By Zhao Minghao   Source: China-US Focus   Published: 2019-5-24

With China-US trade negotiations suffering a new setback, international public opinion is increasingly pessimistic about the prospect of the two countries reaching an agreement and concluding the trade war. The Trump administration has not only decided to raise tariffs on about $200 billion worth of Chinese exports from 10 percent to 25 percent, but is also preparing to impose a 25-percent tariff on another $320 billion worth of goods. The Chinese side has announced it will take necessary retaliatory measures in response. Chinese official media outlets, such as the People's Daily, have published a series of articles, emphasizing that China is not afraid of US pressure, and will fight till the end if the US wants to continue the trade war. Beijing's rseponse was tougher than expected.

This particular year may indicate why China is particularly keen to show strength–2019 marks the 100th anniversary of the anti-imperialist May 4 Movement, and the 70th of the founding of the People's Republic. On May 4, 1919, the Chinese people staged large-scale protests against the unequal treaties that imperialist powers imposed on China after the First World War—a significant symbolic incident in safeguarding national sovereignty and dignity, that was also closely related to the birth of the Communist Party of China.

Immediately prior to the beginning of the 11th round of China-US trade negotiations, the Chinese government held a high-profile commemoration of this crucial centennial anniversary. In his keynote speech, President Xi Jinping spoke highly of the patriotic spirit of the May 4 Movement, and stressed the significance of “struggle and sacrifice” in realizing the great rejuvenation of the Chinese nation.

Though the Trump administration has already identified China as a “strategic rival”, it seems to have never had a proper understanding of this rival, and particularly under-estimated the importance of national sovereignty and dignity to Chinese leaders as well as the ordinary Chinese. The Trump government has repeatedly resorted to “maximum pressure” tactics in negotiating with Canada and Mexico. Washington Post columnist Eugene Robinson had a keenly incisive description of these tactics: “Veterans of the high-stakes world of New York real estate have told me about what they described as Trump's standard negotiating practice — pitching some kind of fit at the very last minute, when the other party thought things were settled, in hopes of bullying his way to a better deal.”

“Maximum pressure” as a strategy doesn't work on China. Instead it is counterproductive. That the Chinese side is unwilling to compromise under coercion by the Trump administration may have the following reasons. First, the US suddenly raised its asking price when negotiations were approaching an end, including forcing the Chinese side to increase procurement of US commodities, which displeased Beijing. Just as Erin Ennis, Senior Vice President of the US-China Business Council, said, Trump tried to raise the stakes in the last round of negotiations. Judging from official statistics, the US economy has performed well lately. This may have made Trump believe he has greater room to maneuver in putting further pressure on China.

Second, the Chinese side won't accept a humiliating agreement, believing that rolling over to US demands will undermine Chinese sovereignty. Vice Premier Liu He, head of the Chinese negotiating team, emphasized the text of an agreement should be balanced. This means that revision of Chinese laws should not be determined by the US side, and both parties should assume full responsibility for the implementation of any agreement. It is also exasperating that Washington is attempting to maintain high tariffs on Chinese goods even after signing the agreement, meaning China would be unable to take any retaliatory measures in the face of US pressure. Beijing deems this requirement as ridiculous and unacceptable.

Third, a series of confusing new signals in America's China policy in recent weeks have made China extremely worried that concessions on trade would inspire the US side to take a mile after China gives an inch. Kiron Skinner, US State Department Director of Policy Planning, openly treated China-US relations from the perspective of the so-called “Clash of Civilizations,” in scholar Samuel Huntington's notoroius phrasing. Her racist remarks ignited tremendous indignation in China. Besides, the US House of Representatives passed the Taiwan Assurance Act in early May, suggesting that the US side is carrying out a dangerous “stress test” on China to take advantage of the Taiwan issue. Some US legislators are attempting to bundle human rights together with China-US trade negotiations, which will make it even harder to reach an agreement.

Beijing is keenly aware that some political forces in the US don't want to see the trade war with China stop. Radical hawks like Steve Bannon are trying to take advantage of setbacks in bilateral trade negotiations to sink the two countries deeper in strategic confrontation. Looking forward to the 2020 presidential election, neither do Democratic Party politicians want to see Trump earn points from resolving the trade conflict with China. In the meantime, US farmers and ordinary consumers have to pay higher prices, and financial markets will continue to suffer disruptions.

The Trump administration should learn three lessons from Beijing's tough response. First, absolutely don't underestimate China's resolve to endure necessary costs for preserving national sovereignty and dignity. Rather than making rash threats, the Trump administration should come up with feasible demands. Second, since the end of World War II, important negotiations between China and the US have never lacked twists and turns, both during the Korean War and during the period leading up to China's WTO accession. China is a tough negotiating partner. Third, professional expertise is seriously insufficient within the Trump administration. Skinner's wayward remarks have met with plenty of criticism even at home. China-US trade negotiations should not suffer distractions from irresponsible statements and malicious commentary.

The risk of China and the US sinking into a deeper strategic conflict is undeniably increasing. Against such a background, trade negotiations are actually functioning as a critical “brake,” with both negotiating teams putting in enormous efforts to make it work. These negotiations have also offered inspiration for bilateral “re-engagement” in fields such as security and diplomacy, and should be seen as valuable on that basis.

President Trump himself has little interest in a new “Cold War” with China. But he does need to spend more time studying Chinese culture and characteristics, so that he won't be manipulated by hysterically anti-China elements in the US. Trump may have a meeting with his Chinese counterpart at the June G20 summit in Japan. Let's hope the trade talks reach a new turning point before that.

Zhao Minghao is visiting fellow of Chongyang Institute for Financial Studies at Renmin University of China.