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The Escalating Trade War Between China And U.S. Calls A Truce

Xi also expressed sympathies for the passing of the former president, saying Bush, who also was once the U.S. envoy to China.

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President Donald Trump with China's President Xi Jinping during their bilateral meeting, Dec. 1, 2018 in Buenos Aires, Argentina. VOA

The world’s two largest economies have agreed to a small truce in their escalating trade war after a meeting between presidents U.S Donald Trump and China Xi Jinping following the G-20 summit.

“This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” Trump said in a statement released as he flew back to the United States from Argentina on Air Force One. “It is my great honor to be working with President Xi.”

Trump told reporters aboard Air Force One as he flew back to Washington, “It’s an incredible deal. What I’ll be doing is holding back on tariffs. China will be opening up, China will be getting rid of tariffs. China will be buying massive amounts of products from us.”

Trump agreed that he will leave the tariffs on $200 billion worth of Chinese products at the 10 percent rate, and not raise it to 25 percent, for now, as he has threatened to do come Jan. 1, according to a White House statement.

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Mike Starkey offloads soybeans from his combine as he harvests his crops in Brownsburg, Indiana, Sept. 21, 2018. China has agree to immediately U.S. agricultural products again in a trade war truce struck Dec. 1, 2018. VOA

“China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial and other product from the United States to reduce the trade imbalance between our two countries,” said White House Press Secretary Sarah Sanders. “China has agreed to start purchasing agricultural product from our farmers immediately.”

Trump and Xi also “agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture, according to the White House statement. “Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent.”

Some of the details were echoed by Chinese Foreign Minister Wang Yi, who confirmed that both countries will step up negotiations.

The news is likely to bring cheer Monday to global financial markets, which have been sensitive to the escalating trade battles between China and the United States.

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Plastic bags of fentanyl are displayed at the U.S. Customs and Border Protection area at the International Mail Facility at O’Hare International Airport in Chicago. VOA

Fentanyl designation

At the dinner, Xi also agreed to designate fentanyl as a controlled substance, meaning that people selling the powerful opioid to the United States will be subject to China’s maximum penalty under the law.

The White House is calling the Chinese president’s decision a “wonderful humanitarian gesture.”

Trump, sitting across from Xi at a long banquet table, described their relationship as “incredible” and predicted that would mean “we’ll probably end up getting something that’s good for China and good for the United States.”

In his remarks, the Chinese president noted, “it’s been a long time since our previous meeting and a lot of things have taken place.”

Xi added, “Only with cooperation between us can we serve the interest of world peace and prosperity.”

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Many major business leaders in both the United States and China had hoped for some sort of truce.

G-20 summit concludes

The 2½-hour meal, which was moved up an hour earlier than its original start time following the conclusion of the G-20 leaders’ meeting here, included a group of top officials from both sides.

Among those at the table for the United States: Trade policy adviser Peter Navarro, seen as the most hawkish member of Trump’s team when it comes to economic issues with China. The other key attendees for the U.S., according to the White House, were Secretary of State Mike Pompeo, Treasury Secretary Steven Mnuchin, White House Chief of Staff John Kelly, U.S. Trade Representative Robert Lighthizer, National Security Adviser John Bolton, the president’s son-in-law Jared Kushner (who is a senior adviser) and Larry Kudlow, assistant to the president for economic policy.

Fears of no progress

Many major business leaders in both the United States and China had hoped for some sort of truce or partial deal in what is seen as an escalating trade dispute between the world’s two largest economies.

Despite months of complaints by the United States and the U.S. imposing tariffs on about $250 billion worth of Chinese goods, Beijing “has not fundamentally alerted its unfair, unreasonable, and market-distorting practices,” according to a report issued last week by Lighthizer.

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U.S. President Donald Trump and Chinese President Xi Jinping participate in a welcome ceremony at the Great Hall of the People in Beijing, China. VOA

Observers feared that if no progress was made at the Trump-Xi dinner, the U.S. president would make good on his threat to double the amount of Chinese goods facing punitive taxes, and escalate tariffs to a 25 percent level at the start of the new year.

China, in response, had been threatening to impose taxes on an additional 5,000 types of American imports worth about $60 billion.

WTO reform

“I think the worst of it is that the conflict between China and the U.S. is again showing the limits of multilateral institutions, in particular the World Trade Organization,” Roberto Bouzas, an international relations and economics professor at the Universidad de San Andres, told VOA.

