China Switches to High-tech; US, Low-Tech, an Outcome of Trade War

In its report “China unveils 5G and NEV spending action plan to boost consumption to cushion US trade war impact”, SCMP says, “Plan would aim to boost the sales of cars, home appliances and consumer electronics including 5G smartphones after sharp drop in retail sales in April. Restrictions on car registrations would also be relaxed after sales dropped 14.6 per cent in April from a year earlier.”

The trade war launched by the US will certainly cause some damages to Chinese economy including reduction of the growth rate of Chinese economy. In the long run, it facilitates China’s transformation to innovation-, creation- and consumption-led economic growth. The new products from innovation and creation will greatly increase China’s sales at home and abroad, much more than enough to offset the reduction in exports caused by US tariff hikes. China’s plan to boost the sales of cars, home appliances and consumer electronics including 5G smartphones is precisely aimed at such a transformation.

Hardship is unavoidable in a war but Chinese people are able to endure it due to their patriotism, but the war also provides China with not only the opportunity but also the incentives to switch to innovation and creation to obtain high technology and overcome the hardship.

US consumers will pay higher prices for their imports from China due to the tariff hikes or alternative sources with higher prices but low tariffs. It will make production of import substitutes profitable and give US entrepreneurs incentive to produce those low-tech products.

China switches to high tech while the US switches to low-tech due to US protectionism. That may be one of the outcomes of Trump’s trade war.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at

Survey Proves China’s Success in Trade War United Front with Germany

SCMP says in its report “German firms find US less reliable than China as trading partner after getting caught between Trump and a hard place to do business” yesterday, “China ranked higher than US and Britain as trading partners in a survey of 2,000 German companies by Commerzbank”

According to the survey, “China was ranked third in an assessment based on political and economic conditions affecting trade, with a score of 30, led by Germany itself way out ahead on 65, and France on 39. The US, in fourth place, was a long way behind on 17 points, followed by Italy (11), Russia (10), Great Britain (8), Brazil (5) and Turkey (3), according to the results of the survey issued on Wednesday.”

China’s further opening-up with its new law on foreign investment succeeds in attracting German companies. US President Trump’s protectionism, on the contrary, will make things difficult for German companies to do business with the US.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at

China Winning Trade War with Diplomacy in Europe and Japan

According to China’s gifted strategist Sun Tze, winning with strategy is the best of the best and with diplomacy the second best. With fight is the next alternative while besieging cities is the last choice.

In its trade war with the US, China’s strategy is to move to countries with cheap labor its enterprises that export labor-intensive products to the US. With his vision that foresees the needs of removal, Chinese President Xi Jinping developed the Belt and Road initiative five years ago to build infrastructures in other countries to facilitate such removal.

However, it take time to build the infrastructures and for the enterprises moved to other countries to become well established there.

In the long run, with that strategy China will inflict overwhelming defeat on the US. China, in addition is supplementing the strategy with wise diplomacy.

Since Trump withdrew from TPP in spite of Japanese Prime Minister Shinzo Abe’s great efforts to try to persuade him no to, Abe has been trying hard to improve relations with China but was rejected by China. However, when there were prospects of trade war with the US, China took a 180 degree turn immediately and has been proactive to improve ties with Japan.

Now, the China-Japan-South Korea tripartite discussions on ASEAN+3 Free Trade Area are making smooth progress. Japan and South Korea may replace the US as China’s major trade partners.

What about Europe, SCMP mentions tension between Germany and China in its report “Germany and China set aside differences to stress importance of cooperation in uncertain economic climate” in saying, “Demands from German businesses for a tougher stance towards Beijing and increasing concern about the Chinese telecoms giant Huawei Technologies have been a growing source of tension”.

However, the report says that due to growing climate of economic uncertainty Germany and China signed agreement to strengthen cooperation yesterday after meetings between German and Chinese relevant officials.

The truth is US pressure has helped Chinese leaders to further open up Chinese market to satisfy German’s requirements. The US might have exploited the above-mentioned tension to have Europe join it in its trade war with China. However, with diplomacy, China has turned a potential enemy into its ally.

