Tuesday, June 04, 2019

CPE Working Group on Empire: Part I--A Critical Reading of China's State Council [国务院] White Paper "China's Position on the China-US Economic and Trade Consultations" [关于中美经贸磋商的中方立场]

(Pix © Larry Catá Backer 2019)

Every great state has several paths among which it can choose, each consist with its governing ideology and culture. One might imagine, for example, that over the last several centuries in Russia, those paths tilted it east toward the Stepppe cultures and Mongolia, or the south toward Central Asian Islam and the Ottoman Turks, or west toward (northern) Europe and the Prussians.  The results are quite distinct Rissia's now constantly in tension with each other and manifested in shifting strategies for identifying, valuing, and interacting with the non-Russian world (including the non-Russian world within Russia).

For the Americans the choice is quite different, between socio-racial hierarchies and isolation within a continent sized nation, or toward the embrace of the ideal of the United States as the embodiment of the world and all of its cultures, in both cases providing a basis for global leadership.  In the 20th and 21st centuries these tilts produced both the Washington Consensus and contemporary economic globalization and variations of America First, both under the leadership of the United States as the global vanguard nation. 

Ironically, China's paths appear along lines similar to those facing the United States, though of course with Chinese characteristics. On the one hand, Chinese paths point inward toward a self referencing and self contained unit that deals with the rest of the world through carefully controlled entry and exit points and from which it develops paths toward relations of use to it. The current manifestation (and variation) of this path is the Belt and Road Initiative, perhaps. The other cluster of paths point outward toward a more robust integration in the world in which though relations are hierarchical, they tend to be open and interactions are deeply integrated.  The "Go Out" Policy and the process of Reform and Opening Up (at least practiced for a generation) might point in this direction. 

For both China and the United States, then, their respective vanguard "leadership core" [领导核心] have sought to manage the choice of paths grounded in a calculation of the respective interests of each state (within a global system in which isolation is no longer an object) and constrained by their respective governing ideologies. The choice on both sides had been stable until the time of the current "leadership core" [领导核心].  Over the past several years both have sought to rethink the parameters of what had been a dynamic but relatively stable relationship as each embraced the idea that they both operated at the moment of the start of a great "new era" [新时代].  This New Era [新时代] was to be manifested in the most important sector of national engagement--its economic model within globalization. 

It ought to come as no surprise (at least in retrospect), that the flash point for choosing the new path in the "new era" [新时代] would find expression at the core of the framing relations that drives global economic activity--the China-US economic and trade negotiations. It is here that both states have been playing out the process (mostly internal and opaque except to the leadership and their servants) of choosing their respective paths consistent with their ideologies which in turn will define not just their bilateral relations, but also the way in which both states approach the world in the context of a globalization that cannot be avoided.  China, especially, appears to face a choice.  Having spent the greater part of the time it had embraced the "Reform and Opening Up" period deeply integrating its economy with that of the world--a choice accelerated with China's Accession to the WTO and its more robust engagement in the institutions of then dominant global economic principles--China appears now to be considering the value of a new path. That path would be grounded on the disentangling of its generalized connection with an unstructured environment of production and substituting in its stead a much more focused and directed set of streams of activity over which it will preside.  To that end, the principal task is to disentangle the Chinese and U.S. economies.  And the trade negotiations provide the perfect cover for the development, articulation and implementation of that choice (formally connected to the receding system but effectively substituting another). In that respect, of course, the Chinese are also providing substantial (and critically necessary) support to the leadership core of the United States who, within the structures of their own governing ideology have also faced this choice and appear as well willing  to follow suit.

The Working Group on Empire (WGE) of the Coalition for Peace and Ethics looks to study and theorize the construction of systems of management and control of human activities, that is of empire in the 21st century. In a series of essays that will be made available form time to time (CPE EmpireSeries) WGE considers the re-construction of Empire shorn of its old glosses (which elites everywhere have been taught to conflate with the form and thus to amalgamate a normative judgment about technique with an evaluation of the form of empire) in the context of the now heated contest for the control of the structures of global economic trade within which these new forms of empire might be developed. WGE is composed of members of the Coalition for Peace and Ethics of whom Flora Sapio, Larry Catá Backer, and James Korman have taken a leading role; its work product is collaborative.

This post is the first of a series of four (4) posts in which the CPE WGE examine the question of paths to empire performed through the choices being made by the U.S. and Chinese leadership cores [领导核心] within the theater of the U.S.-China bilateral trade negations.  To that end it critically examines China's State Council [国务院White Paper, entitled China's Position on the China-US Economic and Trade Consultations ; <关于中美经贸磋商的中方立场>; 原中国语言版本. The White Paper was distributed by the State Council Information Office on Sunday 2 June.  

For this Part I the critical analysis is embedded in the English text of the White Paper Annotation in RED (original in black).  The original Chinese version [关于中美经贸磋商的中方立场]; then follows--原中国语言版本如下印刷.  
Part 1 may be accessed HERE.
Part 2 may be accessed HERE.
Part 3 may be accessed HERE.

Part 4 may be accessed HERE.

(Pix © Larry Catá Backer 2019)


A Critical Reading of China's State Council [国务院] White Paper "China's Position on the China-US Economic and Trade Consultations" [关于中美经贸磋商的中方立场] 

CPE Working Group on Empire


What follows is a critical reading of the State Council White Paper.  We avoid free standing analysis in this Part I.  Rather, in an effort at more systematic examination, analysis is embedded into the structure and form of the White Paper itself.    Part II, which follows, then develops the bigger picture insights in more traditional essay form. The Working Group on Empire analysis appear in RED (the original White Paper appears in black).


(June 2019)
The State Council Information Office of
The People’s Republic of China



The China-US commercial relationship serves as both the ballast  and the propeller of the overall bilateral relationship. At stake are the fundamental interests of the two peoples, and the prosperity and stability of the world. Since the establishment of diplomatic relations between China and the US, bilateral trade and economic relations have come a long way, with expanding fields of cooperation at higher levels. A mutually beneficial and win-win relationship with strong complementarity and interlinked interests has been forged, benefiting not only the two countries but also the entire world.

 It is always useful to place an argument--or an issue--in perspective.  But here the perspective is not ideological but practical. Thus the White Paper starts with a practical "win-win" imagery--the ballast and propeller images (though it is not clear who the Chinese meant to serve as the propeller  and how the ballast.  It is possible that the invitation was for each person to read that choice into the paragraph for herself (and tho their detriment).  This propeller and ballast imagery is then tied to the interests of the Chinese and American peoples, and to global prosperity and stability.  The idea, of course, is that together the U.S. and China are responsible, if only because of their size and power, for determining economic and political ordering and that is is a function of the bilateral relationship--and more particularly getting it "right." This is then historically situated (bilateral relations "have come a long way"). Yet that "practical" veils a number of principles through which China would manage the form and parameters of discourse by grounding it in Chinese ideological principles and positions. First, the statement of the objective ("win-win," "complementarity," and "mutually beneficial") sit at the core of China's "new era" principles for economic relations (On the Internationalization of China's "New Era" Theory). Second, it seeks to limit the extent of the relationship to economics--"commercial relationship,"  and "trade and economic relations"--veil the critical importance of the social and cultural elements which have also defined trade relations. Third, "complementarity" is meant to evoke images of a set of puzzle pieces that need only be fit together to make a nice and complete image with no elements of opposition or overlap.  Fourth, the intimation is that complementarity is a key element not just in the arrangement of bilateral relations but in the way the two states will--as equals--reshape the world in teir respective images.  The principle notion advanced in the key opening paragraph, then, is one of empire, or rather the arrangement of complementary but not overlapping empire.  
Given the differences in stage of development and economic system, it is inevitable that the two countries will experience differences and friction in their commercial cooperation. The history of China-US trade and economic relations has seen twists and turns and difficult situations. By adopting a rational and cooperative attitude, the two countries have managed to resolve previous conflicts, bridge differences, and render the bilateral commercial relationship more mature through dialogue and consultation. 

