Thursday May 27, 2021
Rapprochement in the trade war?
USA and China start talks
For three years now, the USA and China have been fighting a bitter trade conflict with mutual punitive tariffs. The new US President Biden indicates a tough course. Now both parties are in contact again for the first time. What’s next?
For the first time since the new US President Joe Biden took office, US and Chinese negotiators have contacted each other in their ongoing trade war. The new US Trade Representative Katherine Tai spoke to China’s Deputy Prime Minister Liu He, Beijing and Washington announced.
“Both sides had an open, pragmatic and constructive exchange,” said China’s Ministry of Commerce. Similarly, the US Trade Representative’s office spoke of “frank” dialogue. Such a choice of words mostly indicates differences of opinion in diplomatic language. Both sides, according to unanimous statements, underlined the importance of trade relations between the two largest economies, which have been fighting a trade war for the past three years.
In the “introductory virtual meeting”, Tai spoke about the trade policy of the Biden government “with workers at the center” and about the “ongoing review” of its trade relations with China, the trade officials said. Both top politicians agreed to continue their discussions in the future.
Joe Biden’s new government sees China as its biggest competitor and has indicated that it will also pursue a tough course against Beijing – albeit in coordination with international allies. China has been accused of unfair trade practices, government subsidies, market barriers, intellectual property theft and forced technology transfer. Negotiators from both sides last spoke to one another in August during the presidency of President Donald Trump. In the ongoing trade war with punitive tariffs, the US and China reached a partial agreement in January of last year on a first phase of the conflict settlement, compliance with which should be checked approximately every six months.
Conflict started under Trump
In the agreement on the first phase, China had promised to significantly increase its imports from the USA over two years by the end of 2021 by an additional 200 billion US dollars compared to 2017. In an analysis, the Peterson Institute for International Economics (PIIE) concludes that China is lagging behind in fulfilling the commitment. By April this year, China had only achieved 73 percent of its targets by that date.
The trade war began on June 15, 2018: Trump fired the first shot in the conflict with punitive tariffs on imports from China amounting to 50 billion US dollars. He wanted to reduce the trade deficit with China and criticized Beijing’s unfair trade methods. The conflict escalated until a year later Trump imposed punitive tariffs on almost all imports from China worth more than 500 billion US dollars – more than Beijing could answer with counter tariffs.
The fact that Vice Prime Minister Liu He spoke to the US trade representative Tai suggests that the 69-year-old should continue to lead the negotiations in the future. There had been speculation in Beijing that the other Deputy Prime Minister Hu Chunhua, who was 58 years old but was not so experienced in dealing with the United States, could take on the leading role. Liu He has long since reached the age limit, but is not only considered an economic expert, but also a close confidante of state and party leader Xi Jinping.