In its communique Saturday at the conclusion of the leaders’ summit, the G-20 called for reform of the WTO to improve its functioning and said the group would review progress made by the trade organization at next year’s summit in Japan.

“For the first time ever, the G-20 recognized the WTO is currently falling short of meeting its objectives and that it’s in need of reform,” a U.S. official, speaking on condition of not being named, told reporters.

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Secretary Kerry Touts Virtues of 10-Year U.S.-China Business and Tourism Visas Before Presenting First Documents in Beijing, flickr

“We’ll see what reactions we get in the next few months,” to the WTO reform call in the communique, G-20 host Mauricio Macri, the president of Argentina, told reporters, adding, “there is clearly a need for dispute mechanisms that are more agile.”

No press conference

Earlier in the day, Trump canceled a planned news conference, saying the timing was not right because of the death of former U.S. President George H.W. Bush at the age of 94.

“He was a terrific guy and he’ll be missed. He lived a full life and an exemplary life,” Trump said of the late president. He did not respond to a reporter’s question about whether he regrets his past criticism of the 41st president, and his son, George W. Bush, who was the 43rd president.

“The fact that we lost a president really puts a damper on it,” Trump said of Saturday evening’s dinner.

At the table, Trump announced his plane would fly to Houston, in the state of Texas, after the return of Air Force One from Argentina, to transport Bush’s casket to Washington.

Also Read: USA Finally votes On Tuesday To Render Decision On Trump

During the meal, Xi also expressed sympathies for the passing of the former president, saying Bush, who also was once the U.S. envoy to China, had “made many contributions to U.S.-China friendship.”

Xi, according to the White House, also told Trump he is open to approving the previously unapproved $44 billion bid by American semiconductor and telecommunication equipment manufacturer Qualcomm to purchase Dutch semiconductor maker NXP should the deal again be presented to him.

The acquisition collapsed four months ago after Chinese regulators expressed anti-trust concerns. (VOA)

Next Story

‘Debt-Trap’ Ahead of Cambodian PM Visit to China Belt, Expert Alerts

China’s Embassy responded with a statement accusing the U.S. of “trying to stir things up again with the so-called trade deficit issue,” adding that bilateral relations are “not just about trade.”

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A woman uses a Chinese national flag to protect the sun as she listens to Prime Minister Hun Sen who delivering his speech during an inauguration ceremony of a sky bridge funded by China for its official use in Phnom Penh, Cambodia, Monday, July 2, 2018. In early July, Cambodia will begin its election campaigning for the 2018's general election. (AP Photo/Heng Sinith) RFA

Overdependence, coupled with loans and the cost of maintaining infrastructure, could leave Cambodia in a “debt trap” to China, an expert said Tuesday, as Cambodia’s Prime Minister Hun Sen prepares to attend a summit in Beijing on Chinese President Xi Jinping’s sweeping Belt and Road Initiative (BRI).

China will hold its second Belt and Road Forum for International Cooperation from April 25-27 to outline the implementation of the BRI, which aims to strengthen infrastructure, trade, and investment links between the Asian superpower and 154 countries and international organizations.

Hun Sen will join nearly 40 other heads of state and 150 global representatives at the event, where he will speak on “boosting connectivity to explore new sources of growth,” according to a statement issued on Monday by Cambodia’s Ministry of Foreign Affairs.

Last week, China’s economic planning agency said that the total trade volume between China and BRI nations had exceeded U.S. $6 trillion from 2013 to 2018, and that China has spent U.S. $80 billion in direct foreign investment in these countries.

Critics of the BRI say that China is using investment to push its own political agenda, and that nations involved in the initiative see their sovereignty undermined if they fall into a “debt-trap” that leaves them beholden to Beijing because they are unable to meet regular payments on loans and default.

Speaking to RFA’s Khmer Service, Carlyle A. Thayer, Emeritus Professor at the University of New South Wales, noted that Cambodia is already an estimated U.S. $3 billion in debt to China, and that it stands to take on further debt through the BRI.

“China provides most of overseas development assistance in the form of loans—these must be repaid,” Thayer said.

“In addition, although China finances major infrastructure projects that do contribute to Cambodia’s economic development, recurrent maintenance costs are left to the host country,” he added.

“Overdependence on China, coupled with loan repayments and maintenance costs, could result in Cambodia’s falling into the so-called debt trap … Chinese companies involved in providing infrastructure take possession of the infrastructure. This could hypothetically mean Chinese ownership of Cambodian ports and even airports.”