Certain elements of the Chinese vanguard have been using the "developing state" discursive trope quite successfully for a generation. They continue to deploy it.  Also lurking here is the aura of another quite useful trope--that of the need to undo the effects of unequal treaties of the 19th and early 20th century (at least to the extent that China appeared, by its own reckoning) to be on the wrong side of the unequal treaty. Both are deployed here as well--to set the stage for the development of the frame of reference later used to justify Chinese negotiating positions.  This is not a criticism but rather an acknowledgement that discursive trope at at their most effective when they avoid the invitation to greater reflection.  The addition of the "rational and cooperative attitude" principle will make it possible for a later building of the argument that China's position is rational and cooperative and by definition the American position (being contrary to it) is not.  Again, an excellent starting point for building a negotiating position but hardly one that can be understood as doing more than building a persuasive argument by seeking to control the parameters of argument making.
Since it took office in 2017, the new US administration has threatened additional tariffs and other measures and provoked frequent economic and trade friction with its major trading partners. In response to the economic and trade friction unilaterally initiated by the US since March 2018, China has had to take forceful measures to defend the interests of the nation and its people. At the same time, committed to resolving disputes through dialogue and consultation, China has engaged in multiple rounds of economic and trade consultations with the US in an effort to stabilize the bilateral commercial relationship. China’s position has been consistent and clear – that cooperation serves the interests of the two countries, that conflict can only hurt both, and that cooperation is the only correct choice for both sides. Concerning their differences and frictions on the economic and trade front, China is willing to work together with the US to find solutions, and to reach a mutually beneficial and win-win agreement. However, cooperation has to be based on principles. There are bottom lines in consultations. China will not compromise on major issues of principle. China does not want a trade war, but it is not afraid of one and it will fight one if necessary. China’s position on this has never changed.

And here it is--the first objective of the first two paragraphs is here identified: the irrational and uncooperative (and unreasonable) position of the Americans by reference to a characterization of the tactics they have used in the course of negotiation. The position is even more deliciously effective through the ploy of appearing to separate the actions of the Obama from the Trump presidencies. To that extent, of course the, White Paper appeals to perceived prejudices among the American leadership elites (especially those out of office, and their media class confederates). There is irony here--the Chinese leadership core has long despised and feared the Obama Administration both for its relentless reminders of China's position with respect to Western human rights, but also for its almost successful efforts to implement a multilateral trade regime (TPP) that would have put China at a severe disadvantage ("The Trans-Pacific Partnership: Japan, China, the U.S. and the Emerging Shape of a New World Trade Regulatory Order"). But they have come to view the weakness of the Trump Administration (a perceived inability to control the outlets for mass mobilization) as a means to turn the tables on the Americans. And yet, to some large extent, there is no real break between the Obama and Trump Administrations with respect to core positions on critical issues of bilateral trade. Still, the White Paper, correctly from a strategic perspective, seeks to characterize the use of tariffs as aggressively imposed on an innocent developing state that then required (as national honor and sovereignty compel) the taking of countermeasures. Lastly, the White Paper uses this paragraph to help develop the discursive framework for positioning China on the warfare high ground--by asserting that the "trade war" was provoked by the irrational and unprincipled Americans and that the resulting conflict will from the Chinese side fall within Western notions of just war.

But the real objective is to continue to develop the oppositional binaries that will propel the arguments and be filled in with the collection of facts that constitutes the bulk of the White Paper. The first one has already been noted: American aggression versus Chinese defensive measures (apparently detached form negotiation and oblivious to the characterization of differences between objectives and tactics toward an end--but this is fair in creating negotiating positions). The second one is the rationality versus brute force binary--Chinese leaders are "committed to resolving disputes through dialogue and consultation;" their counterparts are committed to unilateral diktat. This is measured by the Chinese willingness to talk versus the American lust to act. The third is that of consistent and clear China versus an inconsistent and ambiguous U.S. (of course this is belied by the strategic missteps of the parties that led to the break down of negotiations in May, but inconvenient facts might be recharacterized or moved to the side when it suits--again fair in negotiation but dangerous for analysis).

All of this, of course, to get to the position that was formulated to justify Chinese actions that provoked the breakdown of trade talks that were apparently on the cusp of completion: the quite interesting and to some extent singular definition of cooperation. The White Paper stresses "cooperation has to be based on principles . . . [with] bottom lines in consultations. . . [but also grounded in normative positions "major issues of principle" with respect to which ] China will not compromise." As a logical proposition the statement may not be as glorious as the sound it makes when read aloud. Still, it is a glorious mellifluous statement with a cloudy context (what principles?; what is cooperation if it means that the U.S. is invited to compromise on its principles so that those of its negotiating partner may be preserved? etc.). Still one might welcome the White Paper if only to provide the principles against which negotiating stances can be measured.
To provide a comprehensive picture of the China-US economic and trade consultations, and present China’s policy position on these consultations, the Chinese government hereby issues this White Paper.

With this critical foundation, of course, it is now possible for the White Paper to build its argument.  To that end the White Paper itself serves to fill in with facts the discursive and normative structures built in the  Preface.  Indeed, the remainder of the White Paper can be understood as one long footnote to the Preface.  Let's test that hypothesis next. But it is more than that. An important aspect of the White Paper is directed outward to the global stakeholders who may judge the legitimacy of the negotiations (and intervene to protect their own interests, or to choose sides). Certainly if the United States must negotiate against the Chinese state apparatus and with its own allies and internal opposing factions, then others will do China's work for it.  A good strategy to use an opponent's weakness against it. AT the same time,t eh White Paper must also be prepared with a mind to internal conversations in China.  First, it must make the case that the choices the Chinese position takes represents  positions that are wholly consistent with the Chinese Communist Party Line.  Second, it must use the opportunity to align that reading of the CPC Basic Line with New Era ideology as it is being developed.  And lastly, it must make the case for alignment between the Chinese position and core policy respecting the Belt and Road Initiative, the program of Yuan internationalization, and China's position respecting the policy goals for Chinese leadership in the Global order. It is to those ends--internal and external, that the White Paper is crafted. For those purposes the Americans must appeal to be selfish, while their opponents are selfless; the Americans must appear to be aggressive while their opponents appear defensive; the Americans must appear to be unprincipled with their opponents appear to uphold the new era version of the great principles of a global order; the Americans must appear to be unreasonable and uncooperative while their opponents appear to be constant and cooperative and pacific but strong in defense. But ultimately the Chinese position must appear to develop the international al elements of Socialism with Chinese characteristics whose developments will be possible only under the leadership of China (just as the development of the pre-2016 global order was necessarily driven by the Americans). .

I. Economic and trade friction provoked by the US damages the interests of both countries and of the wider world

 Trumpeting “America First”, the current US administration has adopted a series of unilateral and protectionist measures, regularly wielded tariffs as a “big stick” and coerced other countries into accepting its demands. The US has initiated frequent investigations under the long-unused Sections 201 and 232 against its main trading partners, causing disruption to the global economic and trade landscape. Specifically targeting China, in August 2017 it launched a unilateral investigation under Section 301. Turning a blind eye to China’s unremitting efforts and remarkable progress in protecting intellectual property and improving the business environment for foreign investors, the US issued a myriad of slanted and negative observations, and imposed additional tariffs and investment restrictions on China, provoking economic and trade friction between the two countries. 

The White Paper is quick to take advantage of some mindlessness that its authors correctly extract from what passes for the discussion among Western elites and their mechanisms for mass education (the press and social media including specifically its opinion sections).   That mindlessness centers on the demonization of the America First Initiative and its depiction as the bad opposite to the benignly multilateral Belt and Road Initiative (as the transformational new era version of the Reform and Opening Up Initiative of prior leadership cores for an era that is now said to have passed). The White Paper is right to do this.  One ought to press all advantages against an opponent in negotiation.  Lamentably this is only a negotiating stance--rigorous analysis would question the space that separates--conceptually and operationally--the Belt and Road Initiative (BRI)  and the America First Initiative (AFI).  The paragraph required little more than  cheery picking some of the more outlandish claims among the Western ruling classes and now repackaged and thrown back into the faces of the American negotiators.  Bravo! But as reality it has certain strong weaknesses that the U.S. might eventually exploit. The American impatience and willingness to speak about Chinese implementation of its intellectual property obligations is longer than that of the Chinese negotiating trade relations since 2016. Indeed this was as much an Obama era issue as a Trump Administration one. Yet that history is nicely reordered for purposes of the White Paper's argument. And, of course, though they make for effective rhetorical J'accuse, the unsupported reference to "slanted and negative observations" does little to advance progress--but then it is not meant to.

