01 perspective
Written by: Comment Editor
2019-12-02 17:58
Last updated: 2019-12-02 17:59It is difficult for the two sides to reach a consensus on two key points in the first phase of the Sino-US trade war. One is that there are reports that China insists that the US side must withdraw the tariffs it has imposed as one of the conditions for signing the first phase of the agreement, but the US side has always refused. On the other hand, US President Trump officially signed the Hong Kong Bill of Rights and Democracy (hereinafter referred to as the "Bill of Rights"), interfering in Hong Kong affairs and damaging China's sovereignty, and also putting a haze on Sino-US trade negotiations. By analyzing these two key factors, it is not difficult to predict where the Sino-US trade talks will go.
The U.S. only has tariffs
The United States has been sending positive signals on trade negotiations. On November 27, the American media "Politico" quoted a Gao Xi from the United States, stating that the two parties were "only a few millimeters away" from reaching the preliminary trade agreement. China has sent similar positive signals to the agreement, but has left an extra prudence. The Global Daily on December 1 quoted news that China required the US to remove some of the tariffs it had collected as a condition for reaching the first stage of negotiations, but was blocked by the US because they believed that tariffs were the only US side in the trade war. For arms, abandoning tariffs amounts to "surrender."
The "tariff" is indeed the biggest weapon in the United States' trade war, and it is also the protagonist of the entire trade war. At the beginning of the trade war, although there were many opinions that the U.S. had a lot of means to exert pressure on China, the "01 View" had long anticipated that the U.S. lacked means beyond tariffs, and that tariff battles would force China to follow suit and likely bottom out soon. Whether the news from the Global Daily is reliable or not, the fact is that the United States has not yet come up with other effective methods to pressure China in addition to tariffs. How many "safe" ammunitions can the US use? There are counts in my heart.
The U.S. lacks means beyond tariffs, and the use of tariffs to force China into compliance is likely to bottom out soon.
Tariffs are the only means of pressure for the US side, but from a Chinese standpoint, the most important negotiation objective is to push tariffs back to pre-trade levels, so as not to promote unequal treaties. In other words, the entanglement between China and the United States on the issue of tariffs is actually to be expected. However, China is more willing to spend time on this issue and will eventually wait until the United States throws out an acceptable solution. China has moved away from the United States in the strategic center of its response to the trade war in an attempt to draw multilateral trading communities outside the United States to mitigate the impact from the United States. For example, China's active promotion of RCEP is expected to be achieved. Although India announced its temporary withdrawal, and Japan also stated that it would only sign if India was willing to sign. Even if Japan did not sign, Australia and New Zealand would probably not sign, but it only counted the cooperation between China and the ten ASEAN countries. It was also a multilateral cooperation organization. Quite a success. In terms of global trends, no country wants to choose an edge between China and the United States. Multilateralism is the best direction to counter the United States ’unilateralism. Now it is only a matter of time for countries to form more multilateralist platforms. . In the global situation, China's persistence in promoting multilateralism is the best way to address the threat of tariff issues.
China ’s November manufacturing purchasing managers index (PMI) ’s official data rose by 50.2, Caixin ’s data rose to 51.8, and it doubled back to the expansion zone. Industrial manufacturing showed a stable situation in the first half of this year. The effect of the gradual stabilization. Although the United States Federal Reserve has continued to cut interest rates halfway to mitigate the impact of tariffs, the "hot money" generated by interest rate reductions may not always be left in the United States, but may be "capital enemies". The US $ 6 billion unrated sovereign bonds issued by the Ministry of Finance of China on November 27 had a very good subscription response. CNBC reported that foreign capital ignored China's economic slowdown or the Sino-U.S. Trade negotiations were under tension and was still betting on China. All this shows that the trade war is difficult to shake from the fundamental to China's huge market attractiveness.
The change has actually begun. Despite the slowdown in economic growth, China's economic structure is quietly undergoing adjustments. (Xinhua News Agency)
For China, it is beneficial to continue trade negotiations, but there is no need to rush to sign any contracts. The U.S. may be considering that tariffs will become less effective as China reduces its dependence on U.S. trade, and may even be targeted at the huge risk of not being able to join the Chinese market. Therefore, it is likely that it is hoped that the tariffs will be threatened when tariffs are still threatened. Sign up. In short, the contract will eventually be signed by both parties over time.
The US side cannot use hard
The signing of the so-called "Bill of Rights" by the United States seems to be tough, but considering the interests of the United States, the United States cannot say that it will be too tough on the Hong Kong issue. American companies have huge interests in Hong Kong and are also an important gateway to the Chinese market. If the United States really invokes the Bill of Rights, it will severely sanction Hong Kong, such as canceling Hong Kong ’s status as an independent customs territory. In addition to seriously harming Hong Kong ’s economic interests, in fact It will also hurt the interests of American companies in Hong Kong and even China. Even if American companies are forced to leave Hong Kong, they will not give up the Chinese market. The end result may be that China launches a free trade zone in the Mainland as a buffer, and then American companies turn to cities such as Shanghai or other Asian cities. However, these choices are definitely not better than Hong Kong, which is extremely economically free and low in tax rates. It is doubtful whether the United States is willing to abandon Hong Kong's "shear harvesting".
As long as the United States does not cite the Bill of Rights, it is estimated that political tensions will not have much impact. Some US media have noticed that the Bill of Rights will cause certain disturbances, but it is estimated that it will not completely set off negotiations. For example, the Wall Street Journal said that after Trump signed the bill, China continued to be willing to negotiate. Axios also quoted US sources as saying that the Bill of Rights did offend China and it would take time to calm down China's domestic political situation, but the first phase of the agreement is expected to be signed as soon as the end of the month. This also shows that the Hong Kong issue does not seem to be a key factor hindering Sino-US trade negotiations.
Looking at the two key obstacles, it is not difficult to find that it is only a matter of time before China and the United States sign a trade agreement.
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