Friday the 13th

Columnist Natalia Portyakova on the hopeless prospects of a new round of U.S.-China trade talks.

This week, the U.S. and China will resume trade negotiations. On Oct. 10-11, the parties will hold their 13th round of meetings, but no one has high hopes for a breakthrough, even on small issues. And it doesn’t have anything to do with the inauspicious date of the 13th.

Recently, CNN learned that in June, as a concession in trade negotiations with Beijing, President Donald Trump promised Chinese President Xi Jinping that the U.S. would not publicly meddle in Hong Kong’s affairs.

The U.S. consul general in this special administrative region of China was allegedly even instructed not to deliver a statement to protesters as the diplomat had originally planned. Other American officials were instructed to remain silent on this topic; however, not all heeded the warning. In August, Trump reiterated his commitment to nonintervention, telling reporters that “it’s all between Hong Kong and China. They will have to deal with this themselves. They don’t need advice.”

Trump’s silence about China violating the rights of Uighurs in the Chinese province of Xinjiang was very noteworthy. If the Trump administration has claimed that the violation of religious freedom is one of the world’s biggest problems and arranged for special discussions about Xinjiang during the last U.N. General Assembly, practically strangling Beijing with language, then Trump didn’t seem to notice this issue at point blank range.

On the political agenda, the U.S. president tried to skirt the rough edges. But regarding actual trade and economic problems, the president didn’t budge an inch. “If the deal is not completely acceptable to us, then we are not going to agree to it,” the president said at the end of last week.*

The problem is that the Chinese are not going to make a deal that Trump wants. And if previous representatives from Beijing were sometimes evasive and did not directly say no, then the Chinese have learned to be tougher during the last 15 months of the trade war with the U.S. According to Bloomberg sources, the People’s Republic of China’s chief negotiator for the trade war, Vice Premier Liu He, is bringing a proposal to Washington that will not include any hint of commitment to reforming China’s industrial policy or government subsidies. And this remains one of the United States’ main demands.

Moreover, with the threat of impeachment looming over the U.S. president, the Chinese believe that now is the time to launch a counterattack; that is, not only will they not succumb to American pressure, but they will seriously expect concessions from Washington.

Moreover, in recent months, there has been a growing belief among experts that it’s in the interest of both parties to agree to a mini-deal now as a prologue to a more comprehensive agreement in the future, and which will help avoid escalation in the short term. Last month, several members of the media outlined such a deal. It was assumed that China would sign off on large-scale purchases of agricultural products and energy in the U.S., as well as fulfill obligations to protect intellectual property, and the U.S. would partially score a win with higher tariffs. However, China’s reported refusal to participate in any discussions on its industrial policy will surely disrupt these plans.

Such a situation almost certainly means that on Oct. 15, the U.S. will increase tariffs on $250 billion worth of Chinese exports to 30%, as it threatened to do. However, the trade war that Trump launched under the banner of “Make America Great Again” has already proven to be a failure.

Under pressure from increased export duties, many American companies have begun to withdraw their products from China, just like the president wanted. But far from benefiting the U.S. economy, it is benefitting third parties. The latest U.S. trade statistics show that amid the reorientation of American business from China to other markets, Vietnam’s exports to the U.S. for the first half of 2019 increased by 40%. Exports from South Korea and India were a little more modest, but still growing.

By the way, if Europe predicts a slight drop in the growth of the eurozone gross domestic product against the backdrop of the U.S.-China trade war, then in Russia, trade frictions between developing and developed countries will, in contrast, certainly add .01% to GDP growth. Such a forecast at least was recently made in a report by the All-Russian Academy of Foreign Trade of the Ministry of Economic Development. For the most part, this could be achieved by increasing the supply of agricultural and industrial goods that were restricted to the Chinese market by the trade war.

At the same time, both in Russia and in countries that have learned the meaning of a silver lining to some extent, they realize that in the long run, economic uncertainty created by the trade war will negatively affect global GDP. Now all that remains is for the U.S. to finally understand and accept that there are no winners in trade wars, which China stressed from the start.

*Editor’s note: Although accurately translated, the quoted remarks could not be independently verified.