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China's Vice-Premier Liu He gestures to the media between US Trade Representative Robert Lighthizer (left) and Treasury Secretary Steven Mnuchin before trade negotiations in Washington on October 10. Photo: Reuters

Trade war: China’s trade ministry fails to mention phase one deal as a priority for 2020

  • Despite the US publishing significant details on its trade deal with China, Beijing maintains silence on the facts
  • Former Chinese official said that US statements showed ‘impatient’ approach of Donald Trump and that some ‘technical problems’ remain to be ironed out

Despite the transpacific clamour for China to confirm details of its phase one trade deal with the United States, the Ministry of Commerce made no mention of the agreement in a statement summarising its working priorities for 2020.

A two-day policy-setting conference was concluded in Beijing this week, on the heels of an agreement with Washington that was announced on Friday. And while the Ministry of Commerce (Mofcom) statement outlined “six priorities, plus one”, including “properly dealing with China-US trade disputes”, there was not a single mention of the deal, nor did the ministry expand on that aim.

This is despite the fact that deputy commerce minister Wang Shouwen has been a key member of China’s trade negotiating team, lead by Vice-Premier Liu He, and that the Mofcom regulates China’s exports and imports, foreign investments, and is responsible for the negotiation and implementation of trade deals.

Instead, the ministry said it would focus on the Belt and Road Initiative, developing pedestrianised shopping areas in Chinese cities, rolling out home appliances to rural homes, an import expo in Shanghai in November 2020, the development of free ports and reducing poverty.

On Friday, Wang was among the Chinese officials to hold a late-night press conference confirming that the text of an agreement had been reached. However, he and other ministers refused to be pushed on Washington’s claims that China would “double” its US imports and would buy US$40 billion in US farm goods annually for two years. In an interview with CBS on Sunday, US Trade Representative Robert Lighthizer said China would add “a minimum of US$200 billion” to its pre-trade war imports of US goods.

It has since been hotly disputed whether China has the need or the capacity to buy such a large volume of goods and whether it would be within the rules of the global trading system.

A fact sheet released by the Office of the US Trade Representative (USTR) added that the deal would include stringent enforcement mechanisms should China not reform areas such as intellectual property rights, exchange rates and financial market access. Both sides agreed to cancel tariffs that would have gone into place on Sunday, while the US will scale back some existing tariffs on China, but China has not said whether it will follow suit.

Mofcom did not reply to a request for comment.

A former Chinese official suggested that while Mofcom’s statement should not be speculated upon too deeply, the US’ publication of so many details shows that “Trump is an impatient person, eager to do something to show his strength”, but that the details “might not be acceptable for both sides”.

“The two sides might have not have fully completed balancing the wording of the final text. The official press conferences confirmed the fact that there is a deal, but there remains a process of locking in the text and a few small technical problems [to be fixed]," Huo Jianguo, former president of the Ministry of Commerce's Chinese Academy of International Trade and Economic Cooperation, told the South China Morning Post.

It is understood that the deal still needs to go through translation, proofreading and legal scrubbing, normal stages of trade agreements that can sometimes cause complications, and which often take longer than anticipated.

Huo added that phase one would not be implemented until after the official signing and the text has been made public. “This was just a normal remark, nothing new,” Huo said of Mofcom’s statement.

This is good for the US in the short term, bad for China in the medium term, and bad for the EU, Japan and South Korea in the short term.
Alicia Garcia Herrero

“In principle, the second phase [negotiation] will start as soon as possible, but there is no clear timetable,” he said, adding that while Washington had leaked some quantitative details of the deal, it was “still necessary to wait for the official copy”.

And while many Chinese and US exporters will be pleased by the prospect of tariff reduction and increased trade, some analysts have warned against the sort of “managed trade” that the phase one looks set to encourage.

“I have long claimed that the type of deal the US seemed to be pursuing was bad for Europe – also Japan and South Korea,” said Alicia Garcia Herrero, chief economist for Asia-Pacific at Natixis. “The core of the deal is more US imports into China, rather than forcing China to reform – trade diversion rather than a more competitive China. [This is] good for the US in the short term, bad for China in the medium term, and bad for the EU, Japan and South Korea in the short term.”

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