As China has further opened its market to Europe, with Germany’s influence there, China’s share in European market will grow fast while US share will drop correspondingly due to its protectionism.

Trade war cannot contain China’s rise. On the contrary, it facilitates China’s rise.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at

Trump, meeting China’s Xi, voices hope for progress on trade dispute

U.S. President Donald Trump, U.S. Secretary of State Mike Pompeo, U.S. President Donald Trump’s national security adviser John Bolton and Chinese President Xi Jinping attend a working dinner after the G20 leaders summit in Buenos Aires, Argentina December 1, 2018. REUTERS/Kevin Lamarque

Roberta Rampton, Cassandra Garrison December 1, 2018

BUENOS AIRES (Reuters) – U.S. President Donald Trump told Chinese President Xi Jinping on Saturday he hoped they would achieve “something great” on trade for both countries as they opened a high-stakes summit aimed at defusing a damaging tariffs war between Washington and Beijing.

With the United States and China locked in an economic dispute that has unnerved global financial markets and weighed on the world economy, Trump and Xi sat down with their aides for a working dinner at the end of a two-day gathering of world leaders in Buenos Aires.

Their closely watched meeting came shortly after the Group of 20 industrialized nations backed an overhaul of the global body that regulates international trade disputes, marking a victory for Trump, a sharp critic of the organization.

Trump struck a positive note as he sat across from Xi, despite the U.S. president’s earlier threats to impose new tariffs on Chinese imports.

“We’ll be discussing trade and I think at some point we are going to end up doing something great for China and great for the United States,” Trump said when a small pool of reporters was briefly allowed into the room.

He suggested that the “incredible relationship” he and Xi had established would be “the very primary reason” they could make progress on trade, though he offered no specifics on how they might resolve the main issue dividing their countries.

Xi told Trump that only through cooperation could the United States and China serve the interest of peace and prosperity. The world’s two biggest economies have also increasingly been at odds over security in the Asia-Pacific region.

At the same time, Trump again raised with Xi his concern about the synthetic opioid fentanyl being sent from China to the United States, urging the Chinese leader to place it in a “restricted category” of drugs that would criminalize it.

Earlier on Saturday, the leaders of all the world’s top economies called for reforms to the crisis-stricken World Trade Organization in a final statement from their summit.

Officials expressed relief that agreement on the summit communique was reached after negotiators worked through the night to overcome differences over language on climate change.

The final text recognized trade as an important engine of global growth but made only a passing reference to “the current trade issues,” after the U.S. delegation won a battle to keep any mention of protectionism out of the statement.

In addition to tariffs on Chinese goods, Trump has imposed tariffs on steel and aluminums imports into the United States this year. Numerous countries have filed litigation at the WTO to contest the levies.

The United States is unhappy with what it says is the WTO’s failure to hold Beijing to account for not opening up its economy as envisioned when China joined the body in 2001. The European Union is also pushing for sweeping changes to how the WTO operates.

“Notwithstanding our differences, we have been able to agree a path forward at the G20,” French President Emanuel Macron told a news conference. “The United States has endorsed a clear multilateralist text.”

G20 delegates said negotiations on the final summit statement proceeded more smoothly than at a meeting of Asian leaders two weeks ago, where disagreements on protectionism and unfair trading practices prevented a consensus.

European officials said a reference to refugees and migration – a sensitive issue for Trump’s administration – was excised to ensure consensus.

On climate change, the United States once again marked its differences with the rest of the G20 by reiterating in the statement its decision to withdraw from the Paris Agreement and its commitment to using all kinds of energy sources.

The other members of the group reaffirmed their commitment to implement the Paris deal and tackle climate change, taking into account their national circumstances and relative capabilities.


With the United States and China clashing over commerce and security, global financial markets next week will take their lead from the results of Saturday’s talks between Trump and Xi.

Ahead of what was seen as the most important meeting of U.S. and Chinese leaders in years, both sides said differences remained, and the outcome of the talks were uncertain.

Beijing hopes to persuade Trump to abandon plans to hike tariffs on $200 billion of Chinese goods to 25 percent in January, from 10 percent at present. Trump has threatened to go ahead with that and possibly add tariffs on $267 billion of imports if there is no progress in the talks.

