USA-China: Phase 1 agreement – what are the other phases? From trade war to offshore control war?



Some optimists and good people are now trying to interpret the trade agreement between the United States and China as the end of the Sino-American conflict. Observers on German stock exchange television seriously declare that the agreement is now a return to rules-based world trade, while Trump is attacking the WTO to make it clear that the struggle will continue, that it will only take place a bit delayed, and that the agreement is only phase 1, which others are to follow , What is the deal so far? SPIEGEL reports:

“Part of the deal is the suspension of a new round of US punitive tariffs on Chinese goods that should have come into effect at the weekend. The Chinese government also announced the agreement in Beijing. The United States has also committed to partially withdrawing tariffs that have already been imposed, said China’s Vice Secretary of Commerce Wang Shouwen.

Trump waives announced punitive taxes

This Sunday, the U.S. had originally planned to impose an additional 15 percent penalty on consumer goods like laptops and smartphones produced in China, valued at approximately $ 150 billion. This would – after various previous customs rounds – have imposed additional duties on almost all imports from China, i.e. goods worth around $ 500 billion a year. However, this escalation does not occur.

Trump wrote that the punitive tariffs planned for December 15 will not be imposed because an agreement has been reached. He spoke of a „very large phase one agreement“ with China. „We will start negotiations on a phase two agreement immediately instead of waiting until after the 2020 election,“ he said. Beijing wanted the punitive tariffs to be abolished, but they remained in effect as a lever for further talks. ”

https://www.spiegel.de/wirtschaft/unternehmen/handelsstreit-usa-und-china-verkuenden-grundsaetzliche-einigung-a-1301227.html

„According to US media reports, it was agreed that:
• The US will refrain from imposing a 15 percent penalty on further imports from China worth nearly $ 160 billion as of Sunday,
• The US government has reduced existing tariffs from 25 percent to $ 250 billion worth of goods and 15 percent to $ 110 billion in volume, some reports have even cut it in half. The Trump administration had long rejected this concession. Only in the past few days did she give in,
In return, China ended its boycott of American agricultural products and, above all, ordered soybeans and pork – which the country urgently needs in view of the rampant swine fever. At first it was unclear how high the commitment was. Trump had spoken of $ 40 to $ 50 billion in October, which would be more than in the record 2012 fiscal year. Beijing’s negotiators were reluctant to commit to specific sums,
Beijing takes action against intellectual property theft and promises not to manipulate its currency. Observers consider the latter to be a problem of the past,
• Tariffs will rise again if China does not keep its promises.
On the other hand, the major issues such as China’s subsidy policy, with which it wants to conquer the economic leadership, have been excluded. Republican Senator Marco Rubio warned that the U.S. government is depriving itself of the leverage it needs to implement an agreement on the more important problem areas: in addition to subsidies, the forced technology transfer and the lack of market access for US companies in key sectors of the Chinese economy , Merely „recalibrating“ the trade balance is too little, criticized several democratic senators in a letter to the president. “

https://www.spiegel.de/wirtschaft/soziales/donald-trump-im-handelsstreit-mit-china-einigung-mit-beruhigungspille-a-1301057.html

So most punitive tariffs remain in effect, the trade agreement is just a short-term ceasefire designed to ensure Trump’s next election success after his tax-cutting program gave an initial boost but is now being thinned out by the trade war. It must be clearly seen that Trump’s first goal is to reduce the United States‘ foreign trade deficits, especially in the direction of China, but also vis-à-vis all other trading partners such as the export world champion Germany or EU or Mexico, Canada, South Korea, Japan and the Southeast Asian countries. The pro-Chinese East Asia Forum wants to see this as a victory against Trump, but sees that the Sino-American conflict with or without Trump continues to have a tendency to escalate. But she emphasizes that China will be the long-term winner, since globalization trends cannot be reversed, and that China will also become a high-tech power, which all Trump’s punitive measures and measures can no longer prevent:

The chill ahead in the Second Cold War

Author: Gary Clyde Hufbauer, PIIE

In the year 2018 — 99 years after the end of the First World War, 73 years after the end of the Second and 26 years after the end of the first Cold War — US Vice President Mike Pence announced a Second Cold War: This time with China. How and when it will end is anyone’s guess. The weapons, for the moment, are trade, investment and technology. In 2020 and beyond, the trajectory of the Second Cold War will challenge leaders in Asia and elsewhere.

