A Start to the China Issues

Terry H. Schwadron

Jan. 15, 2020

The Chinese government has not had much to say about the Phase One deal-signing with the United States that is set for today at the White House.

While Donald Trump has been extremely vocal about the deal, using it at campaign rallies and political gatherings to burnish his own record as a negotiator, China has remained quiet. That silence has prompted many to question whether the gains of this first phase actually are as significant as described by the White House.

Indeed, while Phase One promises big agricultural buys of U.S.-grown soybeans and other products in return for removal of threatened tariffs on other consumer goods, it postponed most of the more complicated questions until future negotiations. It also allowed for appeal of requests from U.S. businesses to share technical intellectual policy to more centralized courts in China.

As always, the public statements being made and distributed about such deals have as much to do with politics at home as they may about dealing with the negotiating partners.

In any event, from a business and economic viewpoint, the deal is just a beginning — in some ways returning both sides to where we had started before an escalating tariff war. All parties except Trump himself seem to agree on that.


This week, a social media account linked to the Chinese government has issued a note of caution by saying that the “trade war is not over yet” and that it is “just the first round of a game.” Taoran Notes, which is affiliated with the official Economic Daily newspaper that is used by Beijing to manage trade talk expectations, published its first piece for two months on Monday, saying the Phase One deal is just “the first step to solve a problem.”

“We must bear in mind that the trade war is not over yet — the U.S. hasn’t revoked all its tariffs on China and China is still implementing its retaliatory measures. There are still many uncertainties down the road.”

It added that the broad meaning of reaching a trade deal is to find an approach to solving China-US disputes in other areas. Vice-Premier Liu He is traveling to Washington for a mid-day signing at the White House today.

The South China Morning Post noted that China has yet to officially confirm the reported amount of its promised imports from the US, even though their American counterparts have talked about these as key parts of the deal. Treasury Secretary Steven Mnuchin has said multiple times that China has promised to buy up to $40 to $50 billion worth of

US farm products — about double the amount that has ever been purchased by China — and a total of up to $200 billion of US goods over the next two years.

The Wall Street Journal reports that China and the U.S. have agreed to restart a comprehensive economic dialogue every six months, led by Liu and Mnuchin.

Major Chinese state media outlets have been relatively muted over the breakthrough in the 18-month trade war, sometimes allowing reports about the deal in English but not in Chinese. China’s censors have blocked any unauthorized information about the trade deal, including Trump’s tweets.

In any event, the full effect of Phase One agreement on the American economy is mixed. As the Washington Post concluded, “Even as the Whie House celebrates the president’s negotiating accomplishment, the “phase one” deal offers little relief for countless American businesses — including chemical makers, apparel retailers and auto parts manufacturers — that will still face the same punishing tariffs they have confronted for some time.”


The South China Morning Post said that relatively low-key stance reflects the complicated feelings in Beijing about the upcoming phase one deal. There is concern about processes, about winners and losers, about the deal itself says about Chinese standing in the world.

By contrast, Trump has had no problem using the deal for political leverage in this country before November’s elections. Phase One, Trump says, proves that he alone is bringing about necessary steps towards pressing China into buying more American products to balance bilateral trade and to change some of Beijing’s allegedly “unfair” trade practices.

Just as clearly, China is trying to project the deal as a proof that it is able to stop disputes with the United States from erupting into confrontations, while downplaying the parts that could be viewed as Beijing’s concessions.

The deal was announced in October, but it took until now to finish it. Just why is not clear.

In this country, tariffs have proved very unpopular, particularly among normally Trump-leaning agricultural counties where the loss of Chinese markets have proved financially devastating. As a result, Trump launched a few rounds of very expensive business bailouts to U.S. farmers — or, in actuality, big agricultural companies.

We may hear wonderful words at the signing ceremony, but behind the scenes, there is still a lot of ugliness left about trade friction with China.