In its latest broadside against the United States amid rising trade tensions, the Chinese regime issued a white paper squarely blaming Washington for the breakdown in trade talks, and accusing it of making unreasonable demands.
In a 5,000-word report detailing the regime’s position on the trade talks released by the State Council Information Office on June 2, Beijing refuted the U.S. administration’s allegation that it backtracked on promises made during trade discussions.
On May 10, the Trump administration raised tariffs to 25 percent from 10 percent on $200 billion of Chinese goods, after the regime allegedly reneged on commitments negotiated during months of trade talks.
Reuters reported at the time that those commitments included pledging to address core U.S. concerns, including theft of U.S. intellectual property, forced technology transfers, and currency manipulation.
The sudden reversal affected every chapter of the almost 150-page draft agreement that was being negotiated during bilateral talks, Reuters reported.
The report, however, said it was “common practice” for both parties to make new proposals and adjustments as the talks progressed, and accused the United States of consistently changing its demands over the past 11 rounds of talks.
Not long after the tariff increases, the Trump administration effectively banned Chinese telecom giant Huawei from doing business with U.S. firms on national security grounds.
In an apparent retaliation to the Huawei ban, the Chinese regime on May 31 announced it would establish an “unreliable entity list” of foreign companies, individuals, and organizations that harm Chinese businesses, without detailing which entities would be included or what punishments would be imposed.
Since the breakdown of talks, Chinese state media has escalated its bellicose rhetoric against Washington, portraying the United States as an adversary and a bully, and blaming it for the lack of progress in trade discussions.
Speculation, fueled by Chinese leader Xi Jinping’s visit to a rare-earth elements facility and commentary by state-run media, has been rife that the regime would block rare-earth exports to the United States as a retaliatory move. Rare-earth elements are a key component in manufacturing many technologies, such as electric vehicles, smartphones, wind turbines, satellites, missiles, and semiconductor chips.
Allegations of US Backtracking
The paper, which largely restates official policy positions and rhetoric, does not level any new threats against the United States. But it does raise three alleged instances of when Washington backtracked on its commitments during trade talks.
The paper accused the U.S. administration of backtracking by releasing a Section 301 investigation (pdf) in March 2018 which found that the Chinese regime has been unfairly acquiring U.S. intellectual property for years—less than a month after the two sides engaged in high-level talks where they “reached preliminary consensus on expanding China’s imports of agricultural and energy products from the U.S.”
The investigation findings had prompted President Donald Trump to propose imposing the first set of tariffs on $50 billion of Chinese products, which came into effect in July 2018.
The white paper, however, didn’t specify exactly how the Section 301 report amounted to the United States going back on a commitment made during discussions.
In the second alleged instance, the paper said the two sides issued a joint statement on May 19, “agreeing to refrain from fighting a trade war, to continue high level communications, and to actively seek solutions to respective economic and trade concerns.”
The paper claimed the United States “publicly announced that it would suspend the plan for additional tariffs on Chinese goods.”
The joint statement, which said Beijing would agree to buy more U.S. goods and services to reduce the trade deficit, didn’t, in fact, include an agreement to “refrain from fighting a trade war,” nor that the U.S. administration would suspend plans to impose tariffs on $50 billion of Chinese goods.
While Treasury Secretary Steven Mnuchin said at the time that the two sides were “putting the trade war on hold,” Trump later told reporters on May 22 that he was “not satisfied” with the recent trade talks, adding that “we have a long way to go.”
The final alleged infraction involved the most recent tariff increase announced by Trump in May, which the paper said “contradicted the agreement reached by the two presidents to ease friction through consultation,” in apparent reference to the deal by the two leaders on the sidelines of the G-20 summit in Argentina in December 2018.
Trump had agreed to hold off on planned tariff increases on $200 billion of Chinese goods for 90 days, so that negotiations could proceed on “structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services, and agriculture.”
A White House statement at the time said that if the two sides weren’t able to come to an agreement within the 90 days, then the tariff increase would proceed.
Then, five days before the deadline, Trump announced that he would delay the planned tariff increases, citing recent progress in negotiations on structural issues.
However, at no point has the administration indicated that it would drop the threat of increasing tariffs. On the contrary, the administration has maintained that tariffs remain on the table if a deal can’t be struck.
Two days before Trump announced the most recent tariff hike, Vice President Mike Pence said the United States “could put more tariffs on if we’re not able to reach an agreement.”