Trump/Biden/Kissinger and Xi on China

[Randy W]

from the SCMP

 

Chinese media told to toe party line on trade war coverage, insiders say

• Companies allowed to publish only comments made by commerce and foreign ministry spokespeople, news editor says
• Beijing does not want to deliver ‘an overly nationalistic message’, person says

 

 

 

The editors of traditional and online media have been told they must use only content provided by official channels and not publish self-generated material or reports from foreign media, a person with knowledge of the situation said.

“We have received instructions that we can only publish comments made by the spokesmen of the commerce and foreign ministries,” the news editor of a major Chinese media outlet said on condition of anonymity.

“We have been told we cannot change any headlines and must use the copy as provided.”

 

Publishers had been warned that even content that was unequivocally supportive of the authorities might still not be allowed, he said.

“The leadership does not want an overly nationalistic message in the press as this may be seen as causing trouble,” the person said, adding that “self checking” was common within Chinese newsrooms.

 

 

[Randy W]

My guess is that David Dodwell is English - not American. From his SCMP Op-Ed

 

No trade deal? Why China should walk away and hit back at the US, in the sectors where it really hurts

• While all may seem calm in markets despite the failure of the latest round of talks, a protracted trade war risks doing severe harm to the global economy
• China should draw up countermeasures to hit US businesses and be ready to shift its dealings to the EU, Japan and Asean

The only substantial hints on what went wrong, in a week that was intended to be devoted to victorious settlement of the year-long tariff war, came from Liu, who referred to three major differences: an argument over the timetable for removing tariffs; a demand that China’s commitments to boosting US imports should be “realistic”, and; a call for the US to respect China’s sovereignty and dignity, which means the Chinese want the agreement to give them some “face”, just as Trump wants the deal to help him win the 2020 presidential election.

“We are very clear that we cannot make concessions on matters of principle. We hope our US colleagues understand this,” Liu said. “The trade procurement figures should be realistic, the text must be balanced and expressed in a way that is acceptable to the Chinese people and does not undermine the country’s sovereignty and dignity.”

 

. . .

 

Just as Beijing’s negotiators have underestimated Trump’s willingness to inflict deep and long-term harm on his own economy (and, given the US’ global importance, on the world economy), so Trump’s team has underestimated the capacity of China to weather the challenges the tariff war has generated, or to retaliate in ways that will undermine the US’ long-term dominance of the world economy. Hubris here is playing a dangerous role.

 

[amberjack1234]

There should be a level playing field with all countries and no exceptions. Same with taxes here in the US.

[Randy W]

from the SCMP

 

Kinling Lo is a China reporter covering diplomacy and society news for the Post. She joined the team in 2016 as a cadet reporter.

 

 

What killed US-China trade talks: A tale of two texts

• A difference of opinion over detail behind sudden shift from optimism to renewed hostilities
• Washington prefers to reveal what Beijing would conceal

 

 

 

“I heard there was a text the US side had given to the Chinese and it spelt out what the obligations would have been in certain areas … in the text they got back from China, all of these details were taken out,” she told the South China Morning Post.

Thornton said similar things had happened before in negotiations with China, as Beijing was particularly sensitive about details being made public which could affect perception of the agreement among its domestic audience.

. . .

According to Thornton, another sticking point between the two sides related to future tariffs, with the US wanting to reserve the right to impose future penalties as a “motivation” to ensure the deal was being implemented.

“The Chinese said they cannot agree to any kind of deal that will let us impose tariffs and use them as an enforcement mechanism,” she said.

 

. . .

 

A source familiar with the negotiations said the trade deal text, which had originally been kept within a very small group in China, was opened to a wider group of officials for discussion about two weeks before the Trump accusation. According to the source, those officials had strong reservations over the text of the agreement.

The source said US Trade Representative Robert Lighthizer refused to back down from the US demands, probably in the expectation Chinese President Xi Jinping would make some concessions, but both sides would need to find a way to formulate a mutually agreeable text.

 

. . .

For example, they pointed to the difficulty of buying more US products when Washington restricts hi-tech exports to China.

The US also reportedly demanded a verification mechanism be put in place over China’s promise to end forced technology transfer, which China saw as an infringement of its sovereignty.

 

I suppose that, in order to reduce the trade deficit, the US could simply BUY less stuff from China.

