Trade war, day 83: Trump accuses China of election interference

If you have not been following our regular China-U.S. trade war updates and need a quick review of the current issues in China-U.S. relations, the U.S. Congressional Research Service has a handy two-page explainer.

Many major issues in China-U.S. relations are connected to one another, but never have they been more often spoken of in the same breath as during the Trump era. President Trump has repeatedly connected the North Korea crisis with trade, something his predecessors have avoided doing, for example.

Today, Trump leveled another charge against China, also connecting it with trade. CNN reports:

• “China has been attempting to interfere in our upcoming 2018 election coming up in November against my administration,” Trump said to the UN Security Council, without providing evidence.
• “They do not want me or us to win because I am the first president ever to challenge China on trade,” Trump then added.
• A couple of hours later, Trump tweeted: “China is actually placing propaganda ads in the Des Moines Register and other papers, made to look like news. That’s because we are beating them on Trade, opening markets, and the farmers will make a fortune when this is over!”
• The newspaper ad placement is real, but not unprecedented outside of Iowa: China Daily, a state media outlet, has been paying to insert pages into the Washington Post for many years, for example.
• While Trump may be the only official publicly accusing China of election “interference,” many others in Washington are also concerned about the influence of Chinese state media: Xinhua and CGTN were recently told by the Justice Department to register as foreign agents (China Daily has already registered).
• The U.S. Director of National Intelligence Dan Coats today also warned of China “trying to exploit any divisions between federal and local levels on policy,” though he did not go into details, and did not describe it as election interference or connect it to trade.

Other news on the trade war and U.S.-China relations:

• Chinese citizen arrested for spying
  Chinese man arrested in US for allegedly acting ‘as an illegal agent’ of China / CNN
  “Ji Chaoqun is accused of acting as an ‘illegal agent’ at the direction of a ‘high-level intelligence officer’ of a provincial department of the Ministry of State Security, China’s top espionage agency, the US Department of Justice said in a statement.”
• Chinese rhetoric and strategy
  Xi Jinping says trade war pushes China to rely on itself and ‘that’s not a bad thing’ / SCMP
  “Chinese President Xi Jinping says rising ‘unilateralism and protectionism’ is forcing China to rely more on itself for development and ‘it’s not a bad thing,’ reflecting a determination to fight a protracted trade war with the US if necessary.”
  Can China fulfill its semiconductor dream? / Inkstone
  “China’s huge manufacturing industry makes it the world’s biggest consumer of chips – but only 16% of them are made at home… Now that sense of frailty has been transferred to the chip industry, spurring renewed efforts to build a domestic alternative… China has yet to produce any competitor to chip giants like America’s Intel, or South Korea’s Samsung Electronics and SK Hynix.”
  As trade war rumbles, China steps up opening of financial markets / Reuters
  “Fidelity International, UBS Asset Management and J.P. Morgan Asset Management…believe the long-term growth potential of the world’s second biggest economy outweighs the more immediate hit from trade disputes,” and are pouring money into the country’s financial sector.
  “China’s global market profile could grow over the next 12 months with the imminent launch of the Shanghai-London Stock Connect, the possible expansion of A-shares weighting in MSCI indices and the potential entry into FTSE Russell’s global equity indexes.”
  China announces fresh import tariff cuts amid brewing trade war / Reuters
  “China’s state cabinet said on Wednesday the government will cut import tariffs for products including machinery, electrical equipment and textile products beginning on Nov. 1.”
  Germany, EU urged to deepen cooperation with China / China Daily
  Cold war mentality will harm US-China relations, top diplomat warns Kissinger / SCMP
  “Foreign Minister Wang Yi made the comments to former US Secretary of State Henry Kissinger during a meeting on the sidelines of the United Nations General Assembly in New York on Tuesday.”
  US threatening to cross red line of bilateral ties: China Daily editorial / China Daily
• American rhetoric and strategy
  Joint Statement on Trilateral Meeting of the Trade Ministers of the United States, Japan, and the European Union / United States Trade Representative
  The statement does not mention China by name, but is clearly directed at China as it details “Concerns with Non-Market-Oriented Policies and Practices of Third Countries…Industrial Subsidies and State Owned Enterprise…Forced Technology Transfer Policies and Practices of Third Countries” — many of the same things the U.S. finds objectionable about the Made in China 2025 initiative.
  Not helping China’s case against these concerns: “China state groups gobble up private companies,” the Financial Times reports, as “twenty-one privately owned groups have sold large stakes to SOEs since the start of 2018, according to stock exchange filings. Of these, 10 are de facto nationalisations because the SOE will become the formerly private company’s largest shareholder.”
• Economic effects of trade war
  The worsening US-China trade war might cost the world much more than US$430 billion of lost GDP / SCMP
  US-China trade war dims Asia’s 2019 growth outlook: ADB / Reuters
  Crop chop: China shuns U.S. soybeans amid trade war, turns to Brazil / Reuters
  Taiwan manufacturer sentiment weakens on U.S.-China trade tension / Focus Taiwan
  Tariffs cost Ford $1 billion in profit and hurt sales in China / Bloomberg via CNBC
  Trump’s $250 billion in China tariffs are now in effect—here’s what could get more expensive / CNBC
• Commentary
  Trump to China: ‘I own you.’ Guess again. / NYT (porous paywall)
  A column by Thomas Friedman, which concludes that “ultimately, I believe, the U.S. and China together will have to play the role that the U.S. played alone after World War II — to define the rules of the new international order, from A.I. to privacy to trade. And our weight in that process — we must never forget — will depend on the talent we attract, the allies we rally and the values we embrace and promote.”
  China’s claims on trade with US don’t add up / Bloomberg (porous paywall)
  David Fickling writes, “Many of Beijing’s actions that most annoy Washington — its high-tech foreign acquisitions, or the desire to upgrade manufacturing expertise through the Made in China 2025 program — are ultimately attempts to offset the gradual decline of China’s labor force with a shift toward higher value-added, capital-intensive products… In moving up the value chain, China switches from being a complementary partner to a competitive rival.”
  An economic cold war looms between the US and China / WSJ (paywall)
  Greg Ip quotes Arthur Kroeber of Gavekal Dragonomics, who is among many that now see a “powerful coalition of security and economic officials who believe the U.S. is entering an existential conflict with China for global economic, technological and geopolitical dominance.”

Previously in The China Project’s trade war coverage:

Trade war, day 82: China establishes hard Party line opposing U.S. tariffs and ‘trade bullyism’