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  1. Home
  2. / Investing
  3. / Global Equity

China 'Advises' Biden to Roll Back Trade Tariffs

China's foreign minister says the U.S. should get back to business under Biden, and forget about thorny issues like Taiwan.
By ALEX FREW MCMILLAN
Feb 22, 2021 | 07:00 AM EST

China would really like the United States to lifts its tariffs on Chinese goods now that President Biden is in power. Pretty please. That's the front-page news in Beijing today, out of a speech by the Chinese foreign minister.

What's not clear out of this unsolicited "advice" is quite why the United States should make these trade concessions. There's a lot of orders as to what the United States should/must do to get everything back on track. There's no detail on what China is going to do to address U.S. concerns.

In what's billed as "the most detailed suggestions on the development of China-U.S. ties since Joe Biden took office," Foreign Minister Wang Yi told the Lanting Forum in the Chinese capital on Monday that the United States better back off on its claims about genocide in Xinjiang Province, and its sanctioning of Chinese and Hong Kong officials after they eviscerated civil freedoms here in Hong Kong. Wang didn't use quite those words, of course, but that's the gist...

"Over the past few years, the U.S. basically cut off bilateral dialogue at all levels," Wang told the conference. "And this was one of the main reasons for the deterioration in China-U.S. relations."

The speech is given front-page coverage in the official news agency Xinhua, the state-run China Daily newspaper, and the Global Times, the state-run mouthpiece used to convey China's foreign-policy stance overseas. So it's quite clearly an order from on high.

Only the groundbreaking "news" that Chinese people should study the history of the Communist Party is given bigger coverage. Why is that news? Well, because it's all-powerful President Xi Jinping giving that particular "advice." That came in a separate speech launching preparations to celebrate the centenary of the founding of the Chinese Communist Party later this year.

Foreign Minister Wang was preaching to the choir - it was Chinese officials, executives and academics attending the Lanting, or "Blue Hall," Forum, held in the foreign ministry's blue hall. This year's event had the snappy subtitle of the Lanting Forum on Promoting Dialogue and Cooperation and Managing Differences: Bringing China-U.S. Relations Back to the Right Track. You can find a link to the full text of his remarks here.

"We hope the United States will respect China's core interests, national dignity, and rights to development," Wang said. "We urge the United States to stop smearing the Communist Party of China and China's political system, stop conniving at or even supporting the erroneous words and actions of separatist forces seeking 'Taiwan independence,' and stop undermining China's sovereignty and security through internal affairs concerning Hong Kong, Xinjiang and Tibet."

This is not a very subtle code for "Stop supporting pro-democracy activists in Hong Kong," "Stop complaining about how we're trying to eradicate the Uighurs," and "Let's all forget about the Dalai Lama, shall we?!" The United States also has a long-running legally binding commitment to supporting Taiwan, which is independent in fact if not rule of law. China persists in promoting the claim that the island, which China has never governed, is a renegade province. The real issue is that the Republican forces of Chiang Kai-shek decamped to the island in 1949 when they lost the civil war with the Chinese Communist Party, leaving Taiwan's government the only democratically elected one in greater China. Arch right wingers in Taiwan would argue they're still the rightfully elected government of all of China.

The civil war still isn't over when it comes to Taiwan, in other words. That'll be a bone of contention heading into those centenary celebrations for the Chinese Communist Party, founded in Shanghai's French trade concession on July 23, 1921.

Biden and Xi shared their first direct communications with a phone call on February 10, the eve of the Lunar New Year. Pleasantries, really, though Biden raised concerns about China's aggressive foreign policy and human-rights abuses at home. I agree with The New York Times assessment that this will be "the most important foreign relationship of his presidency." The White House summary says Biden "underscored his fundamental concerns about Beijing's coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan."

Wang's comments therefore seem directly intended to counteract those demands. Beijing's favorite tactic is to say that Hong Kong, Xinjiang and Taiwan are all "internal" domestic issues, which is probably how the Nazis saw quite a few issues back home, too. None of your business. In fact, China often likes to say that critics of China have hurt China's feelings, as if nations have touchy feely emotions: particularly touchy in the case of China on these points.

Biden on Friday made his first big foreign-policy appearance with a remote speech to the G7's Munich Security Conference. "I'm sending a very clear message to the world. America is back, the trans-Atlantic alliance is back," he said in a 15-minute address. The speech was essentially an "ode to the power of alliances," as David E. Sanger describes it. Biden reaffirmed U.S. commitment to NATO and also promised to push back against Russia. Without mentioning his predecessor once, Biden said "we're not looking backward," and called for re-strengthening diplomatic ties with Europe.

Biden has promised to coordinate a diplomatic approach to corralling China's rising militarism, economic coercion and aggressive suppression of dissenting voices at home and in foreign countries. Australia has recently been embroiled in a long-running spat with China over its demands for an independent inquiry into the origins of the coronavirus. The "quad" nations of the United States, Australia, Japan and India will be key to Biden's efforts to maintain democratic influence, in Asia in particular.

China hawks will watch for any signs of weakness from Biden, given the relatively light-handed approach that the Obama administration had toward China. But those were different days, different times, and with bipartisan support for a tougher stance on China, the vice president-turned-president may find it hard to walk back the restrictions put in place under former president Donald Trump. As vice president, Biden spent many hours with Xi before he himself became Chinese president. Biden in fact said he'd spent more time with Xi than any other leader.

Biden now says he will review the tariffs that Trump put in place on Chinese goods. These tariffs sound harsh, but since they're imposed on imports into the United States ultimately often end up being paid by U.S. companies with production or parts suppliers in China, or by U.S. consumers themselves.

The Global Times was waiting to see Biden's address to the G7, which the Chinese paper describes incorrectly as a virtual meeting to deal with the "China challenge." Biden's attempts to ring-fence China with alliances is different from Trump's "fighting alone," but amounts to "putting old wine in new bottles," the newspaper says.

Actually putting new wine in old bottles is the popular con in China. That way you can sell a 1945 Mouton Rothschild tons of times, even after you've drunk it! The Chinese newspaper's point is a muddled one, but that Biden's attempt "will not prevail easily as the G7's perceptions about China are divided and the U.S. cannot fulfill what they need and want."

Wang, the foreign minister, hopes U.S.-China business ties can get back on track. Again, there seem to be no concessions offered, just demands positioned as advice.

"We hope the U.S. side will adjust its policies as soon as possible, among others, remove unreasonable tariffs on Chinese goods, lift its unilateral sanctions on Chinese companies and research and educational institutes and abandon irrational suppression of China's technological progress, so as to create necessary conditions for China-U.S. cooperation," Wang said.

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At the time of publication, Alex Frew McMillan had no position in the securities mentioned.

TAGS: Investing | Markets | Trading | China | Global Equity

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