Box 1: China’s technological innovation is based on self-reliance. Accusing China of intellectual property theft and forced technology transfer is utterly unfounded.
China is an innovative and diligent nation. It has created a highly-sophisticated civilization and contributed significantly to human progress over the course of 5,000 years. Since the founding of the People’s Republic in 1949, and in particular since the beginning of reform and opening up in 1978, China’s scientific and technological undertakings have passed through a series of phases. They started from a difficult beginning, forged ahead in the course of reform, and have now achieved multiple breakthroughs featuring a variety of innovations. These achievements have won worldwide recognition. Historical records confirm that China’s achievements in scientific and technological innovation are not something we stole or forcibly took from others; they were earned through self-reliance and hard work. Accusing China of stealing intellectual property to support its own development is an unfounded fabrication. 
China is fully committed to intellectual property protection. It has established a legal system for the protection of intellectual property that is consistent with prevailing international rules and adapted to China’s domestic conditions. China values the leading role of judicial measures in protecting intellectual property, and has achieved impressive results. The understanding of the importance of intellectual property among the general public and business community in China has increased, the value of royalties paid to foreign rights-holders has risen significantly, and the number of intellectual property applications and registrations has surged.
The effective impact of China’s intellectual property protection has won broad international recognition. Former WIPO Director General Arpad Bogsch spoke highly of China’s legal framework for intellectual property protection, noting that China’s achievements are “unmatched in the history of intellectual property protection”. The US Chamber of Commerce recognized that China is making concrete progress in creating an intellectual property environment appropriate to the 21st century.[1] In its 2018 China Business Climate Survey Report, the American Chamber of Commerce in China noted that among the main challenges facing its member companies operating in China, concern over intellectual property dropped from 5th place in 2011 to 12th place in 2018. An article in The Diplomat predicted that China will become a leader in global intellectual property. Many of the concerns raised by foreign firms doing business in China have already been addressed through judicial reform and a strengthened enforcement mechanism.
Respecting the laws of the market economy, China has been actively improving the policy system for innovation, continuously increasing investment in research and development, accelerating the development of innovators, and strengthening international cooperation on technological innovation in an all-round way. In terms of some key innovation indices, China is already among the world’s leading players. As China continues to witness a series of major scientific and technological achievements, its industries are gravitating toward the middle and high end, and the country’s international influence is markedly increasing. In 2017, total R&D investment in China reached RMB1.76 trillion, ranking second in the world. The number of patent applications reached 1.382 million, ranking No. 1 in the world for the seventh consecutive year. The number of invention patents granted reached 327,000, up by 8.2 percent year-on-year. China ranks third in the world in terms of valid invention patents held.[2]
China has always pursued international technical cooperation with mutual benefit and win-win as the basic value orientation. China’s economic development has benefited from international technology transfer and dissemination. International holders of technology have also reaped enormous benefits from this process. China encourages and respects voluntary technical cooperation between Chinese and foreign firms based on market principles. It strongly opposes forced technology transfer and takes resolute action against intellectual property infringement. Accusations against China of forced technology transfer are baseless and untenable.

Text boxes have become an essential tool of business and state elements in drawing attention to a small thing that can then stand for something more universal. All self respecting institutional actors now use this device--and use it to death, it seems. This is not a criticism of this White Paper so much as an observation that both Chinese and U.S. administrators cannot resist this device. . . and that is a pity. This text box is meant to make the case against the now decades old argument from Western nations that Chinese enterprises have sticky fingers with respect to intellectual property. The claim is a reasonable one--that having invested a generation of students studying in the West, that China is quite capable of developing its own intellectual property and need not engage in activities that so irritate western competitor entities (and the states in which they reside). Moreover, the Whte Paper suggests that Chinese history itself suggests that Chinese culture has always been a technology driver (of course this is an argument that then is impossible to align with the "we are a developing state and need to play by different rules argument) but that is for negotiation opponents to sort out. The text box is used as well to again underline the "win-win"principle now in context and to declare that forced technology transfers are not in China's toolkit--an odd argument since forced technology transfers were in all developed states' toolkits for at least a generation. The temptation to over argue a point does not serve this textbox or the White Paper well--though there is a bit too much of it here. n the other hand, over-argument may be necessary to send the appropriate signals to perceived reader stakeholders. So it is not clear who whom which portions of the text box (and the White Paper) are written.

Turning a blind eye to the nature of the economic structure and the stage of development in China and the US, as well as the reality of the international industrial division of labor, the US insists that China’s “unfair” and “non-reciprocal” trade policies have created a trade deficit in bilateral commercial exchanges that constitutes “being taken advantage of”, leading to unilateral imposition of additional tariffs on China. In fact, in today’s globalized world, the Chinese and American economies are highly integrated and together constitute an entire industrial chain. The two economies are bound in a union that is mutually beneficial and win-win in nature. Equating a trade deficit to being taken advantage of is an error. The restrictive measures the US has imposed on China are not good for China or the US, and still worse for the rest of the world. 

Here again the "poor China" argument is deployed.  It probably has more traction within China than outside of it.  This argument certainly would not garner much sympathy in Africa or Latin America.  But still, it has a long and distinguished history among the Chinese vanguard and those sorts of things are difficult to abandon--just ask the Americans who also tend to find it hard to drop arguments that no longer serve a purpose and are at odds with reality.  The Americans rightly turn a blind eye to the economic structure and stage of development in China precisely because they believe that both are in an advanced stage.  Of course, the White Paper has a problem--the Chinese Communist Basic Line--as well as the General Program of the Chinese Communist Party Constitution continue to advance the line of development in terms of Chinese development having a long way to go.  That CPC Basic Line constrains the discursive tropes of the White Paper is especially apparent here.  That Basic Line, though, is dynamic, and part of the underlying argument is meant to suggest the way that the New Era recasting of the Basic Line itself strengthens and changes the Chinese position (and thus explains the invocation of principle as the cause of the rejection of the tentative agreement reached in May 2019).  One is reminded of an old text:
Certain propositions advanced by a Marxist-Leninist Party during a certain period and under certain conditions have to be replaced by new propositions, because of changed circumstances and times. Failure to do so will result in the error of dogmatism and losses to the cause of communism. But under no circumstances is a Marxist-Leninist Party allowed to use the pretext of certain new social phenomena to negate the fundamental principles of Marxism-Leninism, to substitute revisionism for Marxism-Leninism and to betray communism ("The Differences Between Comrade Togliatti and Us," Editorial in Renmin Ribao, December 31, 1962).
But that also suggests that this is a paragraph with far more resonance within China than outside of it. As for the rest, there is much room for argument--and that is specifically the object to which it is deployed.  It is for the Americans to counter much of the factual assertions made--and there is room for such arguments.  But still, the Chinese make the best case they can within the logic of their ideological world view.
One last point--the assertion that the American and Chinese economies are "highly integrated and together constitute an entire industrial chain" is both true as a historical matter but also may be passing as the New Era comes into its own. The actions of both China and the United States has done much over the last 12 months to disintegrate the unitary production chain that marked the golden age of the Reform and Opening Up period. And that makes sense in the era of Belt and Road Initiative where, logically, such an integration and unitary production chain is both dangerous and irrelevant--to both states. Thus here one finds an argument form history meant to produce an aura of unity that in fact is quickly dissolving. To the extent that this misleads the American negotiators, it will be interesting to see in what direction.

