No bargaining chip too big: techno-trade war talks resume

CNBC reports that “U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke to Chinese Vice Premier Liú Hè 刘鹤 and Commerce Minister Zhōng Shān 钟山” on July 9, marking the official resumption of negotiations in the now more than one-year-long U.S.-China techno trade war.

• Zhong is “an old colleague of Xi from the Zhejiang days,” SCMP reporter Jun Mai notes, and “was not a core member of China’s negotiating team before.”
• Zhong was vice-governor of Zhejiang Province at the same time that Xí Jìnpíng 习近平 held a variety of leadership positions in the region.
• The implied closer watch of Xi could indicate that Liu will have less leeway to make concessions toward market reforms encoded in legal changes than he did in the last round, which by some accounts sank the previous tentative trade deal.

Trump is determined to keep up his dealmaking brand as the next round of talks gets underway, and has taken several steps to try to ensure Beijing stays at the table:

• One: A limited reprieve for Huawei. Commerce Secretary Wilbur Ross confirmed yesterday that licenses for some U.S. to sell to Huawei were in the works.
• Two: Softened criticism on human rights. Vice President Mike Pence has continued to delay a speech on human rights in China that was originally slated to coincide with the 30th anniversary of June Fourth, and Treasury Secretary Steven Mnuchin has reportedly held up sanctions on Chinese officials over the abuses of Uyghurs in Xinjiang.
• Three: Softened criticism on Hong Kong. The FT reports (porous paywall):

Donald Trump told Chinese president Xi Jinping last month that the US would tone down criticism of Beijing’s approach to Hong Kong following massive protests in the territory in order to revive trade talks with China.

The US president made the commitment when the two leaders met at the G20 summit in Osaka, according to several people familiar with the meeting. One person said Mr Trump made a similar pledge in a phone call with Mr Xi ahead of the G20 summit…

Following the Trump-Xi meeting, the state department told Kurt Tong, the departing US consul general in Hong Kong, to remove several critical comments about China from his final speech in the Asian financial hub. Mr Tong had told people he would give a speech about Hong Kong that would mention the erosion of freedoms by China in the territory, but the veteran diplomat was forced to water down the July 2 address.

In other words, no bargaining chip is too big — the survival of one of China’s largest technology companies, for instance — or too morally valuable — like the rights of millions of ethnic minority Muslims, or eroding promised freedoms of the residents of a Special Administrative Region — for Donald Trump, when dealing with China.

Other techno trade war related news today:

• Huawei taps domestic lenders for $1.5 billion loan / TechNode
  “Huawei plans to raise $1.5 billion from a group of domestic lenders, an anonymous source familiar with the matter told Bloomberg. The move will mark the Chinese telecom giant’s first offshore syndicated loan secured without any help from overseas banks.”
• Trade War Threatens Chinese Factories’ Existence, Supplier Says / Bloomberg (porous paywall)

The world’s largest supplier of consumer goods says China’s factories are getting “urgent and desperate” as worried U.S. retailers accelerate a move out of the country amid heightened trade tensions.

China will see more factory shutdowns as the trade war that’s roiled the global supply chain exacerbates an exodus, said Spencer Fung, chief executive officer of Li & Fung Ltd. The company, which designs, sources and transports consumer goods from Asia for some of the world’s biggest retailers including Walmart and Nike, is being pushed by American clients to shift production out of China.

• Trade war tariffs are new normal and may be difficult to remove, says former US ambassador to China / SCMP
  “Max Baucus, the top US envoy in Beijing from 2014 to 2017, said on the sidelines of a US-China trade relations event in Hong Kong that it would be difficult for the world’s two largest economies to cancel their existing tariffs on each other’s products.”
• U.S. exempts some medical, electronic devices from China tariffs / Reuters
  “The Trump administration will exempt 110 Chinese products, from medical equipment to key capacitors, from hefty tariffs, it said on Tuesday, offering relief to some U.S. firms which have said the taxes harm their bottom lines.”
• Banned Chinese Security Cameras Are Almost Impossible to Remove / Bloomberg (porous paywall)
  “U.S. federal agencies have five weeks to rip out Chinese-made surveillance cameras in order to comply with a ban imposed by Congress last year in an effort to thwart the threat of spying from Beijing. But thousands of the devices are still in place and chances are most won’t be removed before the Aug. 13 deadline.”