Will the looming trade deal ease China US relations? The impeachment of the US President left observers convinced that Donald Trump would be too distracted to focus on resolving tensions between the world’s two biggest economies. This article is a summary of major US China news in December 2019.
Trade secretary Steven Mnuchin claimed the trade deal was completely finished, on paper and translated, was just undergoing a technical “scrub”, and would not be subject to any renegotiation before its likely signing in early January 2020. As the details have still not been disclosed, US farmers remained sceptical of Trump’s promise China would buy $50bn of US farm goods.
No date has yet been set for the two sides to begin “phase two” trade talks, said Robert Lighthizer, US Trade Representative. As the FT commented, the Chinese detente is heavily dependent on the success of a tricky implementation phase over coming months — during which the Trump administration will scrutinise every economic step taken by Beijing to make sure it is consistent with their pact. This could determine whether the truce evolves into a much more ambitious and comprehensive trade deal, or breaks down in some manner. Few observers are betting on the former.
While JP Morgan celebrated becoming the first US bank to win approval for a majority-owned securities venture in China, the US government is weighing new limits on sales of chips and other components to Huawei.
“Getting VERY close to a BIG DEAL with China. They want it, and so do we!” Trump Tweeted mid-month. Codifying what was agreed in principle in October, this tentative agreement will require China to significantly increase its purchases of US farm goods, open up the financial services sector and enact new protections against IPR theft. In exchange, Trump will cancel the 15% tariff scheduled for this Sunday.
The trade war to date has already cost the most affected US communities billions of dollars in lost auto sales in 2018, and slowed job growth, due to retaliatory tariffs slapped by China on US products.
Beijing responded angrily to the Uighur Human Rights Policy Act 2019 bill. Some sources claimed progress in moving closer to agreeing on the amount of tariffs to be rolled back in a phase-one deal. China announced it would exempt US soybeans and pork from tariffs.
Trump lobbied NATO allies against involving Huawei in their 5G telecoms networks. The US may also revive a plan to kick Huawei out of the American financial system. Meanwhile Huawei sued the US telecom regulator. China’s ambassador to the US accused Washington of building a “Berlin Wall” between the two nations. “Cold War II has begun,” said historian Niall Ferguson. China announced that it would complete Beidou, its competitor to the US-operated GPS network, by the first half of this year, thereby increasing the potential for Internet Balkanisation.