Box 2: The Chinese and American economies are interlinked, and bilateral trade and investment are mutually beneficial
China and the US are each other’s largest trading partner and important source of investment. In 2018, bilateral trade in goods and services exceeded US$750 billion, and two-way direct investment approached US$160 billion. China-US commercial cooperation has brought substantial benefits to both countries and both peoples.
According to China Customs, the trade in goods between China and the US grew from less than US$2.5 billion in 1979 when the two countries forged diplomatic ties to US$633.5 billion in 2018, a 252-fold increase. In 2018, the US was China’s largest trading partner and export market, and the sixth largest source of imports. According to the US Department of Commerce, in 2018 China was the largest trading partner of the US, its third largest export market, and its largest source of imports. China is the key export market for US airplanes, soybeans, automobiles, integrated circuits and cotton. During the ten years from 2009 to 2018, China was one of the fastest growing export markets for American goods, with an annual average increase of 6.3 percent and an aggregate growth of 73.2 percent, higher than the average growth of 56.9 percent represented by other regions in the world.[3]
Trade in services between China and the US is flourishing and highly complementary. The two countries have conducted extensive, in-depth, and mutually-beneficial cooperation in tourism, culture, and intellectual property. China is the largest destination for US tourists in the Asia-Pacific and the US is the largest overseas destination for Chinese students. According to Chinese figures, two-way trade in services rose from US$27.4 billion in 2006, the earliest year with available statistics, to US$125.3 billion in 2018, a 3.6-fold increase. In 2018, China’s services trade deficit with the US reached US$48.5 billion.
Over the past forty years, two-way investment between China and the US has grown from near zero to approximately US$160 billion, and this cooperation has proved fruitful. According to MOFCOM, by the end of 2018 accumulative Chinese business direct investment in the US exceeded US$73.17 billion. The rapid growth of Chinese business investment in the US has contributed to local economic growth, job creation, and tax revenues. According to MOFCOM, the paid-in investment by the US in China was US$85.19 billion by the end of 2018. In 2017, the total annual sales revenues of US-invested companies in China were US$700 billion, with profits exceeding US$50 billion.
Therefore, if trade in goods and services as well as two-way investment are taken into account, China-US trade and economic relations are mutually beneficial, rather than the US “being taken advantage of”.

Ahhh, yet another text box. . . .what now? Yes, the hstorical argument about the interlocked economies of the U.S. and China. To some extent that is and will remain true. It will remain true to the extent that both economies will continue to invest in the other and to own parts of the economic machinery of the other. But the long term arc of development now suggests a trajectory of disintegration. BRI will turn Chinese attentions toward its Silk Roads and the protection and enhancement of its economic production chains--with producers and consumers to development along these routes. America First suggests a need for U.S. companies to hedge--with movement to South Asia (other than Pakistan now increasingly economically bound to China) and East and Southeast Asia. Americans are moving aggressively to strip Latin America of a too energetic encounter with BRI (though that strategy may ultimately fail). Yet even as the two states disentangle it will be true enough that they will not become strangers. It is likely, though, that the character of their mutual inter-investment will likely change. It is to a determination of the character of that change that the leadership cores of both states appear to be devoting themselves.

But then, why the effort in the White Paper to make this case? One reason may be hinted at in the end of the text box--the White Paper may be seeking to make a fact based case for its principle of mutually beneficial relations at the heart of the Chinese framework of international trade and global production. Yet trade among these two states that is measurable in billions of dollars are not necessarily stable nor impervious to change.


(I) The tariff measures the US imposed harm others and are of no benefit to itself

The US administration has imposed additional tariffs on Chinese goods exported to the US, impeding two-way trade and investment cooperation and undermining market confidence and economic stability in the two countries and globally. The US tariff measures lead to a decrease in the volume of China’s export to the US, which fell by 9.7 percent year-on-year in the first four months of 2019,[4] dropping for five months in a row. In addition, as China has to impose tariffs as a countermeasure to US tariff hikes, US exports to China have dropped for eight months in a row.[5] The uncertainty brought by US-China economic and trade friction made companies in both countries more hesitant about investing. China’s investment in the US continues to fall and the growth rate of US investment in China has also slowed down. According to Chinese statistics, direct investment by Chinese companies in the US was US$5.79 billion in 2018, down by 10 percent year-on-year.[6] In 2018, paid-in US investment in China was US$2.69 billion,[7] up by only 1.5 percent year-on-year compared with an increase of 11 percent in 2017. With the outlook for China-US trade friction unclear, the WTO has lowered its forecast for global trade growth in 2019 from 3.7 percent to 2.6 percent.[8]

This paragraph appears to appeal to the U.S. allies and to those portions of the American leadership class who have devoted so much energy to undermining current negotiations in hopes, perhaps, that if they can be stretched out for four years a new (Democratic) administration will be able to "make things right. That is a dangerous calculus, assuming it is plausible. Again, the White Paper continues the discursive trope--American aggression followed by Chinese reluctant defense. And it continues the argument structure that tends to detach the tariffs from the negotiations themselves. That is, tariffs here are depicted as an objective rather than as a tool. And to the extent it is acknowledged as a tool, it is one that is viewed as disproportionate and misdirected causing harm to the innocent. Here one is confronted with a fundamental difference (at least formally, it is less clear when one rigorously considers the actions of either leadership core) in approach to the way in which global trade regimes ought to be driven. And yet, beyond the bilateral trade negotiations, there appears to be a substantial convergence around the aggressive use of markets as a tool for disciplining production within increasingly more visible divided global production chains (From Markets as Governance to Governance Through Markets). The White Paper continues to advance the line that theirs is a defensive rather than an offensive use of such techniques. But first it is not clear that this distinction makes a difference, and second it is not clear where one can in principle draw the line between offense and defense. If nothing else, the U.S.-Soviet arms race of the second half of the 20th century taught us all that lesson.

For all this, this is a brilliant tactic. It deploys in the economic context the same sort of cluster of arguments and principled overtones that have been refined in the context of Israeli actions against Palestinians and their defenders in the Palestine-Israel War(s). It combines (1) (dis)proportionality analysis (so dear to the hearts of factions of Western leaders) with (2) unequal bargaining partners (a point made throughout the White Paper, though one hard to square with the new fundamental contradiction announced in the 19th CPC Congress Report) and (3) an assessment of self harm and harm to innocents (children mostly in the Palestine Israel case--other countries that China has in its sights for its BRI closed loop global production system in the present case). It suggest the way that the actions are disproportionate, cause more harm to the U.S. than to the Chinese and has collateral effects that are negative. Worse, it appears to have global effect--thus the innocent suffer from the arrogance of the use of tariffs as a (mean spirited) tool. The numbers are interesting but ultimately not persuasive. While it suggests a change in the quantity of bilateral trade it does little to suggest where the investment funds have gone. That, of course, is what ought to be worrisome for the White Paper authors. It is not, as they try to intimate, that a reduction of US-China trade inevitably produces a reduction in global trade; perhaps that reduction produces gains somewhere else that the numbers the White Paper offers its readers do not capture. But that is not the White Paper's problem. It is again for the American negotiators to deal with this quite useful negotiating stance.

(II) The trade war has not “made America great again”

The tariff measures have not boosted American economic growth. Instead, they have done serious harm to the US economy.

It is here that the White Paper takes up the  argument made earlier that the tariffs are more harmful to the United States than to China. The facts produced are meant to drive home that point. It is also the place where the White Paper can make a more subtle claim about the value of the Reform and Opening Up Initiative and the inevitable strength of the BRI.  More importantly, perhaps, this section, for internal consumption, is meant to remind readers of the consequences of  the "two vastly different kinds of class dictatorship, bourgeois dictatorship and proletarian dictatorship" ("The Differences Between Comrade Togliatti and Us," Editorial in Renmin Ribao, December 31, 1962).

