Skip to content
Breaking News Alert Whistleblowers File Bold Motion To Intervene In Hunter Biden's Lawsuit Against IRS

Glimmers Of Hope Remain For U.S.-China Trade Negotiations


Chinese Vice Premier Liu He has dropped a hint on where the U.S.-China trade negotiations might go from here. He predictably insisted the new U.S tariffs on Chinese exports be withdrawn “without exception.” But more telling was his unease about what he called the “tortuous” process of drafting the text of the agreement.

His insistence that the agreement give neither party the advantage while respecting China’s “dignity” and “equality” as a U.S. trading partner is worth noting. It suggests the sticking point may not be the technical dos and don’ts, but more broadly a matter of face-saving. China may well have been willing to give foreign companies wider access to its markets as well as stronger intellectual property protection through State Council regulations. But not to the extent of having those concessions codified into law—a humiliation that can hardly be borne.

This may explain why the negotiations seemed a few weeks ago to be all but done before breaking down over U.S. complaints that Beijing was “reneging” on previous commitments. Liu He denied that China was backing out of anything. It’s just objecting to the “tortuous” way the “text” (wen ben) was being rehashed “over and over again.”

The Chinese Communist Party has its share of hardcore conservatives whom President Xi Jinping must win over to get support for what his lead negotiator already called a “historic” trade agreement with the United States. Liu He, one of the bright U.S.-educated technocrat politicians climbing up the party’s hierarchy, has bona fides to protect at home.

On Fox News this week, White House economic adviser Larry Kudlow slipped in his own hint as to how the impasse could be resolved. He suggested the next few weeks could be a timely cooling off period. It would allow the negotiators to work out the proper language and optics to allow Trump and Xi a chance to settle the matter at the G-2 summit in Tokyo this July.

The process may be prolonged further if Beijing announces retaliatory tariffs against the United States. That it didn’t do so immediately after the impatient Trump raised tariffs on Chinese goods again last week betrays China’s weaker position.

Xi was criticized by some Party leaders last year for underestimating Trump and escalating the tariff wa. That was before his economy turned sour over unprecedented fiscal and corporate debt. The Chinese leader likely wouldn’t care for more of that.  Trump is taking some heat for tariff-induced hikes in retail and wholesale prices, although Kudlow insists the collateral damage is de minimis while the potential gains would be well worth it.

The Washington Post reported Sunday that Trump’s China trade strategy may be undercutting his America First agenda. It conjectured that broadening the Chinese market for U.S. multinationals in such fields as financial services, insurance, and cloud-computing would create far more jobs for workers in the mainland than at home.

It also said more of those jobs created in the United States will likely be taken by well-educated urban-dwellers rather than by the blue-collar workers who make up Trump’s electoral base. By way of backing up its projection, the Post notes that General Motors sold more Cadillacs in China than it did at home. As an indication of the size of this auto market, GM has as many as 60,000 Chinese workers in its employ.

This outlook can’t be verified until a trade agreement is concluded and its details spelled out. If the Chinese see the trade pact’s benefits breaking their way, that may be another reason they want the negotiations to proceed despite the risk of their dignity being sullied.

If Trump is doing yeoman’s work for the multinationals, he isn’t getting much appreciation in return. The Post quotes a business leader questioning the administration’s obsession with investing in the United States: “That’s not where the market is; that’s not where the market growth is.”

Trump is not just thinking about swelling corporate profits, although some of these may be trickling back to middle-class households through their investment accounts. He can’t bring back the lost furniture-making jobs in North Carolina.

But redoing Chinese trade can still serve the America First agenda if some of the financial and high-tech jobs it creates are more broadly shared with Middle America. And even if the trade talks fail, the net effect would return some of those corporate investments back to the United States.