How China went from courting Trump to ‘never yield’ tariff defiance
Item
1 of 3 U.S. President Donald Trump attends a bilateral meeting with
China's President Xi Jinping during the G20 leaders summit in Osaka,
Japan, June 29, 2019. REUTERS/Kevin Lamarque/File Photo/File Photo
[1/3]U.S.
President Donald Trump attends a bilateral meeting with China's
President Xi Jinping during the G20 leaders summit in Osaka, Japan, June
29, 2019. REUTERS/Kevin Lamarque/File Photo/File Photo Purchase Licensing Rights - After unsuccessfully courting Trump, Beijing takes hardline stance on trade
- China orders foreign affairs and commerce officials to cancel vacations
- Trump says China has panicked
- China tried to rally international support against tariffs
BEIJING/WASHINGTON,
April 13 (Reuters) - China has put civilian government officials in
Beijing on “wartime footing” and ordered a diplomatic charm offensive
aimed at encouraging other countries to push back against U.S. President
Donald Trump’s tariffs, according to four people familiar with the
matter.
Communist
Party propaganda officials have played a leading role in framing
China’s response, one of the people said, with government spokespeople
posting defiant clips on social media featuring former leader Mao Zedong
saying “we will never yield.”
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As
part of the “wartime” posture, the details of which are being reported
by Reuters for the first time, bureaucrats in the foreign affairs and
commerce ministries have been ordered to cancel vacation plans and keep
mobile phones switched on around the clock, two of the people said.
Departments covering the U.S. have also been beefed up, including with
officials who worked on China’s response to Trump’s first term, they
said.
The combative all-of-government approach after Trump’s
“Liberation Day"
salvo marked a hard turn for Beijing, which had tried to avoid a
spiralling trade war. For months, Chinese diplomats had tried to
establish a high-level channel of communication with Trump’s
administration to defend what China’s cabinet has described in state
media campaigns as a “win-win” trading relationship.
Optimistic Chinese observers even held out hope for a grand bargain with Trump over trade, TikTok – and perhaps even Taiwan.
This
account of how China shifted from seeking a deal to punching back with
retaliatory tariffs and threatening all-out defiance is based on
interviews with more than a dozen people, including U.S. and Chinese
government officials, as well as other diplomats and scholars briefed on
bilateral exchanges.
Four
of them also described how Beijing's diplomats have been engaging other
governments targeted by Trump tariffs, including sending letters
seeking cooperation to several countries. Longstanding U.S. allies in
Europe, Japan and South Korea have also been contacted, two people said.
Most of the people spoke on condition of anonymity to describe confidential government deliberations.
"China
is a responsible major country. We stand up against hegemony, not only
to safeguard our own rightful interests, but also to uphold the common
interests of the international community," the Chinese foreign ministry
said in a faxed statement.
It
added that, "This trade war was started by the U.S. and imposed on
China... If the U.S. really wants to resolve the issue through dialogue
and negotiations, it should stop applying extreme pressure. Any dialogue
should be established on the basis of equality, mutual respect and
mutual benefit."
The
South Korean and Japanese embassies in Washington did not immediately
respond to a request for comment on talks between their countries and
China.
After
the initial Chinese retaliation, Trump said: "China played it wrong,
they panicked - the one thing they cannot afford to do!” He has also
suggested that Beijing wanted to make a deal but “they just don't know
how quite to go about it."
U.S.
officials have also blamed China for the impasse because its
trillion-dollar trade surplus with the world is the result of what they
see as abuses of the global commerce system that haven’t been
successfully addressed through years of negotiations.
Trump
on April 2 stunned the world with massive tariffs that he said would
prevent countries like China from “ripping off” the U.S. Chinese leader
Xi Jinping ditched official caution and issued a patriotic message
casting doubt on whether American voters could bear as much hardship as
the Chinese.
The “Liberation Day” levies have since been suspended for all countries except China for 90 days. With
some exceptions,
trade of goods between China and the U.S. is now largely frozen, and
Beijing is starting to crack down on trade of services, while warning
its citizens against travel to the U.S. and putting curbs on import of
American films.
POLITE START AND A QUICK STALL
Even
after Trump was elected on the promise of high tariffs, relations with
Beijing got off to a polite start. Trump invited Xi to his inauguration,
which was eventually attended by Chinese Vice President Han Zheng.
Things started deteriorating soon after.
During
the first Trump administration, Beijing had several high-level channels
of communication, most notably between then-ambassador Cui Tiankai and
Trump’s son-in-law, Jared Kushner.
There
isn’t an equivalent channel this time around, according to a Beijing
official familiar with Sino-American ties, adding that China wasn’t sure
who spoke for Trump on their relationship.
A
Trump administration official said in response to Reuters' questions
that the U.S. had "made clear to China that we want working-level
contact to continue... but will not engage for the sake of engagement
and in dialogues that do not advance American interests."
Chinese
ambassador to the U.S. Xie Feng made unsuccessful attempts before the
election to reach Trump’s billionaire ally Elon Musk, said a U.S.
scholar who recently visited China for unofficial exchanges that Beijing
has historically used to communicate with Washington policymakers.
Musk didn’t immediately return a request for comment.
