{"id":17606,"date":"2018-05-12T18:28:15","date_gmt":"2018-05-12T10:28:15","guid":{"rendered":"http:\/\/chinaworker.info\/?p=17606"},"modified":"2018-05-13T18:03:12","modified_gmt":"2018-05-13T10:03:12","slug":"us-and-china-positions-harden-in-trade-standoff","status":"publish","type":"post","link":"https:\/\/chinaworker.info\/en\/2018\/05\/12\/17606\/","title":{"rendered":"US and China positions harden in trade standoff"},"content":{"rendered":"

Escalation of tit-for-tat conflict between world\u2019s largest economies<\/strong><\/p>\n

<\/p>\n

By Vincent Kolo<\/p>\n

The trade conflict between China and the US has escalated in recent weeks. Beijing initially believed it could \u2018manage\u2019 relations with the unstable US administration and its petulant leader to avert a trade war through negotiations and by offering\u00a0some concessions. This is still possible. But Chinese leaders have become dismayed and perhaps to some extent also thrown off balance by the hardening positions of Trump\u2019s\u00a0government.<\/p>\n

This has even thrown into question the May visit of vice-premier Liu He to Washington for the next round of trade negotiations. The Chinese side are frustrated that Liu\u2019s trip may again prove fruitless. In\u00a0February, the Trump administration announced steel and aluminium tariffs against several countries including China on the same day Liu was in Washington meeting with US trade officials.<\/p>\n

At this stage the conflict is still mainly at the stage of threats and counter-threats. Even Trump\u2019s steel tariffs haven\u2019t yet taken effect. In April, Washington\u00a0raised the stakes with a threat\u00a0to impose punitive tariffs against US$50 billion of Chinese industrial goods alleging theft of US technology and intellectual property (copyrights). These measures will not be implemented until a review procedure in the US government has been completed. China responded by announcing a provisional package of countermeasures worth US$50 billion. Trump then threatened tariffs on a further\u00a0US$100 billion worth of Chinese goods.<\/p>\n

\"\"<\/p>\n

Power struggle<\/strong><\/p>\n

Globally, the capitalists have grown increasingly\u00a0nervous that this \u2018chicken race\u2019 of escalating threats, ostensibly to push the other side into making a deal, may get out of control.\u00a0But deep down this is not only a trade conflict,\u00a0it is\u00a0a more fundamental geopolitical and economic power struggle between the two giants.<\/p>\n

Trump\u2019s administration represents a wing of US capitalism that believes now is the time to decisively push back against China\u2019s increasing challenge to US power. Alongside the infected trade issues are potentially bigger conflicts: Taiwan, control of the South China Sea, and even the upcoming Trump-Kim summit on North Korea\u2019s nuclear programme \u2013 a detente that has evidently unsettled Beijing.<\/p>\n

Within the wider trade imbroglio there is a rapidly escalating \u201ctech war\u201d, with Trump\u2019s administration and significant sections of US capitalism, especially the military, determined to thwart China\u2019s \u2018Made in China 2025\u2019 plan to establish Chinese pre-eminence in crucial technologies such as robotics, electric vehicles, advanced information technology and aviation. As the conflict unfolds it is becoming clear that \u2018Made in China 2025\u2019 \u2013 or rather blocking it \u2013 is the core issue for the US government.<\/p>\n

\u27b5\u00a0World economy: Close to a trade war?<\/a><\/h4>\n

 <\/p>\n

One early casualty is the Chinese telecom giant ZTE, which has been slapped with a seven-year ban on buying US technology components and software, in a case that involves alleged sanctions busting in Iran. Shenzhen-based ZTE, the fourth-largest smartphone company in the US market, is now in deep crisis with its 75,000 workforce facing an uncertain future. More than a third of its components are sourced from US companies and even the Android platforms used in its phones may fall under the terms of the US ban. ZTE\u2019s crisis, and possible collapse, is not just a Chinese problem but is already rippling through the global telecom sector with many national telecom providers building their services around ZTE\u2019s products.<\/p>\n

Wall Street pressure<\/strong><\/p>\n

Beijing\u2019s trade strategy has been a combination of carrot and stick, its approach to almost all problems. It has matched Trump\u2019s team, threat for threat, while at the same time launching a package of proposals for increased \u2018market reforms\u2019 and concessions to foreign capitalism.<\/p>\n