A Chinese foreign ministry official in Buenos Aires said there were signs of increasing consensus ahead of the discussions but that differences persisted.

Trump has long railed against China’s trade surplus with the United States, and Washington accuses Beijing of not playing fairly on trade. China calls the United States protectionist and has resisted what it views as attempts to intimidate it.

The two countries are also at odds militarily over China’s extensive claims in the South China Sea and U.S. warship movements through the highly sensitive Taiwan Strait.

International Monetary Fund Managing Director Christine Lagarde said high levels of debt accumulated by emerging market nations was a pressing concern.

“There is an urgent need to de-escalate trade tensions, reverse recent tariff increases, and modernize the rules-based multilateral trade system,” she said.

U.S. officials said a call by G20 leaders for the IMF and World Bank to improve monitoring debt levels was aimed at ensuring that developing economies did not become to heavily indebted to China in return for infrastructure projects.

U.S. officials, including Vice President Mike Pence, have warned about China’s increasing influence across swaths of the developing world, including Latin America. G20 summit host Argentina is expected to sign a series of deals with China on Sunday during a one-day state visit by Xi.

Apart from trade and climate change, Russia’s seizure of Ukrainian vessels drew condemnation from other G20 members, while the presence of Crown Prince Mohammed bin Salman at the summit raised an awkward dilemma for leaders.

Saudi Arabia’s de facto ruler arrived amid controversy over the killing of Saudi journalist Jamal Khashoggi, though Saudi officials have said the prince had no prior knowledge of the murder.

While Prince Mohammed was largely sidelined by other leaders at public events, the leader of the OPEC heavyweight had a series of bilateral meetings, including a closely watched encounter with Putin.

Reporting by Roberta Rampton, Michael Martina, Matt Spetalnick, Maximilian Heath, Scott Squires, Cassandra Garrison, Daniel Flynn and Kylie Maclellan in Buenos Aires; writing by Matt Spetalnick and Daniel Flynn; editing by Ross Colvin, Alistair Bell and Jonathan Oatis

Source: Reuters “Trump, meeting China’s Xi, voices hope for progress on trade dispute”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

EU-Asia United Front to Counter US Protectionism

SCMP highlights in its report “At Brussels summit, EU embraces China and other Asian powers, in the face of Trump’s protectionism”:

●EU states are being joined at the summit by more than 20 Asian leaders, including Chinese Premier Li Keqiang, as they hammer out a joint defence of free trade
●The meeting comes amid bitter disputes with Washington over Donald Trump’s protectionist policies

It seems quite difficult for the US to strike a trade deal with EU, let alone having some toxic pill against China in the hard deal.

In my opinion, given the good relations between US President Trump and his Chinese counterpart Xi Jinping, the probability of striking a deal between the US and China is bigger, if any.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at

Amid U.S. trade war, China’s Xi reiterates reform commitment

September 2, 2018

BEIJING (Reuters) – China is still determined to reform and wants to work with all parties to build an open world economy, Chinese President Xi Jinping said on Sunday, reiterating Beijing’s message amid a bitter trade war with Washington.

The two countries have been rolling out a series of tariffs on each other’s exports as U.S. President Donald Trump’s administration seeks to tackle a range of issues from the large trade imbalance with China to forced technology transfers.

China has criticized the United States for resorting to protectionist and unilateral measures and says it will keep opening up its economy, providing a fair and transparent environment for foreign businesses.

Meeting U.N. Secretary-General António Guterres in Beijing ahead of a major China-Africa summit, Xi made no direct mention of the trade tensions with the United States, referring instead to “unilateralism and protectionism rearing its head”.

“China’s determination to fully deepen reforms will not change,” China’s Foreign Ministry paraphrased Xi as telling Guterres.

“We are willing to use practical actions to drive all parties to jointly adhere to trade liberalization and facilitation and build an open world economy,” Xi added.

The ministry’s statement did not elaborate.

U.S. and Chinese officials ended two days of talks last month without a major breakthrough as their trade war escalated with the activation of a further round of tariffs on $16 billion worth of each other’s goods.