First, the tariff measures have significantly increased production costs for US companies. The Chinese and US manufacturing sectors are highly dependent on each other. Many American manufacturers depend on China’s raw materials and intermediary goods. As it is hard for them to find good alternative suppliers in the short term, they will have to bear the costs of the tariff hikes.
Second, the tariff measures lead to domestic price hikes in the US. The import of value-for-money consumer goods from China is a key factor behind the long-term low inflation in the US. After the additional tariffs were imposed, the final selling price of Chinese products increased, leaving American consumers effectively bearing some tariff costs. According to research by the US National Retail Federation, the 25 percent additional tariffs on furniture alone will cost the US consumer an additional US$4.6 billion per year.[9]
Third, the tariff measures have an impact on US economic growth and people’s livelihood. A joint report by the US Chamber of Commerce and the Rhodium Group in March 2019 showed that, under the impact of China-US economic and trade friction, US GDP in 2019 and the next four years could decrease by US$64-91 billion per year, about 0.3-0.5 percent of total US GDP. If the US imposes 25 percent tariffs on all Chinese goods exported to the US, US GDP will decrease by US$1 trillion in the next ten years cumulatively.[10] According to a research report in February 2019 by Trade Partnership, an American think-tank, if the US imposes 25 percent additional tariffs on all imported Chinese goods, US GDP will decrease by 1.01 percent, with 2.16 million job losses and an additional annual burden of US$2,294 on a family of four.[11]
Fourth, the tariff measures lead to barriers to US exports to China. The 2019 State Export Report, published by the US-China Business Council on May 1, 2019, stated that in the ten years from 2009 to 2018, US exports to China supported over 1.1 million jobs. The Chinese market continues its importance to US economic growth. Forty-eight states of the US have increased their goods exports to China during the last decade – 44 of them by double digits – while in 2018, when economic and trade friction worsened, only 16 states increased their goods exports to China. Thirty-four states exported fewer goods to China, with 24 of them seeing a double-digit decrease. The Midwestern agricultural states were hit particularly hard. Under tariff measures, exports of American agricultural produce to China decreased by 33.1 percent year-on-year, including a 50 percent drop in soybeans. US businesses are worried that they might lose the Chinese market, which they have been cultivating for nearly 40 years. 

The bulk of this section is devoted to an exposition of what might be called the "Four Self-Inflicted Harms."  It is meant to make that case that the choice of bargaining tactic has hurt the Americans more than the Chinese.  Of course, the only facts marshaled are those about the harm to the U.S.  It is not clear what the harm has been to the Chinese side--but of course that is an argument that the American side ought to make, if it is up to the task.
The assessments though true enough are easy enough to counter--but that is for the American side to do (and to disseminate its counter as successfully as the Chinese are attempting through the White Paper. On the other hand these also mark challenges to U.S. industry that may trigger long term corrections that ultimately will pose challenges for China outside its BRI zone. 

For example, the first point about the harm caused by China's control of resources (a challenge that Western public officials merrily ignored for art least a decade) is already evident in the hysteria about Chinese control of rare earths.  Yet even there the U.S. is taking middle term countermeasures that may weaken the effect (e.g., Africa’s rare earths opportunity ("China may dominate the rare earths market, but there are many unexplored sources – and it is Africa that geologists believe holds the most potential"). The point isn't that the White Paper is wrong (it its assessment is correct (e.g., here)), but that it leaves unspoken challenges and consequences that ought to cause worry on the Chinese side.

The second point is also true in the short term, but the scope of its effects may be more limited than implied, and it may cause the same sort of self-harm that the White Paper argues is the primary effect of U.S. tariffs. Thus, for example, if as suggested the two economies are intertwined and there is substantial reciprocal investment, then the effect will harm Chinese interest in the U.S. as it harms U.S. interest in China.  Moreover, it does not touch on the incentives this creates not to move U.S. operations out of China, but to redirect new investment and augmented production elsewhere. This can pose a problem in the middle and long term especially if the United States decides that it is a good idea to encourage investment in core BRI countries on the peripheries of the Silk Roads.

The third provides the opening for a numbers game that the propaganda departments of both states are free to indulge for the purpose of managing opinion, though in both cases the arguments are likely to be curated in a way that serves a purpose other than the production of knowledge for outsiders. But that is the way of these things, even within liberal democratic orders, though with substantially different characteristics.

The last point is the most interesting. It suggests two things--the first is that China will continue to hold its own internal markets hostage to successful negotiation on its own terms--fair enough.  But the second is that by making that claim it proves the American's point about unequal relations at the heart of a portion of the negotiations.  The White Paper might have framed this with more subtlety--on the other hand it is buried deep within a document that will not be read carefully to this point. Yet to the extent this can be extracted it is possible to build nice out of context arguments that point in a direction opposite from the White Paper's intent.  Bravo. 

(III) US trade bullying harms the world

Economic globalization is a firmly-established trend of the times. Beggar-thy-neighbor unilateralism and protectionism are unpopular. The trade protectionist measures taken by the US go against the WTO rules, damage the multilateral trading system, seriously disrupt global industrial chains and supply chains, undermine market confidence, and pose a serious challenge to global economic recovery and a major threat to the trend of economic globalization. 
This section takes up the argument, unveiled in the Preface, about the fundamental characteristic of the Americans as bullies--contrasting the more pacific and principled Chinese side. Nowhere mentioned here, of course, are Chinese countermeasures, including the quite brilliant new rules on punishing enterprises deemed hostile to China's policies and objectiveness.  That makes sense in this context since those would in accordance with the logic of the White Paper be deemed to be reluctantly undertaken measure sot preserve Chinese sovereignty.  
 First, the US measures are undermining the authority of the multilateral trading system. The US has launched a series of unilateral investigations, including those under Sections 201, 232 and 301, and imposed tariff measures. These are a serious breach of the most fundamental and central WTO rules, including most-favored-nation treatment and tariff binding. Such unilateralist and protectionist actions have harmed the interests of China and other WTO members. More importantly, they have undermined the authority of the WTO and its dispute settlement system, and exposed the multilateral trading system and international trade order to peril.
Second, the US measures threaten global economic growth. With the shadow of the international financial crisis still lingering over the global economy, the US government has escalated economic and trade friction and hiked additional tariffs, provoking corresponding measures by the countries involved. This disrupts global economic and trade order, dampens world economic recovery, and undermines the development of companies and the well-being of people in all countries, plunging the world economy into the “recession trap”.
Global Economic Prospects released by the World Bank in January 2019 revised its forecast for global economic growth down further to 2.9 percent, citing continuous trade friction as a major downward risk.[12] The International Monetary Fund also marked down its projection of world economic growth for 2019 to 3.3 percent from the 2018 estimate of 3.6 percent in its World Economic Outlook report published in April 2019, suggesting that economic and trade friction could further depress global economic growth and weaken already anemic investment.[13]
Third, the US moves disrupt global industrial and supply chains. China and the US are both key links in global industrial and supply chains. Given the large volume of intermediary goods and components from other countries in Chinese end-products exported to the US, US tariff hikes will hurt all the multinationals – not least those from the US – that work with Chinese companies. The tariff measures artificially drive up the costs of supply chains, and undermine their stability and security. As a result, some businesses are forced to readjust their global supply chains at the expense of optimal resource allocation.  
It is foreseeable that the latest US tariff hikes on China, far from resolving issues, will only make things worse for all sides. China stands firm in opposition. Recently, the US administration imposed “long-arm jurisdiction” and sanctions against Huawei and other Chinese companies on the fabricated basis of national security, to which China is also firmly opposed.

Here the White Paper takes up the case for U.S. isolation as a result of its unreasonable and uncivilized behaviors; behaviors for which it ought to be punished by isolation.  The argument is well done and ironically enough turns the tables on the U.S. by inverting its TPP China isolation arguments (see, e.g., The Trans-Pacific Partnership: Japan, China, the U.S. and the Emerging Shape of a New World Trade Regulatory Order). In a sense, then, the White Paper may evidence the way in which China learned from its unfortunate experience with the construction of a new global trading order based on a self referencing network of interlinked economies bound together by a set of principles whose combined power might then drive the rest of the global economic system.  The TPP was constructed against Chinese operational principles--and while China was cut out of negotiations (except the secret and discrete ones that in retrospect served as a warm up to the current bilateral negotiations)--the door was left open to China joining TPP, but only to the extent it was willing to embrace the Trans Pacific Partnership (TPP) operational principles.  The lesson the White Paper seems to suggest that China learned was that the construction of a such an imperial trading order (in the sense that it was driven by a central authority in the form of an apex nation-state the way that a multinational enterprise is organized and led by an apex corporation) was possible within the broad principles of contemporary economic globalization, that the rhetorics of its creation and operation could be conformed (at least outwardly) to those of that system broadly construed, and that it could be used to embrace friendly states and contain competitors. All of that eventually contributed to the construction of the outer forms and objectives of the BRI.  To understand the White Paper, and this section, then, it is necessary to understand the context of the bilateral negotiations in the shadow of the insights developed by the West in TPP and then taken up quite brilliantly by the Chinese in the construction of its BRI.

