By Lingling Wei
BEIJING -- China indicated that a near-term trade agreement with
the U.S. has yet to be completed despite President Trump's signoff,
highlighting the unpredictability of a negotiation process that has
rattled global markets and businesses.
Mr. Trump on Thursday approved a so-called phase-one trade pact
that will scale back existing tariffs on Chinese imports and
eliminate new levies scheduled to take effect on Sunday, in
exchange for a written pledge from Beijing to buy tens of billions
of dollars worth of U.S. farm products, among other
concessions.
While Mr. Trump was "upbeat and enthusiastic about this
breakthrough," in the words of Michael Pillsbury, an adviser to the
president during the trade talks, the mood in Beijing has been
decidedly more sober.
None of China's state-owned media outlets or economic agencies
involved in the trade negotiations made any public statement during
the day on Friday about the deal endorsed by Mr. Trump. After the
markets closed in China, the State Council's Information Office put
out a notice about a press conference scheduled at 9:30 a.m. EST,
in which senior Chinese officials are expected to discuss progress
with the U.S.-China trade negotiations.
At a regular news briefing, Foreign Ministry spokeswoman Hua
Chunying referred only to how news of the agreement helped fuel a
surge in U.S. and European stocks. It also lifted Chinese shares.
Pointedly, Ms. Hua didn't confirm the existence of a deal.
Instead, she hewed to the line that Beijing has maintained
throughout the nearly two-year trade battle with the Trump
administration: "Any agreement must be mutually beneficial."
The muted reaction from Beijing underscores uncertainty over
whether the two sides can get to the finish line and produce a deal
capable of withstanding intense political blowback both in
Washington and Beijing.
President Trump, for instance, is vulnerable to criticism from
China hawks who have advocated a hardened stance toward Beijing.
Chinese President Xi Jinping, meanwhile, faces an increasingly
tricky balancing act of his own, as he seeks to stabilize a wobbly
bilateral relationship without appearing to give in to U.S.
pressure.
Ensuring what senior leaders have described as a "balanced"
agreement has been a priority for Chinese negotiators throughout
the process. Beijing walked away from a nearly completed deal in
early May because the leadership felt that the text of the
agreement was too lopsided in Washington's favor. That led the
Trump administration to ramp up its trade war with China, putting a
drag on the world economy.
Though Beijing sees the benefit in wrapping up a deal as quickly
as possible this time around, it still wants to ensure that China
doesn't appear to have been pressured into making all the
concessions. The perception of a one-sided agreement could subject
Mr. Xi to criticism from within the ruling Communist Party and
other parts of the society, Chinese officials fear.
"The U.S. side talks too much, and that's the American style,"
said Mei Xinyu, a trade analyst at a think tank affiliated with
China's Commerce Ministry. "If there is an agreement, both sides
will have to make an official announcement. Without that, anything
is possible."
Having taken control over all the levers of power in China, Mr.
Xi has staked his credibility and popularity in large part on his
image as someone willing and able to stand up to foreign pressure.
During the protracted trade battle with Washington, Chinese
officials say, he has consistently directed his lieutenants to
strike back at tariff increases imposed by the Trump
administration.
Following the collapse of trade talks earlier this year, Chinese
state media was also instructed to speak out aggressively against
what was described as American hegemony.
By the time U.S. and Chinese negotiators renewed discussions in
October with the near-term goal of reaching a limited deal centered
around agricultural trade, officials say, Mr. Xi was eager to
strike a deal to help alleviate pressure on the Chinese economy,
which faces a variety of challenges. Yet he hasn't given up his
desire to claim victory.
A U.S. proposal made in the past week, reported by The Wall
Street Journal early Thursday, appeared to offer an opportunity for
both leaders to walk away with a win. Under the proposal,
Washington would slash existing tariffs by as much as half on
roughly $360 billion of China-made goods, in addition to canceling
fresh tariffs on $156 billion in Chinese goods that Mr. Trump had
scheduled to kick in on Sunday.
In return, China would guarantee purchases of large quantities
of American merchandise, especially soybeans, poultry and other
farm products. The U.S. side would also have the right to bump
tariff rates back up to their original levels again should China
fail to carry out its pledges as part of the deal.
It is unclear how the trade deal approved by President Trump
might differ from that offer, since the White House hasn't
disclosed details on the agreement. Mr. Pillsbury, the Trump
adviser, said Thursday that the deal calls for China to buy $50
billion of U.S. agricultural goods in 2020, along with energy and
other products. In exchange, he said, the U.S. would reduce the
tariff rates on many Chinese imports, which now range from 15% to
25%. He confirmed that the deal would include a "snapback"
provision that would restore the original tariff rates if Beijing
fails to make the agreed-upon purchases.
During recent discussions, however, Chinese negotiators have
been reluctant to commit to the promised purchases of U.S. goods
and have instead insisted on a clause that would allow China to
reimpose tariffs on U.S. products should Washington fail to follow
through on its tariff-reduction promises.
"The U.S. side often complains that China doesn't follow through
on its promises," said one Beijing official involved in economic
policy-making. "Well, we don't always trust them, either."
Bingyan Wang contributed to this article.
Write to Lingling Wei at lingling.wei@wsj.com
(END) Dow Jones Newswires
December 13, 2019 09:14 ET (14:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.