Chinese Foreign Minister Wang Yi
tried to meet
Secretary of State Marco Rubio, a China hawk who is sanctioned by
Beijing, during a February visit to New York to chair a United Nations
session but did not secure a meeting. There has been no publicly
disclosed exchange between the two sides’ top diplomats beyond a frosty
phone call in late January.
Wang
was also unsuccessful in his efforts to meet on that trip with National
Security Adviser Mike Waltz, said a person familiar with the matter.
Wang had held numerous talks with Waltz’s predecessor, Jake Sullivan,
including an exchange that led to a rare prisoner swap.
In
an interview with ABC News on Sunday, U.S. Commerce Secretary Howard
Lutnick said there have been initial discussions through intermediaries
between the U.S. and China.
"We all expect that the President of United States and President Xi of China will work this out," Lutnick said.
China's commerce ministry did not immediately respond to a request for comment on Lutnick's remarks.
Trump told reporters this week that he would be
willing to meet Xi, whom he also described as a friend. He has not detailed any specifics of a possible deal.
The
Trump administration official said the U.S. had repeatedly asked
Chinese diplomats if Xi would request a phone call with Trump and “the
answer has consistently been ‘no.’”
International
relations expert Zhao Minghao at Shanghai’s Fudan University said such
outreach “totally doesn’t work in terms of the Chinese policymaking
system.”
“For the Chinese side, usually there is agreement and work on the working level and then we can arrange the summit,” he said.
The way “countries which have tried to negotiate
have been treated so far
this year also certainly has not done much to encourage China to sit
down at the table,” said Lynn Song, Chief Economist for Greater China at
ING Bank.
There
are some ongoing conversations between lower-level officials on both
sides, according to one Chinese and three U.S. officials, though some
working groups put in place by the Joe Biden administration to deal with
commercial disputes, as well as treasury and military issues have been
frozen.
LESSONS LEARNED
While
many countries were hit by U.S. tariffs this month for the first time,
China honed its response during previous bouts of the Sino-American
trade war.
Drawing
on lessons from Trump’s first term, China created a retaliatory
playbook that includes tariffs as well as restrictions on about 60 U.S.
companies and curbs on exports of rare earths.
The
effort was a result of weeks of preparations by Chinese government
officials who had been tasked with studying Trump’s policies and
suggesting countermeasures that could be gradually scaled up, according
to two people familiar with the situation.
Xi
opted for a strong response, hitting back with across-the-board levies
even before Trump’s announced tariffs went into effect. The duties were
announced shortly before Wall Street opened on April 4 - a public
holiday in China. U.S. equities dropped sharply lower.
One
Chinese official briefed on the deliberations described the unusually
swift response as akin to COVID pandemic-era decision making that was
carried out without the customary sign offs by all relevant departments.
Some Chinese opinion leaders appeared to suggest off-ramps in the trade war.
Ren
Yi, a political blogger with nearly 2 million followers on the Weibo
microblogging platform said in an April 8 post that countermeasures “do
not require a broad increase in tariffs on American goods.”
Ren,
whose grandfather was a prominent reformist leader in the 1980s,
suggested targeted moves like suspension of fentanyl cooperation and
further restrictions on agricultural imports and movies.
China’s
finance ministry said Friday that with tariffs on U.S. goods now at
125%, it will stop matching any future hikes in duties by Washington,
whose tariff strategy it
branded a “joke”.
‘NEVER YIELD’
China’s
foreign ministry has summoned many of the heads of its overseas
missions back to Beijing for a special meeting held this week to
coordinate the response, according to two Beijing-based diplomats.
China
has also sent formal letters to government officials of other countries
pressured by Trump to engage in trade negotiations.
The
letters, which were described to Reuters by four people familiar with
their contents, outlined the Chinese position as well as the need for
multipolarity and for countries to stand together. The messaging also
included criticism of U.S. policy that echoed China's public statements.
China
has approached some G20 governments with wording for a joint
declaration voicing support for the multilateral trading system, an EU
diplomat told Reuters.
But
the diplomat said that the messaging did not address concerns also held
by non-U.S. governments about Chinese overcapacity, its subsidy regime
and alleged unfair competition.
Beijing has said those concerns are overblown and that the rise of its high-tech industries is due to its
comparative advantages and benefits the world.
China
is also heavily focused on the domestic reaction to the tariffs, with
social media users this week widely reposting an April 7 editorial in
the official People’s Daily warning against panic.
China has also recently started encouraging households to
spend more
and has dramatically changed its language about domestic consumption.
Beijing is aiming to shift the engine of growth from exports to
consumers at a time when the economy remains hobbled by a crisis of
failed real estate development.
“The real battlefield is on the domestic front, rather than bilateral negotiations,” said Zhao of Fudan University.
Chinese
officials also published on Musk’s X platform a clip of Chairman Mao
giving a speech in 1953 - the last time the U.S. and China were in
direct military conflict during the Korean War.
In the clip, Mao, whose oldest son died in the war, says peace is up to the Americans.
“No matter how long this war is going to last, we’ll never yield,” he said. “We’ll fight until we completely triumph.”
Reporting
by the Beijing, Washington, Berlin and Hong Kong newsrooms; Editing by
Antoni Slodkowski, Kevin Krolicki and Katerina Ang