Beijing\u2019s calculation,\u00a0right or wrong, is that Wall Street and the big guns of US capitalism will exert pressure on the trade hawks in Trump\u2019s government to reach a deal before major damage is done. That such pressure is building is already apparent.\u00a0However, while the Chinese regime has long been able to rely on its considerable pull especially within US financial circles as a counterweight to US government demands, this method is not as effective as it once was.<\/p>\n

There are increasing fears that the hardening of positions could develop its own logic, jeopardising the chances of reaching a deal. Both Trump and Xi rely heavily on nationalist rhetoric as a pillar of their rule: \u201cMake (insert country here) Great Again!\u201d<\/p>\n

Both governments are under mounting pressure at home.\u00a0Xi\u2019s regime is less \u2018stable\u2019 than it wants the world to think.\u00a0Workers\u2019 strikes are increasing, running at double the level of a year ago in the first three months of 2018, and increasingly less isolated as workers\u2019 coordinating abilities and consciousness have grown. Recent political missteps such as Xi\u2019s \u2018emperor\u2019 gambit and a short-lived attempt to ban gay content on Weibo, China\u2019s version of Twitter, have triggered unprecedented online protests.<\/p>\n

\u27b5\u00a0Trump and China: Heading for conflict?<\/a><\/h4>\n

 <\/p>\n

While Xi\u2019s team are likely to agree an increased tempo of pro-market \u2018reforms\u2019 in designated sectors \u2013 to head off protectionist pressures \u2013 the main economic trend in China will be an even greater resort to state capitalist measures. This is especially likely in the event of a full-scale US-China tech war, which would force Beijing to plough massive new investments into developing homegrown technologies in areas such as semiconductors where it is heavily dependent on foreign imports.<\/p>\n

Beijing has already identified a range of economic concessions to be\u00a0thrown into\u00a0negotiations with the US, some of which were announced already last year (such as plans to allow greater access to China\u2019s finance and insurance sectors for US companies, including majority-ownership). It has also promised to buy more US goods in order to reduce the US trade deficit. The Chinese regime believes many of these concessions\u00a0\u2013 some real and others largely cosmetic \u2013\u00a0will actually assist it to upgrade and strengthen its state capitalist economic model without surrendering real economic control.<\/p>\n

But Xi\u2019s readiness to make concessions has limits and\u00a0he\u00a0cannot\u00a0allow himself to be perceived as a loser \u2013 a weak leader. The Chinese regime has studied and has no intention of following the example of Japan, bullied in 1985 (\u2018Plaza Accords\u2019) into revaluing its currency as a concession to US capitalism.<\/p>\n

\u201cHumiliating demands\u201d<\/strong><\/p>\n

Indeed, the latest \u201cdraft framework\u201d from Trump\u2019s trade negotiators makes \u201chumiliating demands\u201d on China, according to Martin Wolf in the Financial Times (8 May 2018). The US side is demanding China cut its US$375 billion trade surplus with the US by US$200 billion dollars\u00a0in the next two years. This is a doubling of Trump\u2019s previous demand for a US$100 billion reduction. Furthermore the US demands China surrender its rights to \u201coppose, challenge, or\u2026 retaliate\u201d (!) if the US imposes bans on Chinese investments in the US technology sector.<\/p>\n

It is as if the US trade team, dominated by anti-China ideologues such as\u00a0Peter\u00a0Navarro and\u00a0Robert\u00a0Lighthizer, has deliberately framed its demands to produce a breakdown in negotiations. Such conditions, \u201cwould be a modern version of the \u2018unequal treaties\u2019 of the 19th century,\u201d says Martin Wolf who also warns, \u201cThis may be a decisive moment for relations between the world\u2019s two greatest powers\u201d.<\/p>\n

For socialists these developments are not a surprise, notwithstanding the staggering speed at which they unfold. The unprecedented capitalist crisis which began a decade ago has set the stage for sharpening imperialist tensions. Socialists stress the need for the\u00a0workers\u2019 movement\u00a0to act independently and not be dragooned into supporting one national capitalist gang against another. The socialist alternative is economic planning and trade under a system of working class democracy to replace capitalist misrule.<\/p>\n","protected":false},"excerpt":{"rendered":"

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