 

from Andy Borowitz (satire)

 

Trump Urges Americans to Boycott Chinese Goods and Just Buy Things at Walmart Edited May 16, 2019 by Randy W (see edit history)

[Randy W]

from the SCMP

 

US-China trade war tariffs wreak havoc on Christmas orders with Chinese manufacturers thrown into disarray

• Chinese manufacturers would normally be expecting Christmas orders from US clients about now, but trade war uncertainty is forcing them to change plans
• Next round of tariffs from US President Donald Trump will include smartphones, toys and bicycles, with Chinese exporters saying US consumers will have to pay more

 

 

“For orders that have to be out by Christmas you have to plan for one month of shipping. Then retailers hold the stock for 30 days before they put it on the shelf. Production is up to 45 days. So that is more than three months,” said Jared Haw, the president of EPower Corp, a US contract manufacturer with facilities in Dongguan that make complex goods to order, from electric bicycles and “smart beehives”, to Fidget Cubes and Travel Tripods.

 

 

 

 

Nothing really new here, but an interesting analysis

 

The high-stakes US-China showdown is hardly a game, but strategists see ‘game theory’ at work in trade war’s tactics, weapons and risks

• Experts predict a deal that Trump will claim as a great victory but that doesn’t significantly change Beijing’s controlling economic tactics
• ‘Like World War I, the two players are holding out for a win in the war of attrition,’ says a professor of managerial economics and decision sciences

 

 

 

Fueling the US-China trade showdown is what experts term “asymmetrical information” – wherein each side knows its own strengths and weaknesses, doesn’t know its adversary’s and slides into mutually destructive behaviour convinced the other side will cave with the next threat.

“So they both fight,” Baliga said.

 

. . .

 

These are mirrored on Trump’s side to varying degrees, magnified by the risk that a trade-intensified recession or an apoplectic political base could derail his quest for a second term, a vulnerability Beijing has sought to exploit by targeting agriculture products in states he needs for re-election.

 

. . .

 

Xi is not without his own political survival risks, despite having recently engineered an end to term limits that potentially makes him president for life.

“China has no democracy, but it doesn’t mean there are no constraints,” said Cheng Li, a senior fellow at the Brookings Institution think tank in Washington.

Even though he does not face voters, Xi remains vulnerable to Communist Party adversaries who can use weak economic growth and rising social instability as a cudgel against him in the opaque, bare-knuckle world of Chinese politics.

 

 

[Randy W]

from the SCMP

 

The story from the Chinese perspective

The US side “kept adding new demands" - including demanding that China “completely open its internet”.

 

 

Was this the moment US-China trade talks fell apart?

• Five days before hopes of a deal receded dramatically, a private chat between China’s Liu He and the US’ Robert Lighthizer and Steven Mnuchin changed the mood
• Claim that US side had kept adding extra demands before accusing Beijing of reneging on what was agreed

Two separate Chinese sources told the South China Morning Post that the talks hit a snag because the US side “kept adding new demands in the late stages of the negotiations”. They said “some of these would directly affect China’s political and social stability”. Beijing was particularly angered by the additional tariffs and what it saw as the US’ attempt to shift the blame to China.

“The real reason is that the US side keep changing their demands,” one source said. “There were so many changes that we can’t [keep giving in]. And then they turned around and accused us of backtracking.”

He also revealed some of the key areas that the two sides could not agree on.

For instance, Washington demanded China “completely open its internet” and relax its controls that require foreign cloud computing companies to store all their data in China.

. . .

Most critically, the US negotiators demanded to have a monitoring mechanism to track and verify progress, and wanted it to be stipulated in the final agreement that the US could impose tariffs on Chinese products if it was not satisfied with developments. Some Chinese laws would also need to be rewritten to accommodate US demands.

“These are unacceptable to the Chinese side,” the source said, adding that a core issue was the US’ lack of trust in Beijing.

“To have a deal, both sides need to be able to see things from the other side’s perspective,” the source said. “The Americans need to understand that it will take time for China to implement these changes. If they refuse to accept that and demand instant changes, then there is no way that we can continue.”

 

 

[amberjack1234]

It's possible.

[Randy W]

These have yet to enter the picture - from the SCMP

 

China will not rule out using rare earth exports as leverage in trade war with US

• A governmental spokesman says Beijing will give priority to domestic demand for the minerals, though China is the leading exporter to the US
• The remarks come after Chinese President Xi Jinping visits a major rare earth mining and processing facility in Ganzhou

 

 

 

China is the global leader of rare earths – minerals that are critical to the manufacture of consumer electronics, semiconductors and military equipment – accounting for 90 per cent of the world’s rare earths production.

 

. . .

 

“If anyone wants to use the products made from our rare earth exports to try to counter China’s development, then the people from the southern Jiangxi Communist revolutionary base would not be happy, and the people of China will not be happy,” the NDRC representative said.

“I would like to reiterate here that the production chains of China and the US are closely linked and highly complementary,” the representative added. “We will both benefit if we work together but suffer if we fight against each other.”

 

[eseum]

Yeah, I was surprised that it took China this long to say they might play the rare earth card. It's not that the United States doesn't have rare earth resources, we just aren't in a position to bring them online as a counter measure. The cost to develop them, plus the cost to the environment mining them has made it cheaper to import.