Under the BRI, China has pledged to invest in Cambodian agriculture, finance, special economic zone development, capacity building, culture and tourism, and environmental protection—though the lion’s share of funding will be set aside for infrastructure projects that include highways, bridges, ports, airports, and high-speed rail.

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Cambodian Minister of Information Khieu Kanharith accused the U.S. of releasing “fake news,” as part of a bid to drive Cambodia and China apart. Pixabay

‘No realistic alternative’

Thayer noted that Cambodia was an early backer of the initiative and said Hun Sen’s attendance at this week’s forum will reaffirm his nation’s support for the BRI, while adding political clout for China’s hosting of the event.

“Beijing expects nothing less and will continue to reward Cambodia by extending diplomatic and political support, continued economic engagement [such as aid, trade and investment], and defense cooperation,” he said.

As Cambodia’s largest trade partner, its most important foreign investor, and a major supplier of development aid, Thayer said the country “has no realistic alternative to dependence on China,” while Beijing benefits from maintaining a regional client it can count on to support its core interests.

Cambodia drew condemnation from Western trade partners and aid donors  after its Supreme Court dissolved the CNRP in November 2017, paving the way for Hun Sen’s ruling Cambodian People’s Party (CPP) to steamroll a general election in July last year widely seen as unfree and unfair.

China, which offered its full support of Hun Sen’s government following the election, typically offers funding without many of the prerequisites that the U.S. and EU place on donations, such as improvements to human rights and rule of law.

But Thayer said Cambodia’s government had “painted itself in a corner” by targeting its political opposition amid a wider crackdown that also included restrictions on NGOs and the independent media.

Since the election, the U.S. has announced visa bans on individuals seen as limiting democracy in the country, as part of a series of measures aimed at pressuring Cambodia to reverse course. The European Union, which was the second biggest trade partner of Cambodia in 2017, has said it will drop a preferential trade scheme for Cambodian exports based on the country’s election environment.

Comparing ties

Hun Sen’s planned visit to Beijing comes as the U.S. Embassy in Phnom Penh warned through social media that Cambodia’s relations with China had done little to create jobs in the country, when compared to its partnerships with the U.S.

“China is Cambodia’s largest trade partner, but this relationship is heavily skewed in China’s favor,” the post to the embassy’s Facebook page said.

“About 87 percent of trade are Chinese imports, which do not support jobs or industry in the same way Cambodia’s trade relationship with the United States or EU does. This is just one more way Cambodia has shifted from a more balanced and diverse economic approach to one more dependent on China.”

China’s Embassy responded with a statement accusing the U.S. of “trying to stir things up again with the so-called trade deficit issue,” adding that bilateral relations are “not just about trade.”

The statement noted that China had built nearly 40 highways and bridges for Cambodia and helped to construct every hydropower station in the country, while questioning how the U.S. had contributed.

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“China is Cambodia’s largest trade partner, but this relationship is heavily skewed in China’s favor,” the post to the embassy’s Facebook page said. RFA

Cambodian Minister of Information Khieu Kanharith accused the U.S. of releasing “fake news,” as part of a bid to drive Cambodia and China apart.

“We want to build a good relationship with all countries, especially the U.S., but some individuals are trying to destroy this relationship because of their ignorance,” the minister wrote on social media.

Lack of transparency

On Tuesday, Koul Panha, director of local NGO Comfrel, told RFA that Chinese money is negatively impacting the people of Cambodia because of the way it is invested.

“Chinese investment in Cambodia lacks transparency and doesn’t help to promote democracy,” he said, adding that the loans have left Cambodia “under Chinese influence both economically and politically.”

Also Read: Rare Earth Metals in Smartphones Can Now Be Tracked

Chinese investment has flowed into Cambodian real estate, agriculture and entertainment—particularly to the port city of Sihanoukville—but Cambodians regularly chafe at what they say are unscrupulous business practices and unbecoming behavior by Chinese residents, and worry that their country is increasingly bending to Beijing’s will.

Trade volume between Cambodia and China was valued at U.S. $5.8 billion in 2017, up 22 percent from U.S. $4.76 billion dollars a year earlier. China, Cambodia’s largest investor, has poured U.S. $12.6 billion into the Southeast Asian nation from 1994 to 2017. (RFA)