest in striking a deal", she said.

Chinese Ministry of Commerce spokesman Gao Feng gestures as journalists raise hands for questions during a press conference at the Ministry of Commerce in Beijing, April 6, 2018.

"China is not afraid of conflict", said the Global Times, a newspaper published by the ruling Communist Party's People's Daily that is known for its nationalist tone. It said Beijing had measures in place to minimise losses for its companies.

Scott Kennedy, a China expert at the Center for Strategic and International Studies in Washington, said the talks were at a delicate stage and much depended on what sort of proposal Liu is bringing to Washington.

However, factories in Chinese coastal regions have suffered declines of up to 40% in sales to the U.S., increasing the pressure on Xi to find a way to sign a deal.

Automakers and competitors in other industries are also required to work through joint ventures with state-owned local partners that can not function unless the foreign company supplies technology and teaches a potential Chinese competitor to develop its own.

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