[Randy W]

the China Law Blog says - "BREAKING NEWS. This is huge. We are hearing all sorts of rumors as to who and what will be blocked and if what we are hearing is true, it will be incredibly extensive."

 

break to the SCMP coverage

 

Beijing to blacklist ‘unreliable’ foreign entities that ‘hurt interests of Chinese firms’

• Commerce ministry says it will publish a list of businesses or individuals deemed to have violated market rules or taken ‘discriminatory measures’
• Hours after announcement, state broadcaster CCTV airs commentary saying China ‘does not want a war but it is not afraid to fight’

 

China will publish a list of “unreliable” foreign entities deemed to have damaged the interests of Chinese firms – a move set to ratchet up tensions in its escalating conflict with Washington, after the US government blacklisted Chinese telecoms giant Huawei.

The Ministry of Commerce said on Friday that it would blacklist foreign businesses or individuals that violated market rules and contractual obligations, or took “discriminatory measures” to hurt Chinese business rights and interests, as well as national security and interests.

Specific measures for those on the list would be revealed “in the near future”, said ministry spokesman Gao Feng.

 

Gao said the “unreliable” blacklist would be based on China’s foreign trade, anti-monopoly and national security laws, and it would target entities that had blocked Chinese businesses out of non-commercial concerns.

 

 

[Randy W]

These have yet to enter the picture - from the SCMP

 

China will not rule out using rare earth exports as leverage in trade war with US

• A governmental spokesman says Beijing will give priority to domestic demand for the minerals, though China is the leading exporter to the US
• The remarks come after Chinese President Xi Jinping visits a major rare earth mining and processing facility in Ganzhou

 

 

China is the global leader of rare earths – minerals that are critical to the manufacture of consumer electronics, semiconductors and military equipment – accounting for 90 per cent of the world’s rare earths production.

 

. . .

 

“If anyone wants to use the products made from our rare earth exports to try to counter China’s development, then the people from the southern Jiangxi Communist revolutionary base would not be happy, and the people of China will not be happy,” the NDRC representative said.

 

“I would like to reiterate here that the production chains of China and the US are closely linked and highly complementary,” the representative added. “We will both benefit if we work together but suffer if we fight against each other.”

 

 

 

More detail about the Rare Earth situation - in an article from 2010

 

China’s Rare Earths: Weakness Not Strength

 

 

 

 

Rare Earth elements are the Lanthanides (Atomic no. 57 through 71), as well as scandium (21) and yttrium (39).

 

Elements with atomic numbers above 103 did not exist in the periodic table when I was in school, and don't occur naturally.

 

So far, 26 synthetic elements have been created. These are the elements with atomic numbers 95–118, along with technetium (element 43) and promethium (element 61). All are unstable, decaying with half-lives ranging from 15.6 million years to a few hundred microseconds.

 

All of this has raised alarm bells in the West. This is because rare earths are an essential component in many high-tech products. For example, the rare earth neodymium is required for the batteries used in the engines of most current electric vehicles and in the generators of most wind power generators. China accounts for about 95% of world rare earth exports. It therefore appears that the West has placed its technological future in China’s hands. The thought of China wielding this monopoly in rare earths on the lines of OPEC is not a pretty picture for Western businesses and governments.

 

There is, however, a much deeper story.

 

. . .

 

 

China has been able to dominate rare earths production by producing product at a remarkably low price. The China price is about one quarter of the price that had previously prevailed in the rare earths market. China achieved this low price in three ways. First, the Chinese producers make only minimal efforts to deal with the environmental impacts of the mining process. As a result, the rare earths mining regions in Inner Mongolia are classified as some of the most polluted regions in the world. Second, rare earth mines pay low wages and provide little or no health or safety protection to miners. The resulting poverty and health problems for the workers are well known. Third, rare earths mining has traditionally been conducted by numerous small operations. These operations ruthlessly bid against each other on price terms. This “ruinous competition” results in a price that barely covers the cost of production. Though China has recently pushed to consolidate the mining in fewer and larger companies, there are still a sufficient number of players so that the intense price completion continues.

 

What is the result for China?

 

China takes the pollution, low wages and health risks and keeps that in China. China then exports the resulting product at a fantastically low price to foreign high tech companies who reap the benefit. The real value of rare earths lies in the downstream use of rare earth minerals in the high tech production process. This technology remains almost entirely in the hands of foreign companies. Very little has been transferred to China. It is the usual story: China does the dirty work, takes the environmental and labor consequences and reaps no reward either in terms of profit or in terms of technological advancement.

 

This is hardly a sign of strength. It is an indicator of incredible weakness.

