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Hopes for a resolution in the US-China trade war appear dim ahead of the G20 summit

Hopes for a resolution in the US-China trade war appear dim ahead of the G20 summit

china us flags


A US flag is tweaked ahead of a news conference.

  • A win at this week's meeting between the US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires could be unlikely, as accusations between the dueling superpowers drag on.
  • A Sydney-based China expert fears Trump's understanding of the consequences of a full-blown trade war are inconsequential because he "simply doesn't care."
  • Regional tensions are already high after China fired back at the president, following his administration's latest accusations of corporate espionage.
  • The US's top trade representative has updated his investigation into China's alleged theft of US intellectual property, technology and trade secrets.
  • Both sides would like to find a way to step back, but their hardline constituents are unlikely to accept any loss of face.

Any remaining optimism for the long-awaited meet between US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Buenos Aires later this week have taken a big hit as the dueling superpowers fall deeper into a trade war.

The stakes have risen sharply in recent weeks just as relations between the US and China have skirted new lows.

The US and China have been engaged in a trade war since July, with tariffs and takedowns flying back and forth with an increasing intensity. The consequences stretch well beyond the economies of the two global superpowers.

Professor James Laurenceson, the deputy director of the Australia-China Relations Institute (ACRI) at the University of Technology in Sydney told INSIDER that the upheaval in once-reliable trade between the US, China and the trading nations caught in the middle, is incrementally undermining US legitimacy.

"These have the potential to make louder broader questions around the value of US leadership in the region," Laurenceson said.

Countries in the Asia-Pacific are among those directly hit with US steel tariffs and, perhaps more importantly, indirectly via tariffs imposed on Chinese goods that so many Asia-Pacific regional supply chains feed into.

Trump earlier this week pledged to raise tariff rates on hundreds of billions of dollars in Chinese imports as early as January 2019. Even the most staunch US security allies like Australia have spent years effectively staking out a position on trade that now stands at polar opposites with the US's position.

"While the countries of the region, without fail, emphasize the importance of the World Trade Organization to resolving disputes, President Trump and the most influential voices in his administration consider it anti-US," Laurenceson said.

"Whether President Trump understands the consequences of an escalating trade war is secondary to the fact that he simply doesn't care."

The base case for war

qingdao trade containers port

VCG/VCG via Getty Images

Containers are unloaded at Qingdao Port on November 8, 2018 in Qingdao, Shandong Province of China.

Writing in The Interpreter for the Sydney-based think tank, The Lowy Institute, nonresident fellow Dr. Merriden Varrall said that while it would be nice to picture a rosy reimagining of Washington and Beijing coming together, defusing the ticking trade tensions, maybe even forestalling Trump's promised escalation of tariffs, the chasm dividing the two sides just yawns wider.

"Despite the hope, there is little reason to be optimistic that such a deal will be made, or, if it is, last long. The domestic political imperatives for each leader are at least as weighty as any economic logic," Dr. Varrall said.

Public pressure in the form of the hardline constituents that form the core power base of both presidents are working hard to ensure Xi and Trump blink last and least in Buenos Aires.

This is perhaps among the reasons why the self-described dealmaker in the White House told The Wall Street Journal on Monday that he would stick to a promise to slap broad new tariffs on Chinese imports if no deal emerges from Argentina.

The potential for relations to fall apart sometime over the weekend are higher when the two sides choose to trade barbs, rather than goods. Instead of concentrating on finding a trade breakthrough, the opposing administrations are intensifying hostilities in the lead-up to the summit.

Last week, US trade representative Robert Lighthizer released a statement calling out China for its ongoing "unfair, unreasonable, and market-distorting practice."

In return, a roundly annoyed Ministry of Finance and Commerce (MOFCOM) made very clear its feelings about Trump, after the ill-timing of the trade investigation update.

According to The Wall Street Journal, with just days away from meeting with Xi, Trump vowed anew to paint tariffs all over whatever remaining imports are coming out of China, should the two sides fail to reach agreement.

The United States Trade Representative (USTR) is on point for an investigation into what it says is China's theft and manipulation of US intellectual property, unwelcome technology transfers and the trade in corporate secrets.

In its latest update made available last week, Lighthizer said China has not only failed to check the "unfair" practices that have blistered bilateral trade relations, but has apparently stepped up its operations.

The 50-page report goes on to cite a long menu of cases that have targeted the US, Europe, Japan, Australia, and other nations across a whole slew of industries.

"China conducts cyber intrusion and cyber theft hand-in-hand with the physical theft of intellectual property, many times with the use of insiders," the report claims.

Here is USTR's report in full.

Add oil! (加油!)

China burning

VCG/VCG via Getty Images

People burn incense in the rain to worship the God of Wealth at Guiyuan Temple on the fifth day of lunar new year on February 20, 2018 in Wuhan, Hubei Province of China.

It's been four months now that the US and China began to slap tariffs on each other's goods. So far, $US360 billion worth of goods has been subject to duties.

Pouring oil on the fires ahead of this week's critical meeting between Trump and Xi, MOFCOM on Friday called on the US to put a stop to its "destructive" policies.

In the face of that criticism, MOFCOM said that these latest accusations from the US were "totally unacceptable" and ignored the facts.

"By putting domestic laws above international laws, the United States has broken its commitment to all members of the World Trade Organization and has disregarded and damaged multilateral rules of the World Trade Organization," Gao Feng, a ministry spokesperson, said.

Dig in

US china nuggets

AFP/Getty Images

Chinese McNuggets. Dig in.

But on the issue of corporate espionage, China appears to have dug in, the USTR report suggests.

And the US is firing back.

Late last week, the Trump administration reached out to its key allies and urged them not to allow the Chinese tech-giant and telecommunications provider, Huawei, access to critical infrastructure.

On Wednesday the New Zealand government rejected an application from the national telecom provider, Spark, to involve Huawei in the rollout of the country's next-generation 5G network, on national-security grounds, The New York Times reported.

Trump in an interview with The Wall Street Journal asserted the only US-China deal that appeals to him is "China has to open up their country to competition … otherwise, I don't see a deal being made. And if it's not made, we will be taking in billions and billions of dollars," Trump said, according to a transcript of the conversation published on Monday.

The US president's latest assertions are not likely to sit well with Xi, as China's prospects for avoiding the so-called middle-income trap that has affected emerging economies throughout history continues to loom imposingly on Xi's economic horizon.

Trump and Xi are reportedly set for a working dinner at the summit that runs Friday and Saturday, in what is likely to be one of the most important economic meals in modern history.

Answers, in one form or another, will come when the two sides meet face-to-face again this week.


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