China is ready to negotiate a trade deal with the United States as both economies stand to lose from a prolonged trade war, Vice President Wang Qishan said today as quoted by Bloomberg. Wang was speaking at the Bloomberg New Economy Forum in Singapore, and added that trade was the “anchor and propeller of China-U.S. relations.”
However, President Xi’s number-two as Bloomberg called him, also warned against “right-leaning populism” and “unilateralism.”
The trade war saw US crude oil shipments to China stop completely in October, and China slapped a 10% tariff on LNG in September.
“The Chinese side is ready to have discussions with the U.S. on issues of mutual concern and work for a solution on trade acceptable to both sides,” Wang told the forum, making it clear, however, that China will hold its ground and will not agree to a disadvantageous deal.
Talk about trade negotiations has been in the media for months after two failed attempts to reach common ground. Judging by the latest attempt at negotiations, which China canceled in late September, the chances of success for this attempt are as uncertain as ever, although the waiver that Washington proffered to China that will allow it to purchase Iranian crude oil may be some grease on the wheels of a trade agreement. Related: The Overlooked Downside Of Ethanol
Back in September, Beijing called off a planned meeting to negotiate trade arrangements after Washington slapped tariffs on US$200 billion worth of Chinese goods effective September and on top of that also sanctioned the country’s defense agency and its head.
Now, Presidents Trump and Xi are due to meet this month at the G-20 summit in Argentina and there are hopes the war will end, although there are also serious doubts it will happen. China has more than once made it clear it will not be the loser in a deal. The United States, in the face of President Trump, on the other hand, has followed a consistently hawkish line in its dealings with Beijing, and this, too, is far from likely to change.
Recent comments from President Xi reinforce a feeling it will take a lot of effort on both sides to reach a deal. Speaking at a recent event, the China International Import Expo, Xi said, as quoted by CNBC, “As globalisation deepens, the practices of ‘law of the jungle’ and ‘winner-take-all’ are a narrowing road that leads to a dead end. Inclusion and reciprocity, win-win and mutual benefits is the widening and correct path.”
By Irina Slav for Oilprice.com
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China is ready to work for an agreement that is equally acceptable to both countries but will never put its name to any agreement that gives the United States an advantage to claim victory.
The first crack in the US armour appeared when the US Treasury admitted that China has not been manipulating its currency to benefit from trade with the United States. This is one of two accusations President Trump used when he imposed tariffs on Chinese exports. The other is the huge trade surplus China enjoys with the US.
It is, therefore, no coincidence that the Trump/Jingping meeting comes at the time US sanctions against Iran went into effect. If no breakthrough is reached then, the trade war between them could be expected to escalate further. China has been increasing its purchases of Iranian crude oil partly because of rising domestic demand and growing refining capacity and partly to spite the United States for its escalating trade war against it. Moreover, China has the power to nullify US sanctions against Iran by buying the entire Iranian crude oil exports estimated at 2.2 million barrels a day (mbd) and paying for them in petro-yuan.
It is preposterous to suggest that the sanction waiver Washington offered to China that will allow it to purchase Iranian crude oil may be some grease on the wheels of a trade agreement. China as the world’s largest economy and a superpower in its own right doesn’t need a sanction waiver to buy Iranian crude.
Still, sooner or later President Trump will realize the futility of his escalating trade war against China. It is a war he can’t win. He will eventually be forced to cut his losses by bringing to an end his trade war with China.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London