The two countries have now targeted $50 billion of each other’s goods and threatened duties on most of the rest of their bilateral trade, raising concerns that the conflict could dent global economic growth.

Trump administration officials have been divided over how hard to press Beijing, but the White House appears to believe it is winning the trade war as China’s economy slows and its stock markets falter.

Economists estimate that every $100 billion of imports hit by tariffs would reduce global trade by around 0.5 percent.

Reporting by Ben Blanchard; Editing by Kirsten Donovan

Source: Reuters “Amid U.S. trade war, China’s Xi reiterates reform commitment”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China looks to get cozy with EU in annual talks as Trump tariffs bite

Reuters Staff July 16, 2018

BEIJING (Reuters) – The European Union will open an annual meeting with China on Monday, and will be looking to fend off overtures for an anti-U.S. alliance as China seeks a European counterbalance to U.S. tariffs.

Premier Li Keqiang will host European Council President Donald Tusk and European Commission President Jean-Claude Juncker in Beijing, where the two sides could reinvigorate long-running investment treaty talks with the expected exchange of markets access offers for the first time.
The meeting is expected to produce a modest communique affirming the commitment of both sides to the multilateral trading system. Leaders failed to find sufficient consensus for such a joint statement after meetings in 2016 and 2017.

This year’s talks come with the United States and China increasingly mired in a trade dispute with no sign of negotiations on the horizon.

U.S. President Donald Trump has warned he may ultimately impose tariffs on more than $500 billion worth of Chinese goods – nearly the total amount of U.S. imports from China last year.

China has sworn to retaliate at each step.

European envoys say they have sensed a greater urgency from China since last year to find like-minded countries willing to stand up against Trump’s “America First” policies.

China’s ambassador to the European Union, Zhang Ming, said in a commentary in the ruling Communist Party’s official People’s Daily newspaper on Sunday that the focus of the meeting would be how China-EU relations could become a “standard of stability” amid the “din of unilateralism and protectionism”.

China and Europe are “two major forces of stability and responsibility” that support inclusive globalization, Zhang said.

But the world’s largest trading bloc, while sharing Trump’s concern over Chinese trade abuses if not his prescription of tariffs, has largely rebuffed efforts by China to pressure it into a strong stance against Trump. [nL8N1U000T]

There is deep scepticism in the EU about China’s actual commitment to opening its market further, as well as concern that it seeks to divide the bloc with its economic influence in Eastern Europe.

Nonetheless, European officials suggest that Trump, who has also targeted Europe with tariffs, has created a widow of opportunity to show that EU-China relations can be a bulwark for global trade.

China and the EU are also expected to set up a working group on reforming the World Trade Organization during the talks.

European Commission spokesman Margaritis Schinas said on Friday that discussions with China would focus on “trade and investment, on the commitment to combating climate change and investing in clean energy and on foreign and security issues, including the situation on the Korean peninsula”.

Schinas said the two sides’ leaders would also talk about their joint commitment to preserving the Iran nuclear deal.

Reporting by Michael Martina in Beijing and Robin Emmott in Brussels; Editing by Robert Birsel

Source: Reuters “China looks to get cozy with EU in annual talks as Trump tariffs bite”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China renews pledges to open economy, protect IP rights

Reuters Staff March 25, 2018

BEIJING (Reuters) – China pledged on Sunday to press ahead with market opening and reforms while reiterating that it will treat domestic and foreign firms equally and protect intellectual property rights.

The pledge on reform and equal treatment came from Vice Premier Han Zheng, at a time there are increasing prospects of a trade war with the United States.

Han, making his first speech since being named executive vice premier earlier this month, told the China Development Forum in Beijing that China needs to “open even wider to the outside world,” and would do so via its Belt and Road Initiative.

China is fully aware that economic globalization is “irreversible,” said Han, adding that unilateralism and trade protectionism served nobody’s interests.

Also at the forum, He Lifeng, chairman of the National Development and Reform Commission (NDRC), said China “will deepen supply-side structural reforms and work hard to eliminate ineffective supply”.

Earlier this month, the NDRC said China, the world’s biggest steel and coal producer, would cut its annual steel capacity by around 30 million tonnes and coal capacity by about 150 million tonnes this year.