It is in that context that the exposition of the "Three Disruptions" acquires its persuasive power. The three--(1) undermining the multilateral trade system; (2) threatening global economic growth; and (3) disrupting supply chains--are all placed at the feet of the tariff strategy.  That objective is discursively necessary given the thrust of the White Paper and its core objectives (to pressure the United States into different negotiating tactics).  At the same time it appears to set the stage for the victorious entry of the BRI system (and Chinese principles for the organization of global trade) as the best way to salvage a system savaged by the Americans.  A very neat trick; and a propaganda challenge for the Americans.

II. The US has backtracked on its commitments in the China-US economic and trade consultations

In response to the economic and trade friction started by the US, China has been forced to take countermeasures, as bilateral trade and investment relations took a hit. For the well-being of the Chinese and American people and the economic development of the two countries, both sides deemed it necessary to come to the negotiating table to seek a solution through consultation. Since they were launched in February 2018, the economic and trade consultations have come a long way with the two sides agreeing on most parts of the deal. But the consultations have not been free of setbacks, each of them being the result of a US breach of consensus and commitments, and backtracking. 
This section deploys a very powerful tactic--it turns the very strong argument made by the Americans at the time that the negotiations broke down--that the Chinese side reneged on the agreement in principle on the basis of which an agreement had effectively been finalized--on its head. It has the benefit of causing doubt on the American argument.  And it strengthens the claims of Chinese principles against American selfish aggression. "He-said-she-said" tactics are always powerful and this one is nicely developed.  First, it excuses a very long period of negotiation that was reversed at the last minute by shifting the gaze elsewhere.  Second, it advances the argument that principle can be deployed at any stage of a negotiation--and that the failure to invoke principle until the last minute is itself a useful negotiation tactic (and indeed it has proven to be quite useful in this case).  Third, it suggests that consultation provides the modalities through which principle can be identified and (eventually) applied to cement a transaction. But most importantly, it is meant to provide the official Chinese response to what had appeared to be a Western consensus that the Chinese side was responsible for the break in negotiations by backtracking at the last minute. Fourth, it undertakes some blame in the form of excuse--that there was no backtracking in any case by either party because what is described as backtracking is merely the product of the give and take of complex negotiations ("It is common practice for both sides to make new proposals for adjustments to the text and language in ongoing consultations").  But the point is surrounded by reminders that such activities were essentially sourced in the U.S. side.  This makes for good reading within CHina, but its persuasive effect outside of China might be less assured.  On the other hand, to the extent that the White Paper is merely meant to provide some basis for providing a "legitimacy cover for political arguments, then perhaps the White Paper serves its purpose.  It does suggest, however, the value of a similar effort form the U.S. side.

(I) The first US backtracking

China had advocated resolving economic and trade friction through negotiation and consultation from the start. In early February 2018, the US government expressed the wish that China send a high-level delegation to the US to engage in economic and trade consultation. Demonstrating great goodwill and positive efforts, China held several rounds of high-level economic and trade consultations with the US, characterized by in-depth exchanges of views on trade imbalance among other major issues. The two sides made substantial progress as they reached preliminary consensus on expanding China’s imports of agricultural and energy products from the US. However, on March 22, 2018, the US government unveiled the so-called report on Section 301 investigation of China, falsely accusing China of “IP theft” and “forced technology transfer”, and subsequently announced an additional tariff of 25 percent on US$50 billion of Chinese exports to the US.

(II) The second US backtracking

Taking a big-picture view of the bilateral relationship, the Chinese government sent a working team again to the US to engage in genuine consultations. On May 19, 2018, China and the US issued a joint statement, agreeing to refrain from fighting a trade war, to continue high-level communications, and to actively seek solutions to respective economic and trade concerns. The US publicly announced that it would suspend the plan for additional tariffs on Chinese goods. On May 29, 2018, despite the opposition of its domestic business community and the general public, the US administration tore up the consensus just ten days after the joint statement, gratuitously criticizing China’s economic system and trade policy, while announcing the resumption of the tariff program. Starting from early July 2018, in three steps, the US imposed additional tariffs of 25 percent on Chinese exports worth US$50 billion, and additional tariffs of 10 percent on US$200 billion of Chinese exports, which, according to the US, would be raised to 25 percent on January 1, 2019. In addition, the US threatened further tariffs on all remaining Chinese exports, leading to quick escalation of the economic and trade friction between the two countries. In defense of its national dignity and its people’s interests, China had to respond in kind and raised tariffs on imports worth US$110 billion from the US.

(III) The third US backtracking

On November 1, 2018, US President Donald Trump had a telephone conversation with Chinese President Xi Jinping and proposed a summit meeting. On December 1 the two presidents had a meeting on the margins of the G20 Summit in Argentina. In accordance with their important consensus on economic and trade issues, the two sides agreed to halt new additional tariffs for 90 days to allow for intensive talks geared toward the full elimination of all additional tariffs. In the ensuing 90 days, the working teams of China and the US held three rounds of high-level consultations in Beijing and Washington D.C., reaching preliminary consensus on many matters of principle for the China-US economic and trade deal. On February 25, 2019, the US announced the postponement of the additional tariffs scheduled for March 1 on US$200 billion of Chinese exports to the US. From late March to early April, the working teams of the two countries held another three rounds of high-level consultations and made substantial progress. Following numerous rounds of consultations, the two countries had agreed on most of the issues. Regarding the remaining issues, the Chinese government urged mutual understanding and compromise for solutions to be found.
But the more the US government is offered, the more it wants. Resorting to intimidation and coercion, it persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, which only served to delay the resolution of remaining differences. On May 6, 2019, the US irresponsibly accused China of backtracking on its position to shift the blame for the inconclusive talks onto China. Despite China’s fierce opposition, the US raised the additional tariffs on US$200 billion of Chinese exports to the US from 10 percent to 25 percent, which represented a serious setback to the economic and trade consultations. On May 13 the US announced that it had launched procedures to slap additional tariffs on remaining Chinese goods, which are worth around US$300 billion. These acts contradicted the agreement reached by the two presidents to ease friction through consultation – and the expectations of people around the world – casting a shadow over the bilateral economic and trade consultations and world economic growth. In defense of its own interests, China had to take tariff measures in response.

(IV) The US government should bear the sole and entire responsibility for this severe setback to the China-US economic and trade consultations 

The US government accusation of Chinese backtracking is totally groundless. It is common practice for both sides to make new proposals for adjustments to the text and language in ongoing consultations. In the previous more than ten rounds of negotiations, the US administration kept changing its demands. It is reckless to accuse China of “backtracking” while the talks are still under way. Historical experience has proved that any attempt to force a deal through tactics such as smears, undermining and maximum pressure will only spoil the cooperative relationship. Historic opportunities will be missed.
A civilized country turns to forceful measures only when gentler approaches have failed. After the US issued the new tariff threat, the international community was widely concerned that China might cancel the consultation visit to the US. It kept a close watch on the future direction of the China-US trade negotiations. Bearing in mind the broader interests of trade and economic relations between the two countries, China remained cool-headed, exercised restraint, and sent a senior delegation to the US, as agreed, for the 11th round of economic and trade consultation from May 9 to 10. In doing so, China demonstrated the greatest sincerity and a strong sense of responsibility for resolving trade disputes through dialogue. In the following candid and constructive discussions, the two sides agreed to manage differences and continue consultations. China expressed strong opposition to the unilateral tariff increase by the US and stated its firm position that it would have to take necessary countermeasures. China emphasized once again that trade deals must be based on equality and mutual benefit. China will never compromise on major principles concerning China’s core interests. One prerequisite for a trade deal is that the US should remove all additional tariffs imposed on Chinese exports and China’s purchase of US goods should be realistic while ensuring that a proper balance in the text of the agreement is achieved to serve the common interests of both sides.

