China’s trade war woes won’t go away after Democrats’ midterm gains

Beijing (CNN)The Democrats have retaken the US House of Representatives, dealing a major blow to President Donald Trump’s domestic agenda, but if anxious politicians in Beijing think that means a reprieve from the White House, they should think again.

Desperate for a solution to the trade war that is weighing on China’s economy, there is a view in China that a Democrat-led House might mean a softer stance against Beijing.
Nick Marro, an analyst at the Economist Intelligence Unit, said that view was misguided because the Democrats have historically been more pro-labor unions and less in favor of unconstrained free trade than their opponents. “It’s unlikely that they’ll push for greater trade engagement with China,” he said.
    Even if the House wanted to, the power to slap tariffs on China is essentially vested in the executive — that’s President Trump. If he needs support from Congress on China policy in the future, the Democrats have shown few signs they’ll stand in his way.
    All this is bad news for Chinese President Xi Jinping, whose government has been scrambling to appease an increasingly hostile US administration, after attempts at flattery and acts of friendship early in Trump’s term didn’t quite deliver.
    Foreign Ministry spokeswoman Hua Chunying declined to comment directly on the election result on Wednesday, saying regardless of the outcome China “won’t change its recognition of the importance of China-US relations.”
    Beyond the economic implications, the optics of the row with Trump are also hurting Xi at home.
    Willy Lam, an adjunct professor at the Chinese University of Hong Kong’s Center for China Studies and well-connected political analyst, said Xi has faced rare criticism from inside the ruling Communist Party for his handling of the US crisis.
    “He has been widely criticized, not by name of course, but subtly, for failing to handle Trump’s multi-pronged challenge. He’s very much on the defensive,” Lam said.

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    ‘Competitive and confrontational’

    The trade war between the US and China that Trump ignited in the middle of the year steadily worsened over months, with tariffs now on more than $250 billion of Chinese goods.
    But it was a landmark speech by US Vice President Mike Pence in early October that marked the start of a new aggressive policy against Beijing, sparking talk of a new Cold War.
    “Beijing is employing a whole-of-government approach to advance its influence and benefit its interests. It’s employing this power in more proactive and coercive ways to interfere in the domestic policies of this country,” Pence said in Washington on October 4.
    “To put it bluntly, President Trump’s leadership is working. China wants a different American President.”
    Adding fuel to the fire, both Trump and Pence have accused China of trying to meddle in the November 6 elections, citing little proof. The claims have been roundly denied by Beijing.
    The US leaders pointed to Chinese state media’s placement of advertorials in US newspapers as evidence, but analysts say that practice is longstanding and pales in comparison with past Russian efforts at interference.
    Tensions have also been rising over the disputed territory of Taiwan, which China considers a breakaway province, and the bitterly contested islands in the South China Sea, where the US has been increasingly pushing back against Beijing.
    All this has led to a perception in China that Trump’s criticisms against the country were merely a way to drum up the Republican vote ahead of the Tuesday’s elections.
    Tong Zhao, a fellow at the Carnegie-Tsinghua Center for Global Policy in Beijing, said China had been “over-emphasized” in US politics of late.
    “The sentiment is that the US is hyping up the competitive and confrontational nature of bilateral relations for the benefits of domestic politics.”

    Tense relationship

    But the fear of a more powerful China in the United States is real. Trump made competitiveness with China a major part of his election campaign two years ago, and now it’s not all about trade.
    In addition to increasing military maneuvers near China’s doorsteps, Trump appears to be using aid to counter China’s influence in the world.

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    Trump threatened to cut foreign aid before his election, but last month he signed off on the newly created US International Development Finance Corporation for developing nations in October, backed with $60 billion in loans and other assistance. That came just a month after Xi announced his own package of aid, investment and loans in Africa, also worth $60 billion.
    Yet there is some cause for optimism. Trump and Xi’s on-again-off-again friendship seems to have warmed after a phone call last Wednesday. It was their first conversation in months and came barely a week before the midterm elections, hinting at a thaw in relations.
    Trump tweeted about his “long and very good conversation” with Xi, and called the Chinese President “great” numerous times in a campaign rally speech after the call.
    But Beijing has become familiar with Trump’s fickle nature, and soon mixed signals began to creep into the White House messaging.
    While Bloomberg News, citing sources, reported that Trump had directed his Cabinet to draft a trade deal with Beijing, top White House economic adviser Larry Kudlow said the two countries were “not on the cusp of a deal.”

    Tough line on China ‘popular’

    The idea that the Chinese government would pin its hope on the Democrats to ease tensions is remarkable, especially as Xi tightens his grip domestically and cracks down hard on anything perceived as dissent.
    For decades, ever since President Richard Nixon made a historic visit to Communist China in 1972, it was his fellow Republicans — more pro-business than the Democrats — who tended to be China’s closest allies in Washington.
    In comparison, the Democrats — who have traditionally tended to focus more on human rights issues in China — were reluctant to let Beijing off the hook in the hopes of closer trade ties, a view that remains to this day.
    But as frustration grew in the business community with China’s perceived refusal to liberalize its economy, the Republicans also hardened their stance toward Beijing and business lobby groups cooled their pro-China stance.
    “I don’t think Beijing understands just how popular in DC a tougher line on China is,” Isaac Stone Fish, senior fellow at the Asia Society, told CNN.
    “There is surprising bipartisan support in DC for a tougher, or some would say more fair, policy to China, especially on trade but also human rights.”

    Panic in Beijing

    The US midterms come at a time when Beijing finds itself more and more at a loss over how to deal with the increasingly hostile Trump administration.
    When Chinese ambassador to the US Cui Tiankai appeared on Fox News in mid-October, he was asked by host Chris Wallace who in the White House was running trade policy on China.
    “You tell me,” Cui replied, with a smile. “(Diplomats) don’t know who is the final decision maker. Of course, presumably the President would take the final decision, but who is playing what role? Sometimes it could be very confusing.”
    Chinese officials, who had viewed Trump as a politically naive transactional leader, were taken by surprise when relations with the US suddenly became tense in the latter half of the year. Now they are struggling to work out how to restore peace.
    But Stone Fish said at the end of the day, Washington politics may not be the greatest problem looming for Xi, amid a growing number of domestic headaches for the Chinese leader.
    The Communist Party’s Politburo, one of the country’s highest decision-making bodies, issued a statement last week acknowledging for the first time “increased downward pressure” on the economy.
    Even before Trump began his trade assault against China, the government was fiercely battling surging debt across the country as well as attempting to balance environmental protection with avoiding a slowdown in growth.
      “Of concerns that Xi faces, the top 20 are much more domestically focused,” Stone Fish said.
      If both Xi and Trump are forced to turn further inward to address domestic turmoil, a diplomatic thaw may take some time to come.

      Original Article : HERE ; This post was curated & posted using : RealSpecific

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