„President Donald Trump’s rhetoric towards China blows hot and cold depending on his daily mood. But Trump’s overriding goal for 2020 is a glowing economy — without that his re-election prospects will take a dive. The economy is far more important to Trump’s political future than impeachment.

Yet, the trade war’s economic toll has largely offset stimulus from the 2017 tax cut. The Tax Cut and Jobs Act of 2017 increased the federal budget deficit by almost US$800 billion annually and cut the corporate tax rate to 21 per cent in line with other advanced countries. But unfortunately, trade wars fostered business uncertainty worldwide and eliminated the investment boost that the lower tax rate would have generated.

Trump can scold Federal Reserve Chairman Jerome Powell, but he cannot command negative interest rates. What Trump can do is dial back his trade wars. Accordingly, the near-term outlook is no escalation. Instead, partial rollback of existing tariffs in exchange for assured US agricultural exports seems possible.

But Trump’s near-term trade war tactics are a mere blip in the Second Cold War. Whether Trump is re-elected in 2020 or a Democrat prevails makes little difference. Trump and his Democratic rivals have all convinced themselves — and a majority of Americans — that China is the threat of our era.

But there are differences of degree. Some US political leaders, like Republican and Democratic senators Marco Rubio and Charles Schumer, respectively, characterise China as an existential threat. Others, like Republican Senator Rob Portman, favour targeted responses to specific trade and investment grievances. Henry Kissinger’s calming voice and warning that the United States and China have reached the ‘foothills of a cold war’ find much less resonance in today’s political environment.

During 2020 and beyond, bilateral US–China trade seems destined to stagnate or shrink, but technology will be the lead weapon of ‘decoupling’ — a soft description of the Second Cold War. The United States has already severely restricted US tech companies from selling to Huawei. Not surprisingly, Huawei is already making smart phones without US components.

For a short period, enhanced technological deprivation will slow China’s industrial aspirations. But this will not last. Instructive is the first Soviet atomic bomb explosion in 1949, a mere four years after Hiroshima. To be sure, Soviet scientists were aided by spies at Los Alamos, but China is no slouch when it comes to commercial espionage and Chinese scientific and technological talent and capacities today are far better than those of the Russians in the 1940s.

While the United States is busy decoupling, China has mounted an economic charm offensive. At a time when openness to trade has become too toxic for most world leaders to swallow, President Xi Jinping has repeated a plea for China to welcome more imports. Speaking at the second China International Import Expo (CIIE) hosted in Shanghai over November 5–10, Xi not only called for China to import more, he extolled the World Trade Organization (WTO) and likened globalisation to a mighty river, unstoppable despite many shoals.

American sceptics will scoff at Xi’s speech, but they should ask what other leader of a major economic power is calling for enhanced imports. Not President Donald Trump. Not Chancellor Angela Merkel of Germany. Not Prime Minister Shinzo Abe of Japan.

The Second Cold War confronts Asian leaders with challenges akin to those European leaders faced in the first Cold War. Asian countries nearest China are clear targets of its geopolitical ambitions. Chinese influence travels alongside the Belt and Road Initiative, together with less obvious, and less expensive, covert measures. But China is already a much bigger economic partner for Asia than the United States. Unless China’s ambitions take overt military shape or China’s response to Hong Kong or the Uyghurs becomes visibly bloody, few Asian countries are going to join Washington’s decoupling crusade.

Trump has yet to take measures familiar in the arena of economic sanctions — using secondary trade or financial restrictions to deter third countries from doing business with the adversary. A looming question, in 2021 and beyond, is whether Trump or his successor will take such measures to deter technologically advanced countries in Asia and elsewhere from sharing technologies with Chinese firms. A taste of this option was the largely unsuccessful US diplomatic effort to deter European countries from buying Huawei’s wares. Stay tuned.

Gary Clyde Hufbauer is a non-resident Senior Fellow at the Peterson Institute of International Economics (PIIE).

