Hard for Xi, Trump to make progress on trade: former China central bank chief
BEIJING: China’s President Xi Jinping and U.S. President Donald Trump are likely to find it “difficult” to make major progress toward ending their countries’ trade war when they meet at a G20 summit in Japan in June, a former top Chinese official said on Friday.
The U.S. approach to trade talks has been “bullying and America First”, whereas the principles of China’s approach to negotiations were equality and cooperation, said Dai Xianglong, who headed the People’s Bank of China from 1995-2002 and remains an influential figure in China.
“It’s hard to reconcile these,” Dai told a seminar on U.S.-Sino trade relations, noting that trade friction between China and the United States was a long-term issue.
Trade tensions between Washington and Beijing escalated sharply this month after the Trump administration accused China of having reneged on its previous promises to make structural changes to its economic practices.
Washington later slapped additional tariffs of up to 25per cent on US$200 billion of Chinese goods, prompting Beijing to hit back with additional levies on around US$60 billion of U.S. imports due to take effect on Saturday.
“I expect that at next month’s meeting of the leaders in Japan it will be difficult to achieve major progress,” Dai said, later adding that he was not confirming that the meeting would take place, but he hoped it would.
Trump has said he is planning on meeting Xi during the G20 summit, set for June 28-29 in Osaka, though China has not formally confirmed this.
Dai said he did not rule out stronger retaliation by China. He said heavy sales of U.S. Treasuries by China was a less likely option for retaliation as it would hurt China’s own interests.
Since the latest round of U.S. tariffs, which caught Beijing by surprise, Chinese state media has gone on the offensive.
The People’s Daily, the ruling Communist Party’s flagship newspaper, warned this week that China was ready to use its dominance of rare earths, crucial minerals used in electronics, to strike back in the trade war.
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PUBLIC RELATIONS BATTLE
A deluge of sharply worded commentaries and warnings out of China in the last two weeks has intensified a public relations battle with the United States that could complicate the run-up to any Xi-Trump meeting in Japan.
At the Beijing seminar on Friday, former Chinese vice commerce minister Wei Jianguo said initiating a trade war with China might be the biggest strategic mistake made by the United States since World War II or even its founding.
There is a need to prepare for the likelihood for the trade war to ratchet up tensions to geopolitical areas including the South China Sea, said Wei, adding that the trade conflict might last for 30 years or even half a century.
He suggested that China had many countermeasures it could take, including rare earths and against Boeing Co. or U.S. software.
“There are lots of Chinese countermeasures, and, speaking honestly, we hope not to use them, because we always negotiate with the United States with sincerity and hope to achieve results,” Wei said.
Dong Yang, a former executive director at the China Association of Automotive Manufacturers, said at the seminar that U.S. auto parts suppliers could also be hit.
“U.S. car components companies have presence in China, and set China as a global manufacturing base. The escalation of the trade war between China and the United States will seriously affect their development in China and the world,” Dong said.
Other parts suppliers such as Germany, Japan, South Korea and France can also provide strong substitutes for U.S. components, he said.
All those who spoke at the seminar were former, albeit senior, officials. The government has not organized media appearances for top leaders or trade negotiators to answer questions on the trade talks.
Chinese officials hardly ever take questions from foreign media. And, unlike in the United States, where there is constant direct contact with the media and Trump tweets about policy regularly, senior Chinese officials, including Xi, do not tweet – Twitter is banned in China.
(Reporting by Stella Qiu, Cheng Leng, Yilei Sun and Dominique Patton; Writing by Ryan Woo and Ben Blanchard; Editing by Paul Tait & Simon Cameron-Moore)