The White Paper builds case for placing the blame for the backtracking on the U.S. side. Yet it may have done too good a job. It reduces that case to three points and a set of related principles and judgments. The last point, of course, opens the door to the restatement of high principle with which the White Paper closes in Part III.

The first point references a six week period early in the negotiations when the Chinese had no intention of serious effort (given the uncertain status of the investigation against the U.S. President). It argued that while the Chinese negotiated in good faith between February and March 2018, at that point the Americans acted scandalously by accusing the Chinese of criminal activity in ways that produced a loss of face impossible momentarily to overcome. Worse, it was an insult in the form of a negotiating tactic coupled with aggression--the first of the American tariff moves.

The second point referenced the Chinese decision to send another team prepared for "genuine negotiation" in May 2018. This one is interesting for the White Paper's suggestion that the American position was wrong in part because it was criticized by an internal opposing American political and business faction and was characterized (again) by insults directed at China. These were almost but not quite too difficult to bear, at least until July 2018 when another round of tariffs made the situation untenable for the Chinese delegation. "In defense of its national dignity and its people’s interests, China had to respond in kind and raised tariffs on imports worth US$110 billion from the US."

The third was the most important, because it provides an alternative reading of the American claim of Chinese backtracking. In this Chinese version of the "backtracking" claim, the problem arose after the meeting of December 2018 between the core leadership of China and the United States that took place in Argentina. Negotiations proceeded on the basis of the consensus reached. But then the White Paper suggested consensus turned to (American) greed--and it is here that the White Paper more fully develops the Chinese counter-story to that proffered by the Americans at the time of the breakdown of negotiations: "But the more the US government is offered, the more it wants. Resorting to intimidation and coercion, it persisted with exorbitant demands, maintained the additional tariffs imposed since the friction began, and insisted on including mandatory requirements concerning China’s sovereign affairs in the deal, which only served to delay the resolution of remaining differences." The White Paper, then, develops the claim that the U.S. crossed a line that the heretofore patient and compromising Chinese delegation could not cross without breaching the core premises of the CPC Basic Line. It was not that China backtracked as much as it was the U.S. that pushed beyond the December 2018 consensus. And that, in turn, is explained by the charge of the innate selfish greed of the Americans (as part of their national character perhaps, but more likely as proof of the characteristics of bourgeois dictatorship referenced above).

The 4th Point then puts all of this together, weaving these points into what is hoped to be a compelling story. First, the U.S. charge of backtracking is false. Second, even if it were not entirely false, it seeks unfairly to characterize the normal give and take a complex negotiations. Third, even if that is not quite the case, then it was the Americans and not the Chinese that kept changing the terms of the deal. Fourth, the American proclivity for negotiating by insulting their counterparts proved not just counterproductive but ultimately could be blamed for the failure of the deal--one cannot insult people and expect to come to some sort of agreement. National sensibilities are both delicate and can override national interest, it seems, in some case ("will only spoil the cooperative relationship. Historic opportunities will be missed"). But even in describing it, the argument itself collapses.

But it is the second paragraph of the 4th point that is worth a careful read. Here the White Paper lays out the Chinese position with remarkable clarity. First that the roles of the 19th century have now been reversed--where once the West assumed China was not worthy of membership in the family of civilized states, it is now the U.S. that is in that position--unworthy to remain in that family. As such it is China's duty not merely to engage ion the negotiations but to assert a leading role in its shaping and final expression--in the way that the political vanguard asserts a leadership role in guiding the Chinese state toward the goals expressed in the CPC Basic Line. It is China, for example, that keeps in mind the role of a "civilized country."It is China (and not the Americans) who bears the burdens of "the broader interests of trade and economic relations." It is China that remains "cool-headed, exercised restraint [and] demonstrated . . . sincerity and a strong sense of responsibility." These are then followed by the terms of a proposed new consensus (one unlikely to be acceptable to the Americans given their current mood):

China emphasized once again that trade deals must be based on equality and mutual benefit. China will never compromise on major principles concerning China’s core interests. One prerequisite for a trade deal is that the US should remove all additional tariffs imposed on Chinese exports and China’s purchase of US goods should be realistic while ensuring that a proper balance in the text of the agreement is achieved to serve the common interests of both sides.

III. China is committed to credible consultations based on equality and mutual benefit

The Chinese government rejects the idea that threats of a trade war and continuous tariff hikes can ever help resolve trade and economic issues. Guided by a spirit of mutual respect, equality and mutual benefit, the two countries should push forward consultations based on good faith and credibility in a bid to address issues, narrow differences, expand common interests, and jointly safeguard global economic stability and development. 
It is to that last point, about negotiations grounded in principles of credibility, equality and mutual benefit, that the last section, Part II is devoted. To that end it juxtaposes (again) the Chinese position with its opposite into which the American position (and their actions, especially the tariff strategy) have been transformed.  The focus on tariff, by this point raises an interesting issue--and a perverse one.  The almost single minded focus on the tariff as objective and as trade negotiation strategy sits at the heart of the Chinese case against the United States.  One wonders if this would be so had they been less effective in terms of  their economic effect.  On the other hand, the effect appears to have produced a perverse result--drawing the Chinese away from further talks and perhaps cementing a determination to disentangle the economic ties between the two states. It is of course too early to tell. But the sings are therein the confluence of the BRI event in May and the timing of the breaking off of negotiations with the US (discussed here: CPE Working Group on Empire: U.S.-China Trade Talks, Encircling the United States, and the Belt and Road Initiative).

(I) Consultations should be based on mutual respect, equality and mutual benefit

It is only natural for China and the US, the two largest economies and trading nations in the world, to experience some differences over trade and economic cooperation. What truly matters is how to enhance mutual trust, promote cooperation and manage differences. For the good of the common interests of the two countries and global trade order, and in a strenuous effort to push forward the economic and trade consultations, China remains committed to resolving issues through dialogue and consultation, responding to US concerns with the greatest patience and sincerity, properly handling differences while seeking common ground, and overcoming obstacles to practical solutions. During the consultations, in accordance with the principle of mutual respect, equality and mutual benefit, China’s only intention is to reach a mutually acceptable deal.
Mutual respect means that each side should respect the other’s social institutions, economic system, development path and rights, core interests, and major concerns. It also means that one side should not cross the other’s “red lines”. The right to development cannot be sacrificed, still the less can sovereignty be undermined. As regards equality and mutual benefit, we must ensure that the two sides in the consultations operate on an equal footing, that results are mutually beneficial, and that any final agreement is a win-win one. Negotiations will get nowhere if one side tries to coerce the other or if only one party will benefit from the outcomes.

The first paragraph of this section repeats fundamental positions already laid out. But it is consist with the discursive style of such reports with Chinese characteristics. The second paragraph is far more interesting. It defines "mutual respect" as touching on each side's "institutions, economic system, development path and rights, core interests, and major concerns." All well and good. but as negotiations from the time of the Obama Administration around TPP had made clear both to the governmental apparatus of each state, mutual respect produced deadlock. It produced deadlock because the elements of mutual respect were at a fundamental level incompatible. And the nature of negotiation required both sides to compromise their own "self respect." Read in this way, the Chinese articulation is either implausible or suggests that from the perspective of each party, such self compromise is to be expected of the opposing side but not of one's own side. That works as rhetorical trope, and it makes the respective masses of each side content in the knowledge of the great efforts of their core in protecting them and the like. But its ultimate logic is one of negotiation failure--and in this case of a consequential disentangling of the relationships it took a generation of Reform and Opening Up to build. Well, this is a new era--for both states. That is the point--"negotiations will get nowhere." And that is especially the case where, as here, the respective "red lines" of each state are mutually incompatible.