China will also promote international capacity cooperation as part of its Belt and Road Initiative, which Beijing considers to be a modern-day ‘silk road’, and widen access to the Chinese market, including the financial, telecom and education sectors, He said.


It will also “give equal protection to property rights of all ownership types by law,” and strengthen protection of intellectual property rights, said He, adding that China would better integrate its financial sector and real economy.

John Frisbie, president of the U.S.-China Business Council told Reuters China “has been promising market-opening measures and protection of intellectual property for some time, but what the U.S. business community is waiting for is action.”

The United States launched a complaint against China at the World Trade Organization on Friday, part of a package of trade measures announced by President Donald Trump on Thursday over China’s alleged theft of U.S. intellectual property..

China’s Ministry of Commerce said on Friday it opposed U.S. unilateralism and protectionism after Washington unveiled plans for tariffs on up to $60 billion in Chinese goods following an intellectual property probe.

Tim Cook, chief executive of Apple (AAPL.O), who is co-chairing the forum, told the meeting the business community “has always supported the idea that open markets foster new ideas and allow entrepreneurship to thrive.”

“The strongest companies and economies are those that are open – those that thrive on diversity of people and ideas,” said Cook, who on Saturday called for “calm heads” in the brewing U.S.-China trade dispute.

Reporting by Kevin Yao and Matthew Miller; Writing by Tom Daly; Editing by Richard Borsuk

Source: Reuters “China renews pledges to open economy, protect IP rights”

Note: This is Reuters’ report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

US Unpopularity Not Caused by China’s Popularity

On June 2, Isaac Stone Fish published a quite interesting article on The Atlantic titled “Is China Becoming the World’s Most Likeable Superpower?” that reflects some Americans’ absurd obsession with America’s status of world number one superpower.

Due to such obsession those Americans direct their bitter jealousy at China as it seems to them that a rising China will replace the US as world number one.

America is declining and China is rising but America is not so weak and China is by no means so strong to replace the US as world leader.

In fact, China is not even a superpower at present as its economy is smaller than the US and its per-capita GDP is much lower than the US. China is making great efforts to strengthen its military. That is not because China wants to contend with the US for world hegemony but because the US wants to bully China by depriving its historical rights and interests in the South China Sea as an approach to contain China.

China has grown strong enough to defeat the US near China’s coast and in the South China Sea due to its geographical advantages, but US navy remains the dominant force in the oceans. Compared with US military, China’s military is weaker and have to make long-term efforts to modernize to be able to resist US attack.

Mr. Fish, However, mentioned China’s popularity in its One Belt, One Road initiatives for win-win cooperation with other countries, but seems ignorant that the term win-win means that China itself will also be benefited from the initiative. In fact, China is also making efforts to conduct win-win cooperation with the United States and the US as well as China will be benefited.

Those who are obsessed with world leadership and jealous at China want to have TPP or other similar arrangement to contain China at the expense of US economy. It is really absurd to contain others by hurting oneself.

Mr. Fish then mentions China’s support for globalization when the US advocates protectionism. China’s support does not mean that it has the intention to replace the US as champion of globalization but to keep on being benefited by globalization. In fact, the major factor that contributes to China’s rise in the past three decades has been globalization that enables China to exploit its cheap labor to produce and exports its products all over the world.

Then there was the Paris Accords to prevent global warming. Some Western media believe that China has switched from opposing to upholding global efforts to protect environment in order to be leader in that respect. That is entirely not true. China’s change in attitude is because its serious air pollution makes it realize the importance of environmental protection.

In fact, Mr. Fish wants to criticize Trump for his attempt for win-win cooperation with China and protectionism and withdraw from the Paris Accords. Those are US problems to be considered in the light of US interests. They have nothing to do with China.

It is the US that has changed its policies to become unpopular. China’s popularity in the world origins from its efforts to benefit others while benefiting itself. The popularity depends on whether Chinese policies benefit others. It has nothing to do with US policies.

