The Debate

What Did the US Give up to Restart Trade Talks With China?

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The Debate

What Did the US Give up to Restart Trade Talks With China?

Washington compromised on more than Huawei.

What Did the US Give up to Restart Trade Talks With China?
Credit: Official White House Photo by Shealah Craighead

On July 9, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke over the phone with Chinese Vice Premier Liu He and Commerce Minister Zhong Shan, marking the official resumption of U.S.-China trade talks after a nearly two-month hiatus.

Larry Kudlow, an economic adviser to the White House, told reporters that the call was “constructive” and said future talks were in the works, although no specifics have been confirmed.

The phone conversation came after a June 29 meeting between Presidents Donald Trump and Xi Jinping on the sidelines of the G-20 summit in Osaka, Japan, during which the two sides agreed to restart their trade negotiations.

Analysts immediately began to parse the give-and-take apparent from the Trump-Xi meeting. Trump kept all existing sanctions on Chinese imports, including the 25 percent tariffs on $250 billion in Chinese goods imposed after talks broke down in May. However, he agreed to hold off on considering tariffs on the remaining $300 billion in Chinese imports – and, more notably, essentially overturned a U.S. ban on American companies doing business with Chinese telecom firm Huawei. According to Kudlow, Huawei remains on the so-called “entity list,” but the government will make it easier for U.S. firms to get the approval they need to continue supplying Huawei with technology.

At the time, many news reports cited the obvious compromise of relaxing the U.S. ban on Huawei to entice China back to the table, which seemed to belie Trump’s constant insistence that China needs a trade deal more than the United States. But, it turns out, the Huawei issue wasn’t the only sweetener the White House threw into the pot.

For instance, in July the Financial Times reported that Trump had told Xi “the U.S. would tone down criticisms of Beijing’s approach to Hong Kong … in order to revive trade talks with China.” Since June, Hong Kong has seen repeated mass protests against a proposed bill that would make it possible for Hong Kongers to be extradited to mainland China. Chinese officials have been adamant that the situation in the special administrative region is “China’s internal affairs” and not open to comment from other countries. China even explicitly warned leaders not to bring the topic up during the G-20 summit. Apparently the Trump administration saw this as an opportunity – if Beijing values silence on the Hong Kong issue, then Washington could barter that away.

“Following the Trump-Xi meeting, the state department told Kurt Tong, the departing U.S. consul general in Hong Kong, to remove several critical comments about China from his final speech in the Asian financial hub” on July 2, FT reported.

Trump himself, when asked by reporters on June 12 about the massive protests in Hong Kong, said, “I hope it all works out for China and for Hong Kong.” He was incredibly vague about the protests, saying only “I understand the reason for the demonstration” without actually mentioning concerns that the proposed extradition bill would threaten Hong Kong’s judicial independence or that China is, in general, undermining Hong Kong’s promised autonomy.

“I’m sure they’ll be able to work it out,” Trump added.

That wasn’t the first time the United States backed down on human rights concerns out of fear of jeopardizing trade talks with China. Earlier in May, before talks fell apart, the New York Times reported that the Trump administration had “backed away” from placing economic sanctions on Chinese officials and companies involved in the crackdown on Muslim ethnic groups in Xinjiang. There was a push to impose sanctions under the Global Magnitsky Act, but while the State Department and National Security Council were on board, the Treasury Department – ultimately responsible for applying sanctions – declined to move forward. Apparently criticizing China’s practices in Xinjiang was seen as “an impediment” to a possible trade deal. That appears to still be the case, as the United States was notably absent from a group of 22 countries that joined together to express concern about China’s human rights violations in Xinjiang earlier this month.

Meanwhile, a planned speech on China by Vice President Mike Pence – expected to heavily stress alleged human rights violations – has been delayed numerous times because of “progress” on trade talks. Pence’s talk was originally scheduled for June 4, the 30th anniversary of China’s bloody crackdown on protesters gathered in Tiananmen Square. That would have sent an undeniably strong message – apparently too strong. The speech was postponed until June 24, and then postponed again, with no reschedule date given.

“The vice president’s office is postponing Monday’s speech due to progress in conversations between President Trump and President Xi,” said a statement from the Wilson Center in Washington, D.C., the planned host for Pence’s address. As of this writing, Pence still has yet to deliver the speech.

For reference, Pence gave a speech on China policy back in October 2018 in which he criticized the Chinese government’s “sharp U-turn toward control and oppression of its own people,” including the creation of “an unparalleled surveillance state.”

Outside of the human rights front, there were also reports that the Trump administration may soft-pedal its relationship with Taiwan while trade talks are progressing. According to the Wall Street Journal, Trump was infuriated to learn of a visit to Taiwan by a senior State Department official in March 2018 and requested that no further visits take place while trade talks were ongoing. Officials had to try to convince Trump that Taiwan was worth supporting – with mixed results. “It took some convincing, but Mr. Trump came around, the officials said, and he now sees the value in using Taiwan as a bargaining chip in his talks with China,” WSJ reported.

Taiwan must be so relieved – it can join Xinjiang’s Muslim groups and Hong Kong’s protesters on the list of concerns the United States is willing to trade away for a better trade deal.

This approach, unfortunately, plays right into China’s hands. Beijing has long insisted that Washington’s rights-based criticisms are not to be taken seriously, because the United States doesn’t really care about issues like freedom and democracy in the first place. Instead, Chinese officials (and many Chinese analysts) take the more cynical view that the United States simply uses human rights as a “cudgel” to target countries it doesn’t like. By offering U.S. silence on human rights concerns in return for Chinese concessions on trade, the Trump administration is perfectly reinforcing the idea that values-based diplomacy is a pretext for securing other national interests. And for China, that might be an even bigger victory than an eventual trade deal.