America’s commander-in-chief isn’t averse to celebrating his personal achievements and his administration last week billed a new trade deal with the Chinese as “gigantic” and “Herculean”.
With the Trump team lurching from one crisis to another, the 10-point package hasn’t been getting much media attention, despite a description by Commerce Secretary Wilbur Ross of it being “the first real breakthrough that we’ve had with China in decades”.
One of the victories is that a 14-year ban on American beef exports will be lifted. “China just agreed that the US will be allowed to sell beef, and other major products, into China once again,” Trump tweeted triumphantly. “This is REAL news!”
In return Washington is going to open up the American market to cooked poultry exports from China and it is promising to treat the Chinese banks in the same way as other foreign financial institutions.
The main criticism of the plan is that it hasn’t tried to address any of the structural issues that complicate trading ties between the two superpowers. There’s no mention of Beijing’s demands for technology transfer from American firms, for instance, nor any reference to the overcapacity that bedevils so many of China’s industrial sectors.
“Meaningful, yes,” was the guarded response from James Zimmerman, the former chairman of the American Chamber of Commerce in Beijing. “All progress on market access is well-received by the business community. However, many of these issues have been part of ongoing bilateral discussions for years and many more barriers need to be resolved.”
Others were more frustrated by the announcement, including Dan DiMicco, formerly the boss of US steelmaker Nucor and an adviser to Trump during his presidential campaign. “This is disappointing on many levels,” he complained to the Financial Times. “We are rewarding China before stopping their massive trade cheating.”
Elsewhere there was a sense of sleight of hand in how the package was being presented. The deal on beef imports was signed off by the Obama administration and the agreement on allowing payment firms like Visa and American Express to issue yuan-denominated credit cards is heavily qualified by Beijing’s insistence on reserving the right to issue licencing guidelines to newcomers.
In fact, the Chinese have blocked international card firms from entering the domestic market for years, despite a WTO ruling that they should be allowed to compete. And with China UnionPay now such a dominant force, it is debatable whether foreign firms will even be able to wrest back much share. “This should have been done years ago when it would have made a difference. At this point, the domestic players are well entrenched so foreign companies will have a hard time entering the market,” rued Ker Gibbs, the chairman of the American Chamber of Commerce in Shanghai, to Reuters.
In Washington’s defence, the trade package is being promoted as the first result from a hundred days of talks and the implication is that more concessions from the Chinese side will be forthcoming.
Bigger picture, the measures will possibly shrink the American trade gap with the Chinese, which reached $347 billion last year, according to figures from the US Treasury. “This will help us to bring down the deficit for sure,” Commerce Secretary Ross promised at a briefing. “You watch and you’ll see.”
What’s striking is the limited mention of the 10-point package in much of the Chinese press, partly because the state media has been falling over itself to focus on Xi Jinping’s brainchild, the Belt and Road Initiative, instead (see page 1).
Indeed, when the trade deal did get a mention, it was frequently headlined with the American recognition of “the importance of China’s One Belt and One Road initiative” in the final communiqué.
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