Comment by Chan Kai Yee on The Atlantic’s article, full text of which

G20 a success for China, but hard issues kicked down the road

Chinese President Xi Jinping (R) and German Chancellor Angela Merkel (L) during their meeting at the West Lake State House on the sidelines of the G20 Summit, in Hangzhou, Zhejiang province, China, September 5, 2016. REUTERS/Etienne Oliveau/Pool

Chinese President Xi Jinping (R) and German Chancellor Angela Merkel (L) during their meeting at the West Lake State House on the sidelines of the G20 Summit, in Hangzhou, Zhejiang province, China, September 5, 2016. REUTERS/Etienne Oliveau/Pool

China is lauding its successful hosting of the G20 summit in scenic Hangzhou, with open confrontation largely avoided and broad consensus reached over the fragile state of the global economy and the need for a wide range of policies to fix it.

There was even a joint announcement by China and United States that they would ratify the Paris climate change agreement, a significant step for the world’s two biggest emitters of greenhouse gases.

But scratch beneath the surface, and the gathering of the world’s most powerful leaders was not all plain sailing – from the distraction of a North Korean missile test to the failure of the United States and Russia to reach agreement over Syria, and diplomatic faux pas to double speak over protectionism.

Chinese state media, while largely basking in the glory of a summit that happened without being too overshadowed by disputes such as the South China Sea, also let slip Beijing’s frustrations at what it sees as Western efforts to stymie its economic ambitions.

“For the world’s major developed economies, they should curb rising protectionism and dismantle anti-trade measures as economic isolationism is not a solution to sluggish growth,” China’s official Xinhua news agency said late on Monday.

“In order to build an inclusive, rule-based and open world economy, protectionism must be prevented from eroding the foundation for a faster and healthier economic recovery.”

In the run-up to G20, China has been particularly upset by what it sees as unwarranted suspicion of its overseas investment agenda smacking of protectionism and paranoia.

A few weeks before the summit, Australia blocked the A$10 billion ($7.63 billion) sale of the country’s biggest energy grid to Chinese bidders, while Britain delayed a $24 billion Chinese-invested nuclear project.


Behind the scenes, Western countries have been accusing China of not sticking to its own goals.

Before the summit, European G20-sources doubted that the Chinese agenda would mark a real new chapter to create more sustainable growth for the global economy.

China, asking in public for more openness and steps to counter protectionism, is still giving Western investors only very limited access to their market, a European official said.

A big concern for foreign investors in China is what they see as the increasing difficulty of doing business in China, driven by concern that new laws and policies are seeking to effectively shut out foreigners or make life very hard for them.

“President Xi accurately raised the alarm on the need to counter the increase in protectionism around the world,” said James Zimmerman, chairman of the American Chamber of Commerce in China.

“But actions speak louder than words and the ball is in China’s court to implement its own needed domestic reforms and to provide greater market access for foreign goods, services and technology.”

And calls to utilize innovation as an economic driver should reflect policies that encourage an environment promoting fair and market-driven innovation that is open to all participants, and not just a few domestic champions, Zimmerman said.

Several diplomats familiar with the summit said China had resisted the idea of putting steel on the final communique, though it did make an appearance in the end with G20 leaders pledging to work together to address excess steel capacity.

For countries like Britain, whose steel industry crisis has been directly blamed on a flood of cheap Chinese imports, the issue is key.

An official from British Prime Minister Theresa May’s office said they and the United States had pushed for language in the communique on the importance of working together at G20 to tackle excess production.

“We have, despite resistance from some countries, secured some language on the importance of doing that,” the official said.

Asked if China was one of those resisting, she just repeated “in the face of some resistance”.

Another shadow over the G20 has been the rise of popular opposition to free trade and globalization, embodied by phenomenon like Britain’s summer vote to leave the European Union and Donald Trump becoming the Republican presidential candidate in the United States.

“We agree with the G20’s analysis that the benefits of trade and open markets must be communicated to the wider public more effectively,” said John Danilovich, Secretary General of the Paris-based International Chamber of Commerce.

“It’s vital that business and governments work together to explain how and why trade matters for all.”

($1 = 1.3110 Australian dollars)

(Additional reporting by William James and Gernot Heller in Hangzhou, China; Editing by Ryan Woo)

Source: Reuters “G20 a success for China, but hard issues kicked down the road”

Note: This is Reuters report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.