{"id":14507,"date":"2017-04-20T22:53:49","date_gmt":"2017-04-20T14:53:49","guid":{"rendered":"http:\/\/chinaworker.info\/?p=14507"},"modified":"2017-06-24T20:51:36","modified_gmt":"2017-06-24T12:51:36","slug":"china-us-trade-war-called-off-for-now","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2017\/04\/20\/14507\/","title":{"rendered":"China-US: Trade war called off for now"},"content":{"rendered":"

Ivanka Trump granted new Chinese business deals on the day she dined with Xi Jinping<\/strong><\/p>\n

Vincent Kolo, chinaworker.info<\/p>\n

The risk of trade war between the world\u2019s two biggest economies has receded, for now at least. The first meeting between Xi Jinping and Donald Trump in April, at the billionaire US president\u2019s Florida resort of Mar-a-Lago, was like most such meetings mostly about symbolism rather than substance. But it marked another significant political u-turn for Trump, who climbed to power on a nationalist \u2018America First\u2019 trade agenda. In last year\u2019s election he accused China of \u201cblackmail\u201d and even \u201crape\u201d, and promised severe countermeasures also against other \u201ctrade cheats\u201d such as Germany and Mexico.<\/p>\n

Before Trump and Xi met their respective teams had hammered out a deal on what would be discussed, with assurances made by the US side that a potential economic \u2018nuclear war\u2019 would be defused in return for Xi delivering greater support to Trump\u2019s push to further squeeze North Korea over it\u2019s weapons programme. Trump even tweeted that China would get a better trade deal if \u201cthey solved the North Korean problem\u201d.<\/p>\n

The main reason for Trump\u2019s softening stance on China, and an equally dramatic lurch towards more aggressive military posturing, is the crisis in his administration after just three months in office. It faces internal splits, weak public support and a succession of political fiascos.<\/p>\n

One week after the Mar-a-Lago summit the US Treasury\u00a0as expected did not<\/em> name China as a \u201ccurrency manipulator\u201d. This represents a high profile reversal of Trump\u2019s campaign promise that he would do this \u201con day one\u201d of his presidency.\u00a0For the first time ever, the Treasury\u2019s report actually recognised that China has been fighting to stop its currency falling against the dollar (spending a massive US$800 billion in foreign exchange since the end of 2015).<\/p>\n

This reversal was attacked by leading US Democrats who favour a harder line against China. The half-yearly Treasury\u00a0review instead put China on a currency \u201cwatchlist\u201d together with Japan, South Korea, Taiwan, Germany and Switzerland. If a country is branded a \u201ccurrency manipulator\u201d the US government can impose penalties such as tariffs against its exports to the US.<\/p>\n

Trump \u2018talking down\u2019 the dollar<\/strong><\/p>\n

Socialists point out the hypocrisy involved here: all major capitalist governments, and not least the US, engage in currency and other forms of manipulation when this suits their interests \u2013 to defend the profits of their own capitalist class. Trump is himself deliberately \u2018talking down\u2019 the US dollar right now (\u201cOur dollar is too strong\u201d he told the Wall Street Journal in mid-April), which set off sharp falls in the US currency.<\/p>\n

Trump is under pressure to boost US exports and bring down the US trade deficit to fulfil at least a fragment of his election promises. He may also pressure the US central bank (the Fed) to hold off on further interest rate increases, because this acts to push up the value of the dollar by drawing in speculative capital from abroad.<\/p>\n

Chinese officials have been assiduously lobbying Trump\u2019s coterie even before he came to power in January. According to reports they have established a \u201cback channel\u201d with Trump\u2019s influential son-in-law Jared Kushner who represents a more China-friendly wing in the internal power struggle raging within the Trump camp, to neutralise the influence of anti-China ideologues like Peter Navarro (of \u2018Death by China\u2019 fame) who is Trump\u2019s special trade advisor.<\/p>\n

The Chinese regime has not hesitated to exploit the extensive business links between Kushner\u2019s family, not least his wife Ivanka Trump, the president\u2019s daughter, and Chinese companies. AP reported that on the same day that Ivanka and Kushner sat at the Mar-a-Lago dinner party with Xi Jinping, the Chinese government approved three new trademarks for Ivanka Trump\u2019s fashion business giving her, \u201cmonopoly rights to sell Ivanka brand jewellery, bags and spa services in the world\u2019s second-largest economy.\u201d<\/p>\n

The Trump-Xi summit unveiled a \u2018100-day plan\u2019 by the US to review its trade and investment links in order to reduce its trade deficit with China \u2013 US$347 billion last year. This type of \u2018fudge\u2019 is typical from such global summit meetings and doesn\u2019t actually commit China to do anything.<\/p>\n

\"\"
Ivanka Trump landed new deals with China the day she dined with Xi Jinping in Florida.<\/figcaption><\/figure>\n

Concessions<\/strong><\/p>\n

However, no one should rule out that the highly unstable Trump regime could switch tack again at the end of this 100-day period, or further ahead, and present a tougher list of demands. China\u2019s media have reported the US proposal as a \u201c100-day plan on economic cooperation\u201d which is not the way it is presented by Trump\u2019s government.<\/p>\n

It\u2019s quite likely that Beijing will make concessions, but small ones, to avert a sharper conflict with the US, for example by curbing some exports like steel, which are highly visible (and opposed by industrial lobbies and labour unions) but actually account for only a small fraction of China\u2019s US trade. China could also increase its imports from the US of oil and agricultural products (Xi agreed to lift China\u2019s ban on US beef) to go some way to reduce the deficit. It wants the US ban on technology exports to China lifted, and similar limits on Chinese investments in US technology companies. US capitalists are pushing for greater access to the Chinese market, into state-dominated sectors like finance, and the lifting of investment and ownership caps.<\/p>\n

But despite efforts to \u201cmanage risks\u201d there is still scope for major frictions to erupt between the two governments, especially if the precarious \u2018stabilisation\u2019 of the global economy in early 2017, in reality it is still stuck in crisis mode, is about to fizzle out. In that sense, the \u201c100-day plan\u201d and the current state of US-China economic relations seems like a temporary truce rather than a lasting peace.<\/p>\n

\"\"
Trump and Xi meet at Mar-a-Lago on 6 April 2017.<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"

Ivanka Trump granted new Chinese business deals on the day she dined with Xi Jinping<\/p>\n","protected":false},"author":33,"featured_media":14511,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"tdm_status":"","tdm_grid_status":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-14507","post","type-post","status-publish","format-standard","has-post-thumbnail"],"yoast_head":"\nChina-US: Trade war called off for now - China Worker<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/chinaworker.info\/en\/2017\/04\/20\/14507\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"China-US: Trade war called off for now - 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