\u201cChina will not hesitate to inflict pain upon the U. S.,\u201d said Chen Wenling, chief economist at the China Center for International Economic Exchanges.<\/b>
\nBEIJING \u2014 President Donald Trump may believe that China will eventually wave the white flag in a trade war, but his posture is inviting only more resistance from Beijing, where skepticism of his administration\u2019s ability to negotiate in good faith is growing.
\u201cOur U. S. counterparts need to assure us they will abide by any agreement,\u201d said Yu Dunhai, deputy director general at China\u2019s Ministry of Foreign Affairs. \u201cHow can we trust them next time?\u201d
The question was raised just before China announced that it would accept an invitation to begin a fresh round of talks, reportedly initiated by Treasury Secretary Steven Mnuchin.
\u201cChina always believes that an escalating trade conflict serves no one\u2019s interests,\u201d Chinese Foreign Ministry chief spokesman Geng Shuang said during a news conference on Thursday.
Despite the official response welcoming new talks, there is little indication that the government in Beijing is ready to change its practices or give in to U. S. demands. The close relationship between state-owned companies and government should make it easy for China to institute quickly new policies on U. S. criticisms over mandatory technology transfers or intellectual property. Yet nothing has been offered publicly indicating that Chinese officials are willing to adapt their approach.
Questions also still linger over who in the Trump administration is in a position to effectively negotiate on behalf of the president.
\u201cNot only my country but many other countries feel confused about who to talk to,\u201d Yu said.
Trump\u2019s comment downplaying reports of Mnuchin\u2019s efforts to re-engage with China was just the latest example of confusion over who has the authority to make trade deals.
\u201cWe are under no pressure to make a deal with China, they are under pressure to make a deal with us,\u201d Trump tweeted on Thursday. \u201cOur markets are surging, theirs are collapsing. We will soon be taking in Billions in Tariffs & making products at home. If we meet, we meet?\u201d
Distrust in Beijing is also running high after Trump trashed an agreement struck in May in which China offered to quell trade tensions by agreeing to import vast amounts of U. S. farm goods and natural gas.
\u201cVery clearly there was agreement,\u201d said Yu, who participated in the talks led on the Chinese side by Vice Premier Liu He.
Chinese academics linked to the government say there is a growing recognition that the U. S.\u2019 existential crisis over China\u2019s economic ambitions will not lend itself to an easy solution if, or when, the two countries meet again.
\u201cThis is not a trade issue. This is about competition between the two sides,\u201d said Teng Jianqun, a senior research fellow at the China Institute of International Studies, a think tank tied to China\u2019s Foreign Affairs ministry. \u201cThe two countries have entered a new stage of relations.\u201d
The Trump administration\u2019s tariffs against China \u2014 which have been imposed now on about $53 billion worth of imports \u2014 are based on complaints about China\u2019s industrial policies. The administration says Beijing\u2019s initiatives, such as the Made in China 2025 policy aimed at boosting China\u2019s high-tech sectors, are based on stealing U. S. technology and on massive, trade-distorting subsidies.
The U. S.\u2018 actions build on long-standing complaints against China’s trade practices. The Obama administration raised similar complaints but chose to deal with China through a semiregular dialogue process and by filing cases at the World Trade Organization.
But there is little chance that Beijing will be coerced into a deal that is based on concessions in its economic policies, government officials and analysts said.
Yu, the foreign ministry official, said it is \u201cunimaginable\u201d that the U. S. would try to contain China.
Meanwhile, Trump is eager to impose tariffs on a further $200 billion worth of Chinese goods, and possibly all U. S. imports from China. Those moves, Chinese analysts say, will quickly hurt both countries even as Trump relies on U. S. economic strength as a weapon in the trade fight.
China has already matched the U. S. tariffs with reciprocal penalties on U. S. goods shipped to China, including soybeans and other agricultural commodities. China also has the ability to make it very difficult for multinational corporations to do business in the economically important nation.
\u201cChina will not hesitate to inflict pain upon the U. S.,\u201d said Chen Wenling, chief economist at the China Center for International Economic Exchanges, a Beijing-based policy group established under supervision of China\u2019s National Development and Reform Commission.
The U. S. administration is on an \u201cadrenaline high\u201d based on its own GDP growth, Chen said. If additional tariffs are put in place, which Beijing now expects any day, Chen predicted a change in attitude over the next six months as tariffs begin to bite U. S. consumers.
\u201cThe faster the trade war escalates, the faster the rebound effects,\u201d she said through a translator.
Xu Changchun, a senior researcher at the center, said an analysis has shown that 40 percent of the goods targeted on the list would affect American companies that operate in China and export back to the U. S.
Experts now say that China\u2019s hope for a peaceful resolution to trade tensions is diminishing with every threat.
In China\u2019s industrial south, the manufacturing and export hub of Guangdong province, the trade war has seen its manufacturing output contract for the first time since early 2016.
\u201cGuangdong is prepared for the worst-case scenario,\u201c said Hu Xijin, editor in chief of the hawkish state-backed Global Times newspaper. He added that that the majority of Chinese believe that recent U. S. policies are part of a broader strategy to contain China.
The province\u2018s government has recently taken steps to continue to encourage foreign investment in the midst of the trade war. Those measures would include tax cuts, land grants, and permission for foreign companies to set up wholly owned ventures to manufacture new-energy vehicles, aircraft, drones and other high-tech products. Previously, overseas businesses were required to enter into joint ventures with local companies.
The province, which boasts a population of more than 100 million, is forging ahead with new plans to increase trade and the development of technology in the region.
The local government, with help from Beijing, is continuing an expansion of an ambitious free trade zone to link more easily the region\u2019s factories to world markets. The area is also eagerly awaiting the opening of the Hong Kong-Zhuhai-Macau Bridge, a 34-mile bridge-tunnel that will create a new link between mainland China and the self-governing areas of Macau and Hong Kong.
Hu, who regularly communicates with senior government officials, said he didn\u2019t expect an outcome any time soon in the talks.
\u201cAs long as the U. S. can bear the consequences, so can China,\u201d he said.<\/p>\n