Progress Amidst China and USA Trade War With Huawei Being Used As Part of Deal

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Nick Staunton
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US President Donald Trump said that positive progress has been made towards a trade deal with China amid media reports that US negotiators are insisting Beijing agrees to regular check-ups on its reforms and shorter timelines for rectifying the trade imbalance.

Following vice-ministerial level talks in Beijing earlier this month, Trump said on Saturday that a deal “could very well happen” after a “very extraordinary number of meetings”, though he denied reports that US tariffs on Chinese products might soon be lifted.

“If we make a deal, certainly we would not have sanctions and if we don’t make a deal, we will,” he said. “It’s going well. I would say about as well as it could possibly go.”

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 Why the US-China dispute is about so much more than a trade imbalance His comments came ahead of Chinese Vice-Premier on January 30 and 31, where he is expected to meet US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin for top level talks.

The two countries are more than halfway through a 90-day tariff truce – brokered by Trump and Chinese President Xi Jinping at the start of December – but tariffs remain in place on billions of dollars worth of goods on both sides. And the US has said it will go ahead with raising duties to 25 per cent from 10 per cent on US$200 billion worth of Chinese goods if an agreement is not reached.

While the upcoming negotiations are a positive step, the world’s two largest economies still have many structural economic issues to untangle before they can resolve their differences.

 Besides China’s yawning trade surplus with the US, which observers have said will be difficult to tackle, there are stickier conflicts over market access, intellectual property protection, cyber theft, and state-backed industrial policies and subsidies for Chinese firms in key sectors.
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 In an interview with Fox Business on Saturday, White House economic adviser and director of the National Economic Council Larry Kudlow played down reports of a breakthrough.

“We’ve made some progress with China in the deputy’s meeting in Beijing … [but] nothing has been resolved, nothing on paper, no contracts,” he said.

However just yesterday Donald Trump has raised the possibility of easing restrictions on Huawei as part of a broader trade deal with Beijing, despite labeling the Chinese telecommunications giant “very dangerous.”

The comments, which appear to run counter to Washington’s hardline policy on Huawei, come just a week after the US Department of Commerce placed the company on a blacklist effectively barring it from conducting business with US companies.
“Huawei is something that’s very dangerous” from a security standpoint, Trump told reporters Thursday.
But then he floated the idea of using the Chinese tech firm as leverage in the ongoing trade negotiations with China.
“It’s possible that Huawei even would be included in some kind of trade deal,” Trump said. “If we made a deal, I can imagine Huawei being included in some form of, some part of a trade deal.”
The Trump administration has been pressuring allies to restrict Huawei equipment in the build out of their 5G networks, citing national security concerns. Washington fears that Beijing could use Huawei equipment to spy on other countries, but has not provided any evidence that such acts have occurred.
Huawei has repeatedly denied that any of its products pose a security risk, noting that Beijing has never requested access to its equipment and if it did, the company would refuse to comply. The Chinese government denies stealing intellectual property and committing unfair trade practices.
Washington has been unmoved by those reassurances.
US Secretary of State Mike Pompeo on Thursday said the dispute over Huawei could deepen, reiterating the security risk posed by Huawei’s technology and saying he expects other international companies to elect not to use their products.
Last week, the Commerce Department barred US companies from selling key parts and components to Huawei, deeming the company a threat to the United States’ national security and foreign policy interest.
And in January, the US Justice Department filed criminal charges against the company accusing the company of violating US sanctions on Iran, and stealing intellectual property.
Trump’s suggestion Thursday that he is using Huawei as an enormous bargaining chip in the ongoing trade talks reinforces Beijing’s position on the situation.
“Recently the United States is frequently using ‘long-arm jurisdiction’ to suppress Chinese enterprises,” China’s Ministry of Foreign Affairs spokesman Gao Feng said Thursday. “China urges the US to stop the wrongdoings to avoid further impact on the China-US trade relations.”

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