Be that as it may, there are essentially two U.S. strategy lines: those of the Democrats and Republicans who militarily want to make military alliances in Asia and free trade areas like the TransPacific Partnership TPP  against China and who, with TTIP wanted to build an economic NATO of the West and at the same time wanted to challenge Russia. Then Trump, who has China and Iran as the main focus, wants to get Putin-Russia away from China, wants to bring the whole world to America first by means of a trade war and the questioning of all international organizations and also the WTO.

In any case, the phase 1 agreement is only a small ceasefire to enable Trump to be re-elected. The impeachment process is doomed to fail, as Republicans will prevent this from happening in the Senate, and there are no other important Republican candidates who would question Trump’s next presidential nomination. Democrats were driven to impeachment more than they were convinced thatbthey could impeach Trump. Especially since Trump, with his campaign against Joe Biden as a centrist integration figure, has now triggered the factional dispute among the Democrats, who are at odds with each other between the left and the right. The trade agreement with China should also be seen as a success for Trump as he claims that because of the Phase 1 agreement US exports to China will double. The chances of his re-election have increased.

But in general, the mood has turned against the CPC in the United States. Which was actually the original intent of Bush rr.when he declared China as the strategic competitor, but this failed as a result of the 9-11 s, after the war in Iraq and Afghanistan,  Obamas or Hillary Clinton’s „Asian Pivot“ wanted a united economic front of the West and the Asians against  China and contain it militarily through alliances.

The question is why China gave in. Is it taht China is afraid of Trump, that the punitive tariffs will have such an impact on China’s economy that they will no longer be acceptable and are dangerous for the economic and political stability of the CCP, or the CCP may have even an interest in Trump being re-elected, judging his rivals‘ strategies as more dangerous for China, and hoping that his trade war against the world will drive Europeans, Russians, and Asians into Beijing’s arms, and China’s rise to a Hitech and world power anyway can’t be stopped and yChina has not to rely on foreign technology and just get your time by an American idiot.. ,

Especially since Trump is also a climate denier and the EU has just decided on a Green Europe, in which 260 billion Euro should be invested annually in  a New Green Deal. China will therefore use the anti-Trump mood in Europe against the Trump-USA., as well as its own Green China image, to use Europe and all supporters of the Paris climate  agreement, which, with the exception of Trumps and Brazil-Bolsanaro, was signed by the rest of the world China will try to cover its own devastating ecological balance sheet, its neototalitarism, its striving for the new world power role No. 1 by means of its international contracts and its economic strength.

They want to challenge Hong Kong democracy activists like Joshua Wong, who calls for a the Second Cold War of the free world against the unfree world, the neototalitarian China, which is in the transition from an authoritarian one-party rule to a neototalitarian one-man rule with no term limit and social bonus system ,. But confronting China through ecological criticism is not as easy as in the question of economy and democracy. The CCP China signed the Paris climate protection agreement, which is a lazy but long-negotiated minimum compromise, which is then advocated by all sides, and which also allows China, India and other countries to expand their coal and nucleasr power, i.e. their CO2, till 2030 – These increases are priced in this global temperature saving agreement.

If the Chinese opposition acted as a pioneer of the Future for Friday, as Joshua Wong does in the column of the German newpaper Welt, they would have to question the Paris climate protection agreement, would be perceived by the world community as an adventurous hate aurator and destroyer of international contracts while the CP China would be regarded as a guarantor of inetrnationbal treateis and stabilizer of the international world order , which also has positive ecological aspects, such as the fact that it is a leading nation in the production of renewable energy and its exports via the New Silk Road, as well as a global leader in the implementation of e-mobility including its infrastructure and increasingly global lead market for e-cars, to which Green Europe and its auto industry, especially VW, wants to convert. I is also likely that the Greens are  coalition partners of the next German government, as the European Greens have grown like the right winged populist movements and parties.

Therefore, a new black- green government may have a more anti-Chinese accent towards human rights and democracy, but China could undermine this through the anti-Trump mood in Europe and its climate denial, as well as economic reasons. China could therefore counter critisism on  democracy and economic interests through a new image as Green China, which supports Green Europe in the alliance against Trump’s climate denial policy. Conversely, European politicians and business associations could also come to the idea that Trump’s trade deal could also make demands in terms of economic policy againts China from export to intellectual property, perhaps also in connection with the USA, especially since some economic associations and Greens are angry. To what extent the common goal of a CO2-free planet and not economic interests dominates remains to be seen. In any case, the promise of prosperity by the ecologists that a Freen Europe could be used to create millions of jobs by regenerative energies and that every farmer could become a solar sheikh were destroyed through China’s cost advantages and industrial policy with dumping prices. that Germany and Europe’s solar and wind power industry is actually broke and that its production and jobs are taking place in China today..

