How Xi Jinping's colleagues rejected an 'unequal' trade deal

Discussion in 'Wall St. News' started by srinir, May 16, 2019.

  1. srinir


    How Xi Jinping's colleagues rejected an 'unequal' trade deal

    A 150-page agreement was sent back to Washington, gutted and shrunk to 105 pages

    Early this month, the Chinese government sent the U.S. a trade deal draft that had been slashed from 150 pages -- painstakingly assembled by both sides over five months of negotiations -- to 105.

    The move riled U.S. President Donald Trump and brought progress on the trade talks to a screeching halt, as Beijing surely knew it would.
    Voices within the Chinese Communist Party, growing louder day by day, were insisting that "an unequal treaty that codifies meddling in our domestic affairs into law is unacceptable."

    These cries came not only from the party's conservative left but also from the rank and file -- from the core of workers and management at state-owned companies, from industries that rely on subsidies for survival and from the bureaucratic institutions that protect them. The proposed deal threatened their interests.

    When modern China was established seven decades ago, the party denounced the "unequal treaties" China signed under imperial rule, exemplified by the 1842 Treaty of Nanking with Great Britain, which ended the First Opium War, and the 1895 Treaty of Shimonoseki, which ended the first Sino-Japanese war.

    The Shimonoseki agreement forced the Qing dynasty to pay an indemnity to Japan and hand over Taiwan. The dynasty would not last two more decades.

    Whether the proposed deal between the U.S. and China really qualified as an "unequal treaty" is debatable, but regardless, it cut to the communist government's heart. It would forbid forced technology transfers by a variety of both public and private means, theft of foreign technology or intellectual property, subsidies to state-owned enterprises and export subsidies given to all companies.

    It is easy to understand the argument that the legal measures demanded by Washington were an unacceptable form of interference that violated China's principles.
    In late April, Xi was forced into an about-face in his negotiating tactics. The negotiating team, led by Vice Premier Liu He, one of Xi's close aides, had focused too much on reaching an amicable resolution and stepped outside the bounds of the discretion granted by party leadership.

    But the Xi-Liu axis would never compromise on the most vital points -- those intertwined with Communist Party rule. This is "the last 10%" that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin have said stood in the way of a deal.
    Yet the text went back to the U.S. gutted. From Washington's point of view, the agreement was now nothing more than 105 pages of words, with nearly all of the legal and other mechanisms to ensure compliance ripped out. It was proof that Beijing had given up on reaching a quick conclusion.
    Despite being positioned as the "core" of the party leadership, even Xi cannot overturn a collective decision without securing the consent of the party leaders.

    The Xi-Liu duo, which has been leading the trade negotiations, was, in effect, shackled.

    This is a sign that, seven years into his rule, Xi's political momentum is slowing. While garnering unrivaled power through an anti-corruption campaign that eliminated his rivals, the president has little to show the public in terms of economic achievement.

    The credit of expanding China's economy into the world's second largest goes to Xi's predecessors.

    When Liu appeared in Washington last week, he no longer had the title of being Xi's "special envoy." His sole mission was to convey to the world that negotiations had not collapsed and that they will go on.
    There is still time to talk, and Trump has said he will meet with Xi in Osaka, on the sidelines of the Group of 20 leaders summit. The two-day meeting begins June 28.

    When the presidents sit down together, at stake will be the implementation of tariffs on all Chinese exports to the U.S.

    The Chinese media is hardening its stance, pounding the argument that China can never compromise on principle issues.

    Xi has no easy task.
    LS1Z28, luisHK, kmiklas and 2 others like this.
  2. The Chinese already have an "unfair trade advantage*" (handed to them by prior US administrations), and don't want to give it up. That's what Trump's "trade war" is all about.

    *Ironically... if Trump is successful in negotiating-away China's advantage, it will mean higher prices for American consumers on some goods. As always, "there ain't no free lunch".
    Last edited: May 16, 2019
    rubbl, toc, traderob and 1 other person like this.
  3. toc


    Robotics is soon going to replace the sweat shop Chinese labor, so US consumers and those around the world would not feel big of a pinch.
    smallfil likes this.
  4. bone

    bone ET Sponsor

    So now both the US and the EU have launched WTO cases against China for unfair, forced Intellectual Property transfers.

    "EU Commissioner for Trade Cecilia Malmström said: "Technological innovation and know-how is the bedrock of our knowledge-based economy. It's what keeps our companies competitive in the global market and supports hundreds of thousands of jobs across Europe. We cannot let any country force our companies to surrender this hard-earned knowledge at its border. This is against international rules that we have all agreed upon in the WTO. If the main players don't stick to the rulebook, the whole system might collapse." "

    Both the US and the EU will prevail in these rulings - this is a blatant violation of WTO rules and the hard evidence is overwhelming. The problem, of course, is that China has a history of contesting WTO rulings and only partial or superficial enforcement of rulings that it accepts.
    dozu888 likes this.
  5. ironchef


    Then why the EU let Trump carries the fight alone?
  6. dozu888


    that's actually a good question because if China opens up the markets EU is also a beneficiary by default... but, what can you expect from them bureaucrats in Brussels.. the track record hasn't been great.

    America truly is the final frontier... and again I have to say - thank God we got Trump.
  7. ironchef


    No, they think it is like a handicap horse race. Those that are ahead need to be slowed down by trade rules.
  8. kmiklas


    Love you man. Keep news like this coming. <3
  9. JSOP


    US and China should really merge into one country and run it as one. That would be the ultimate solution. The two countries are exactly the same with the top leader bowing to selfish special interest groups that have no idea and doesn't give a s*** about what's good for the local and world economy except their pocket, ignorant rednecks who base everything on distorted nationalism instead of facts and then leave the rest of the mass who just wants a stable job and stable income to pick up the pieces.
  10. JSOP


    Because Trump has alienated everybody including his allies all around the world. So now US has no friends and is fighting alone with China. US and China are like two sumo wrestlers fighting in a ring with the whole world as spectators and making money off the side from the fight. Neither US nor China is going to come out on top from this trade war but the true winners from this war are going to be the "alternative economy" countries, continents, and organizations like Vietnam and India and even Africa who are the alternative cheap labour to China and EU and to a smaller extent Japan who are the alternative to US.
    #10     May 16, 2019