China-US tensions rise ahead of Xi-Trump trade talk

Beijing, China – Hopes this week’s meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 in Argentina will achieve a trade breakthrough are fading with analysts and business leaders expressing disappointment over intensifying tensions in the lead up to the summit.

The high-stakes encounter between the two leaders in Buenos Aires was hailed as a last-ditch opportunity for Beijing and Washington to resolve trade differences and avert additional US tariffs on Chinese exports in the new year.

So Henry Wang, president of the Beijing-based think-tank Center for China and Globalization, was surprised when last week US Trade Representative Robert Lighthizer released a statement saying China had failed to alter “unfair, unreasonable, and market-distorting practices”.

“It’s not appropriate to publish this negative report prior to the summit. It’s not conducive to constructive dialogue, and it just doesn’t look good,” said Wang.

The findings are part of an update of the US Trade Representative’s “Section 301” investigation into China’s intellectual property and technology transfer policies.

“They give the impression that things aren’t well coordinated,” said Wang.

“President Trump says something, Lighthizer says something different, and so does [economic adviser Larry] Kudlow etc. China has maintained a message of wanting to seek dialogue and resolve the issue. That should be the attitude on both sides.”

Mutual mistrust

Officials in Beijing have gone on the offensive with China’s Commerce Ministry spokesman Gao Feng telling reporters on Friday the Trump administration had made “totally unacceptable” and “groundless” new accusations against the Chinese side.

The ministry is also assessing the potential impact from a separate US proposal to tighten control over technology exports, saying it would take necessary steps to protect the interests of Chinese firms.

“These moves by the US are only diminishing trust,” said Liu Zhiqin, a senior fellow at Renmin University’s Global Governance Research Center.

“Right now the US has no trust in China and unfortunately many in China now are doubting the sincerity of the Trump administration in wanting to reach a real solution. Does Trump really want to improve our trade relationship, or is China just part of his political sideshow?”

This mutual mistrust was on show on Wednesday at a World Trade Organisation meeting in Geneva, where envoys from China and United accused the other of hypocrisy and flouting WTO rules.

Deputy US Trade Representative and WTO Ambassador Dennis Shea said China was using the WTO to promote “nonmarket policies,” while a Chinese representative said the US was only blaming China to disguise its own violations of WTO rules.

‘Fairness and clarity’

President of the American Chamber of Commerce in China, William Zarit, said Washington has simply lost patience with Beijing.

“Many years of discussions with the Chinese government” has “yielded only marginal progress”, he told Al Jazeera by email.

“Regulations are still proceeding in a direction that appears contrary to the values of fairness and clarity. We would like to see the Chinese government offer reciprocal treatment to US companies so they feel welcomed in China in the same way that Chinese companies have been welcomed in the US,” said Zarit.

The Trump administration has imposed tariffs on $250bn of Chinese imports to try force concessions from Beijing. The tariff rate on $200bn worth of Chinese exports to the US is set to increase to 25 percent from 10 percent on January 1.

Despite recent bitter exchanges, Trump expressed confidence in Washington’s punitive approach. On Thursday he spoke to reporters in Florida saying “China wants to make a deal very badly – because of the tariffs.”

That confidence, however, is not shared by Zarit who said tariffs alone are not the best way to address trade concerns. “Applying pressure without also engaging in negotiations is unlikely to yield the optimal outcome,” he said.

Souring relations between China and the United States have not been confined to trade. At the 2018 APEC conference in Papua New Guinea earlier this month President Xi and US Vice President Mike Pence exchanged thinly veiled attacks. Xi criticised the US’ unilateral “winner takes all mentality”, while Pence doubled down on China’s militarisation of the South China Sea and Belt and Road infrastructure initiative.

The open hostility has led to speculation that the upcoming G20 meeting would result only in confrontation, and not collaboration.

“It will come to a head at the G20,” top White House economic adviser Larry Kudlow told reporters last week.

Worrying uncertainty

Global markets have slumped with Hong Kong and Shanghai stocks the hardest hit as investors brace for a trade war blow-out.

Wang and Liu both dismissed the idea that the Xi-Trump meeting would resemble a dramatic showdown, saying hope for a solution in China hasn’t been extinguished entirely.

“We shouldn’t underestimate the gesture of having this important high-level meeting. Both sides have shown strong support for it and it has been planned for a long time,” said Wang.

“It shows both leaders have willingness and determination to resolve these issues.”

Liu, however, took a slightly less optimistic tone.

“Of course we always hope for a positive result,” he said, “but we have to acknowledge that there are so many difficulties and uncertainties here. And we won’t be able to solve them in just one week.”