Trade war, day 42: China to send low-level delegation in late August

Yesterday (day 41 of the trade war), we observed that China appears to be undecided in its next move. Negotiations to avert the conflict before it started broke down spectacularly, leading to deep, lasting trust issues between the two sides. Top-level contact between the two sides since the official start of the trade war was brief and went nowhere.

Now China is very slightly stepping back into official contact.

• In late August, according to a Chinese Ministry of Commerce statement, “commerce vice-minister Wang Shouwen would lead the delegation that will meet US Treasury undersecretary David Malpass to discuss ‘economic and trade issues between China and the US,’” the South China Morning Post reports.
• The delegation’s planned visit was confirmed by Larry Kudlow, an economic adviser for Donald Trump, to CNBC.
• “The Chinese government, in its totality, must not underestimate President Trump’s toughness and willingness to continue this battle to eliminate tariffs and nontariff barriers and quotas, to stop the theft of intellectual property and to stop the forced transfer of technology,” Kudlow said.
• The Dow rose 396.32 points, its biggest single-day increase since April, and Walmart, Cisco Systems, Boeing, and Caterpillar all rose as well, in a trend that one analyst said was “almost entirely related to China,” CNBC reports.

But the outlook remains extremely grim. Just check out these quotes from the SCMP article linked above:

• Malpass, the U.S. official leading the talks, “has no authority to negotiate anything of substance,” James Zimmerman, a partner in the Beijing office of law firm Perkins Coie, said. Plus, “anything he does negotiate, including the basic protocol for a possible next round, could be shot down by the various dysfunctional and competing players in the Trump administration.”
• “The Chinese no longer trust Treasury Secretary Mnuchin,” Malpass’s boss, “to be able to finish the deal,” said Derek Scissors, resident scholar at the American Enterprise Institute.
• “If there is going to be a deal, it has to be between Xi Jinping and Donald Trump,” Chen Long, an economist with Gavekal Dragonomics, added.
• “I don’t think this ends unless Trump can come out and say ‘I have defeated the Chinese,’” Jorge Guajardo, a former Mexican ambassador to China, said more bluntly.
• “Xi Jinping would rather be dead than give him that victory or the impression that China was defeated by the United States,” Guajardo concludes.

Other trade war reporting:

• China continues to craft propaganda messages
  China has a new message for the US: Don’t be alarmed, we’re not that great. / Washington Post
  “In the past several months, Beijing has urged its officials and party outlets to tamp down the swagger about China’s economic strength. Rather than behemoth, Beijing has begun to pitch itself as a humble helper, an aide to countries in need.”
  China says Trump’s ‘America First’ policies are hurting US / Bloomberg (paywall)
  “After more than a year of observing American diplomatic practice, people have seen the United States strides under the slogan ‘America First,’ but the complaints of those Americans who have not felt the benefits of ‘America First’ are growing… Bizarrely, U.S. trade policy makers seem to be deaf,” an opinion piece in the People’s Daily under the important pen name Zhong Sheng said.

• Soybeans
  In soybean country, Trump’s trade war with China tests patience and nerves / LA Times
  One soybean farmer, who supports Trump’s shaking up of trade relations, “can wait it out for at least a few more months partly because he was able to sell some of his fall harvest in advance, before soybean prices dropped. The question is: Will he and other farmers stick with Trump when they really start to feel the pain?”
  Soyabean ship saga tests China’s stance on tariffs / FT (paywall)
  “China has little choice but to buy the oilseed from the US to feed to its vast pig- and chicken-raising industries. But with Beijing keen to punish Washington, the question for American farmers is how quickly China can reduce its dependence on US soyabeans.”
  China says US farmers may never regain market share lost in trade war / SCMP
  Last week, the Chinese Commerce Ministry warned that “If other countries become reliable suppliers for China, it will be very difficult for the US to regain the market.”
• Hacking and theft
  Chinese hackers targeted US firms, govt after trade mission: researchers / Reuters
  “Hackers operating from an elite Chinese university probed American companies and government departments for espionage opportunities following a U.S. trade delegation visit to China earlier this year, security researchers told Reuters.”
  China trademark theft. It’s baaaaaack in a big way / China Law Blog
  Dan Harris, who runs a business that helps foreign companies navigate legal issues in the Chinese market, writes, “For years we probably averaged a call a week from someone who had lost their trademark to China, to someone who had gone ahead and filed it before the non-Chinese company did so. Then, starting maybe 5 or 6 years ago, the number of these calls declined.”
  “But starting about a year or so ago, our China trademark lawyers started getting a ton of China trademark theft calls and the number of those calls has been accelerating ever since.”

Previously in The China Project’s trade war coverage:

Trade war, day 41: China undecided on next move?