It is also a question of the grand narrative. The USA previously had freedom and propserity for he world, now only prosperity and only America first. China only has prosperity for China and the world by its New Silkroad. The EU Freedom and Ecology, the Green Europe, through which Prosperity should somehow appear indirectly. Russia d lacks everything, it fluctuates between Eurasia, GreaterEurasia , Greater Europe, but Eurasia always has the disadvantage that a Euraisen is not dominated by Russia or Europe or Greater Europe, but above all by China, and Russia would be at best the junior partner. And the old Primakovian triangle Russia-China-India is not so easy either, because India did not want to become part of the Eurasian Free Trade Agreement Regional Comprehensive Economic Partnership .The Global Times demands that India should decide one day which side it would be in a future Eurasian conflict, which would be a Sino-American conflict.The Phase1  agreement is a short-term ceasefire, a breather. Trump only calls it phase 1. Phase 2 is likely to become China’s high-tech sector and Made in China in 2025, with 5 G and Huawei only being the tip of the iceberg, as everything from AI to quantum computers will follow.

In short: Trump wants to be re-elected, but then will not be saturated, because his goal is not only to reduce the trade deficit, but that the CP China agrees to its America first conditions for a new pax america, which defines China as No.2 in a sustainable and medium-term manner. At least Trump’s deal has damaged China’s image as an unstoppable rising world power as a result of globalization. Phase 2, phase 3 are yet to come and Trump will not be saturated under this agreement, but will then even more intensify his final struggle against the CPC in the event of re-election. He still has 4 years to do this, but the possibility that he could wage a Sino-American war according to the model of the US strategist TX Hammes Offshore Controll as phase 4 is currently not being considered.

Über Ralf Ostner

Ralf Ostner geboren 1964 in Frankfurt am Main, 1984 Abitur in Bayern--Leitungskurse: Physik und Kunst/ Schülerzeitung. Studium der Physik (Nebenfächer: Mathematik, Chemie), Wirtschaftsgeographie (Nebenfächer: BWL, VWL) und Studium der Sinologie. 1991 Abschluss als staatlich geprüfter Übersetzer in der englischen und chinesischen Sprache am Sprachen- und Dolmetscher-Institut/München (Leiter der Chinesisch-Abteilung: Herr Zhang, ehemaliger Dolmetscher von Deng Xiaoping und Franz-Josef Strauß).Danach 5 Jahre Asienaufenthalt: China, Indien, Südostasien (u.a. in Kambodscha während des ersten Auslandseinsatzes der Bundeswehr, Interviews mit Auslandschinesen, Recherche im Karen-Guerillagebiet in Burma, Unterstützung einer UNO-Mitarbeiterin während den Aufständen in Nepal und bei UNO-Arbeit in Indien), Australien. Danach 5 Jahre als Dolmetscher, Delegationsbegleiter und Übersetzer in München. Abendstudium an der Hochschule für Politik /München (Schwerpunkt: Internationale Beziehungen). Abschluss als Diplom-Politologe (Diplomarbeit: Die deutsch-chinesischen Beziehungen 1989-2000 unter besonderer Berücksichtigung der SPD-Grünen-Regierung). Delegationsbegleitung von Hu Ping, Chefredakteur der chinesischen Dissidentenzeitung "Pekinger Frühling" (New York)und prominentester Vertreter eines chinesischen Liberalismus bei seiner Deutschlandtour (Uni München, Uni Mainz, Berlin/FU-Humboldt) bei gleichzeitigem Kontakt mit Liu Liqun (Autor des Buches "Westliches Denken transzendieren"/ heute: Deutschlandberater der chinesischen Regierung).Chefredakteur der Studentenzeitschrift UNIPOL . Projekte am Goethe-Institut und bei FOCUS TV. Seit 2000 Übersetzer (chinesisch-deutsch), Graphiker, freier Schriftsteller und Blogger.
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