Trade war, day 48: Low expectations and gloating propaganda

Chinese and U.S. officials met in Washington today, for the first of two days of lower-level talks led by Chinese Vice Commerce Minister Wang Shouwen and U.S. Treasury undersecretary David Malpass. On the second day of their negotiations, a second tranche of tit-for-tat tariffs will raise the value of taxed goods between the two countries to $50 billion — but that’s not even the main reason expectations are low. The Financial Times reports (paywall):

“In private conversations, Beijing officials said that what they see as Mr Trump’s constant provocations — such as his recent threat to target additional Chinese exports worth $200bn with tariffs of up to 25 per cent— have made it extremely difficult for them to offer conciliatory gestures… ‘We are not optimistic because we don’t think Trump is willing to compromise,’ one Chinese official told the Financial Times…”

The talks, the FT says, are focusing on:

• “A list of more than 140 specific demands originally drafted by the Trump administration for the first round of trade talks in May.”
• The list includes items like “the rapid approval of applications by Mastercard and Visa to enter China’s domestic payments market — and JPMorgan’s plans to take a majority stake in its Chinese securities joint venture.”
• “In less confrontational circumstances, [Chinese officials said they] would be willing to either implement or discuss about two-thirds of the demands. They added that the rest, such as opening China’s cloud computing market to foreign companies, is off-limits because of national security and other concerns.”

Yesterday (day 47), Donald Trump himself downplayed expectations for these negotiations. His direct quote: “I don’t anticipate anything coming out of it.”

A strange piece of Chinese propaganda was published, then taken down in the lead up to these negotiations. The South China Morning Post reports:

• “China’s biggest state broadcaster [CGTN] has produced a short, satirical video mocking the US president that opens with the line: ‘Thanks Mr Trump, you are GREAT!’”
• The video “sarcastically thanks Trump for helping the rest of the world to ‘bond’ and galvanising China into making economic reforms that helped it lure major foreign investors such as Tesla,” and is “one of the few occasions that state media has personally targeted the US president since the start of the trade war.”
• It included lines such as, “Thank you for re-instilling in the Chinese a sense of HUMILITY. How can there be enough gratitude for highlighting the foibles of overconfidence and self-congratulation, never a virtue except in your case.”
• The unusually aggressive video was deleted within 48 hours of its publishing, SCMP notes, “hours before” the current negotiations started.

Other trade war reporting:

• No starring role for Wang Qishan?
  China-US trade war: Vice-President Wang Qishan ‘the firefighter’ might not be sent to front line / SCMP
  “Wang Qishan is widely considered China’s most powerful vice-president but the man dubbed ‘the firefighter’ for taking on tough jobs might not have the hands-on role in US trade talks that many observers had expected, according to a source who met Wang recently.”
• Pipe tariffs
  Trump administration imposes duties on pipes from Canada, China / Marketwatch
  “The U.S. Commerce Department said Tuesday it will order duties on large diameter welded pipe from Canada, China, Greece, India, Korea, and Turkey…. In the China case, Commerce assigned a preliminary rate of 133%.”
• Corrections to Trump speech
  Trump says China no longer on quick path to be bigger than US / Bloomberg (paywall)
  “Speaking at a rally in West Virginia on Tuesday night, Trump noted that China’s market was ‘way down’…China’s roughly $12 trillion economy has steadily narrowed the gap with the U.S.’s, which is about $19 trillion. China’s gross domestic product is forecast to expand 6.6 percent this year.”
  No Mr. Trump, a Chevy Camaro Doesn’t Cost $119000 in China / Bloomberg (paywall)
  “‘When we make a car, we sell it into China and there’s a 25 percent tariff and that’s just the beginning,’ he said in a speech in West Virginia, adding the Camaro costs three-times as much as it sells for in the U.S…The vehicle sells for 399,900 yuan ($58,430) in the Asian country…That compares with a starting price of $25,905 for a similar Camaro coupe model in the U.S.”
• Trade war and U.S.-China business
  China’s Geely sees minimal impact from US-China trade row, 2018 sales jump / Reuters
  8 Ways the next round of China tariffs could pinch consumers / NYT (paywall)
  Two US airlines cut China routes as state-backed rivals turn up the heat / CNBC
  Google tried to change China. China may end up changing Google. / NYT (paywall)
  Chinese underwater drone maker’s plan to rule the waves could be scuppered by US trade war / SCMP
• More extreme negotiating tactics coming?
  For U.S. to stay in WTO, China may have to leave / WSJ (paywall)
  “Instead of unilateral tariffs, the U.S. and its allies could use the World Trade Organization to force China to alter its trade-distorting behavior—or leave.”
  Noted China businessman James McGregor commented: “A radical response to China on trade? Expulsion from WTO. This discussion shows how much China has alienated its trading partners and foreign business.”
• Other effects of trade war
  US-China trade war: The countries caught in the crossfire / BBC
  What Dr. Copper ordered: Trade war gives China metal a shot in the arm / Reuters
  “China’s copper producers and traders are riding an unexpected surge of business that has pushed physical prices to their highest in nearly two years as fabricators rush to buy refined metal to avoid import tariffs on scrap that kick in on Thursday.”

Previously in The China Project’s trade war coverage:

Trade war, day 47: ‘No time frame’ for end of dispute, Trump says