 

 

It appears that the West is the absolute winner in this exchange. However, there is a hidden problem. Economists I have talked with estimate that the “Chinese price” for rare earths is about 1/4 the price that would result from an environmentally sound, worker friendly, profitable operation. This means that the “real” price of rare earths is about four times higher than the current China price. An entire set of “green” industries have grown up over the past ten years in reliance on that China price. The danger is that as the China price is phased out, many of these green industries will prove to be unprofitable. A primary example of this risk is the electric car. Since the China price for rare earths is virtually certain to be phased out very quickly, this risk is quite real.

[Greg.D.]

Using the rare earth monopoly as a bargaining tool is like using a suicide bomb: you only get to use it once. Now that the P has brought the dependency to the attention of the U.S. and the world, one would expect world-minus-China to take measures that ultimately eliminate that monopoly. Well, one *would*.

 

The array of claims in the trade war (about which I only agree with the middle bunch) are so diverse that the other side seems to only be allowed to agree to all (and seem to capitulate) or disagree (to all) and dig in their heels.

 

I'll just leave it at that.

[eseum]

I am a geologist, by training, in a past life. I worked for the government and oversaw permitting and inspections of exploration and mining on federal lands. The U.S. has deposits of rare earth minerals in a number of western states. How big they are, I don't know. Exploration in New Mexico and Texas was taking place back in 2013 while I was working in Las Cruces, NM. None of those sights has been developed, or are in the process of being developed. The Mountain Pass mine in CA has produced a lot of the minerals in the past. It has closed at various times due to prices. It has also had a number of issues with pollution.

 

I believe that the only way for the U.S. to secure these metals at a price that won't harm the economy, is for the government to subsidize mining them. During WWII the government subsidized mining operations for metals critical to the war effort. I really don't see this being any less important to national security.

 

Here is an article I found that says the same thing:

 

https://www.resilience.org/stories/2019-06-02/is-there-a-way-to-counter-the-chinese-stranglehold-on-rare-earth-metals/

[Randy W]

in the SCMP

 

Beyond tariffs: China looks for new ways to hit back in US tech and trade war

• Ministry of Commerce says it is drafting a list of ‘unreliable foreign entities’ following Washington’s decision to blacklist 70 Chinese companies

 

 

 

In addition, China’s Ministry of Commerce said on Friday that it was working on an “unreliable entity list” of foreign entities and individuals deemed to have damaged Chinese firms, a “doing by learning” move in response to the US’ decision to blacklist 70 Chinese companies, including telecom giant Huawei.

The ministry said it would detail the action soon, identifying violators of market rules and contractual obligations. It would also specify parties that had taken “discriminatory measures” such as boycotts to harm Chinese business rights and interests, or posed threats to national security.

Wang Hejun, a senior ministry official, said the list could be changed over time and those named would have the right to defend themselves.

. . .

Renmin University international relations professor Shi Yinhong said China was forced to consider non-tariffs measures because it could not match the US on import duties.

“All those measures cut both ways. If we walk too far, it may hurt China’s efforts to attract foreign capital and opening up. But at the moment, the most important thing is to hit back and retaliate in the trade war with the US,” Shi said.

. . .

Most US products in China are not irreplaceable. Their market share could be quickly taken up by others,” Lu said. “The losses [to US firms] would be irreversible.”

He said the US action against Huawei and other Chinese tech companies had already gone beyond trade, allowing China to expand its countermeasures past tariffs.

“China has been restrained in taking its action and is sincere in protecting foreign companies including US firms. However, the further escalation of the tensions will inevitably hurt some of them,” Lu said.

 

[eseum]

Article on subway/rail cars constructed by the China Railway Rolling Stock Corporation (CRRC) for the U.S. market:

 

https://thehill.com/policy/technology/446997-lawmakers-target-chinese-rail-cars-over-security-concerns

 

Mainly talking about security concerns. There is no company in the U.S. that constructs the cars. Where is Pullman when you need him!

 

 

Popovic noted that the CRRC recently built “explosion-proof” metro cars for Tel Aviv, highlighting the strong focus on security in Israel as proof the company’s products can be trusted.

. . .

Critics, though, have pushed back, arguing that the questions about the CRRC are legitimate.

. . .

“CRRC is a Chinese state-owned enterprise and has a nearly ten-year track record of engaging in anti-competitive practices, to the detriment of the cities and countries where they do business,” Olson said. “Cybersecurity experts at the highest levels of our government and lawmakers on both sides of the aisle agree that there is a real threat to U.S. economic and national security. Hollow denials by CRRC don’t change that.”

For now, it is unclear if the Trump administration will take any action on the CRRC.

The company is pushing ahead with its plans for the U.S. even as lawmakers sound the alarm.

Popovic said at the end of the day the company just wants a “fair shot” to compete for contracts.

 

 

Edited June 5, 2019 by Randy W
added quote from article (see edit history)