(II) Consultation involves working toward the same goal in good faith

Consultation calls for mutual understanding and genuine effort from both sides. Consultation is a process where the parties concerned seek consensus or make compromise through discussion. Many factors are at play in consultation. It is perfectly normal during consultations for the parties to react differently to various changes at different stages based on their own interests.
The Chinese government believes that economic and trade consultation is an effective way to solve issues. None other than engagement with goodwill and a full understanding of the other’s position can contribute to success. Otherwise, it will be hard to reach a sustainable and enforceable deal as the parties will not find the ground for a long-term and effective agreement.
Good faith is the foundation of consultation. The Chinese government has engaged in these consultations with the US with the utmost credibility and the greatest sincerity. Attaching great importance to US concerns, China has worked hard to look for effective paths and find ways to address differences. The 11 rounds of high-level consultations have made significant progress. The outcomes of the consultations have not only served the interests of China, but also those of the US, as a result of both sides’ efforts to pull in the same direction. China has kept its word during the consultations. China has emphasized repeatedly that if a trade agreement is reached, it will honor its commitments sincerely and faithfully.

In light of the points made in subsection (I), the arguments of Subsection (II) appear implausible or consequential. Red lines are red lines--and incompatible red lines become points of impossibility that only power can resolve. That is the actual state of things not so well hidden beneath the text of this section. And that, of course, has been the much more brutally put point the Americans have been making--to the irritation of virtually every other state. But the point is worth considering, as uncivilized as it might appear.No amount of consultation, off mutual understanding, of empathy and compromise can avoid the problem of the incompatible and conflicting red lines of the actors. If negotiation will inevitably require one of the parties to cross an uncrossable red line, then negotiation becomes merely a means of marking time until conditions change or alternatives can be instituted--in this case perhaps a fully functioning and autonomous BRI and America First. One finds oneself in a situation in which time is the only matter on which there can be agreement; in the meantime, absent decoupling, there can only be conflict, especially where as here, the willingness of each state to tolerate the other's incompatible red lines (state support of SOEs, intellectual property claims, access to markets and the like) declines precipitously. The rest are the sort of pieties one expects of states of the stature of China and the U.S.

(III) China will not give ground on issues of principle

Every country has its own matters of principle. During consultations, a country’s sovereignty and dignity must be respected, and any agreement reached by the two sides must be based on equality and mutual benefit. On major issues of principle, China will not back down. Both China and the US should see and recognize their countries’ differences in national development and in stage of development, and respect each other’s development path and basic institutions. While no one expects to resolve all issues through one single agreement, it is necessary to ensure that any agreement will satisfy the needs of both sides and achieve a balance.
The recent US move to increase tariffs on Chinese exports does not help to solve bilateral trade issues. China strongly opposes this and has to respond to safeguard its lawful rights and interests. China has been consistent and clear on its position, that it hopes to resolve issues through dialogue rather than tariff measures. China will act rationally in the interests of the Chinese people, the American people, and all other peoples around the world. However, China will not bow under pressure and will rise to any challenge coming its way. China is open to negotiation, but will also fight to the end if needed. 

The point made above, of course, is underlined explicitly in this section. Red lines, core principles, and sovereign dignity all suggest the limits of cooperation, "win-win" strategies, mutual respect and the like. That they appear in separate sections underscores the essential contradiction of the Chinese position. Or perhaps its politics--for it may be meant to be applied in one direction--with the expectation of red line compromise by others. That makes sense in empire theory where the imperial center cannot compromise its core values and principles and sovereignty but its "spokes and outer wheels are expected to do just that as necessity dictates. But if that is the case then a more interesting observation emerges--underlying the White Paper is an important unstated premise (hinted at in the section that characterized the United States as a barbarian apparatus and the Chinese as civilized in the old fashioned sense of these terms) that as a fading power it is for the Americans to compromise in the face of Chinese superiority and to accept with as good grace as possible the reality that they are no longer in a position to extract compromise from inferiors but instead must now be prepared to make them. An interesting conclusion but one compatible with the arc of suppositions at the heart of new era thinking.

(IV) No challenge will hold back China’s development

China’s development may not be all smooth sailing. Difficulties or even perils are inevitable. Whatever the future might bring, China is confident of meeting challenges head on, turning risks into opportunities, and opening new chapters.
China remains committed to its own cause no matter how the external environment changes. The fundamental solution to economic and trade tensions is to grow stronger through reform and opening up. With the enormous demand from the domestic market, deeper supply-side structural reform will comprehensively enhance the competitiveness of Chinese products and companies. We still have sufficient room for fiscal and monetary policy maneuvers. China can maintain sound momentum for sustainable and healthy economic development, and its economic prospects are bright.
China will continue to deepen reform and opening up. China’s door will not be closed; it will only open even wider. President Xi Jinping announced in his keynote speech at the opening ceremony of the Second Belt and Road Forum for International Cooperation that China would adopt a number of major reform and opening-up measures, strengthen institutional and structural arrangements, and promote opening up at a higher level. Measures to be taken include expanding market access for foreign investment in broader areas, strengthening international cooperation on intellectual property protection, increasing imports of goods and services, implementing more effective international coordination on macro-economic policies, and putting more focus on the implementation of opening-up policies. A more open China will have more positive interactions with the world, which in turn will advance the development and prosperity of both China and the world. 

And this paragraph then puts the icing on the cake. The references to the BRI Conference, to the speech of the leadership core, to patience in the face of rising Chinese power, underline the points made in the earlier portions of the White Paper. This is an example of the application of Chinese political and economic ideology at its best. But it is an application that might appear difficult to understand much less embrace by some of China's partners. Yet here it is--self reflexive, logical, complete and quite certain of the realities of the arc of history and China's place within it. Now if only other states can be brought to agree. . . . .


Cooperation is the only correct choice for China and the US and win-win is the only path to a better future. As to where the China-US economic and trade consultations are heading, China is looking forward, not backward. Disputes and conflicts on the trade and economic front, at the end of the day, need to be solved through dialogue and consultation. Striking a mutually beneficial and win-win agreement serves the interests of China and the US and meets the expectations of the world. It is hoped that the US can pull in the same direction with China and, in a spirit of mutual respect, equality and mutual benefit, manage economic and trade differences, strengthen trade and economic cooperation, and jointly advance China-US relations based on coordination, cooperation and stability for the well-being of both nations and the world.

The United States is not without its principles fro engaging in trade talks. Thus it is important to read the White Paper with the American position on principles in mind. These were nicely summarized in 2018 by the American Vice President Pence (Remarks by Vice President Pence on the Administration’s Policy Toward China, Issued on: October 4, 2018).
In our National Security Strategy that the President Trump released last December, he described a new era of “great power competition.” Foreign nations have begun to, as we wrote, “reassert their influence regionally and globally,” and they are “contesting [America’s] geopolitical advantages and trying [in essence] to change the international order in their favor.”

In this strategy, President Trump made clear that the United States of America has adopted a new approach to China. We seek a relationship grounded in fairness, reciprocity, and respect for sovereignty, and we have taken strong and swift action to achieve that goal.

As the President said last year on his visit to China, in his words, “we have an opportunity to strengthen the relationship between our two countries and improve the lives of our citizens.” Our vision of the future is built on the best parts of our past, when America and China reached out to one another in a spirit of openness and friendship.

* * *

As we respond to China’s trade practices, we will continue to demand an economic relationship with China that is free, fair, and reciprocal. We will demand that Beijing break down its trade barriers, fulfill its obligations, fully open its economy — just as we have opened ours.

We’ll continue to take action against Beijing until the theft of American intellectual property ends once and for all. And we will continue to stand strong until Beijing stops the predatory practice of forced technology transfer. We will protect the private property interests of American enterprise. (Applause.)

As the White Paper suggests, the issues are much more profound than a tactically useful complaint about U.S. negotiating tactics.  The White Paper puts on the table--from the Chinese side--the fundamental issues about the ordering of trade that the United States had earlier advanced for the elaboration of its own interests. One reaches here the point of contradiction, and the choices it proffers to both China and the United States: deeper interconnection; conflict; or separation and disentanglement as the world divides into distinctive and imperial global trading orders in which states assume the role that multinational enterprises occupied at the head of production chains in the last century. The choice, given the words of the leadership cores of both sides, now appears clear.

[1] In February 2018, the Global Innovation Policy Center of the US Chamber of Commerce published the International Intellectual Property Index 2018, noting that in 2018, China with a score of 19.08 rose to 25th among the 50 ranked economies, two places up from where it had been in 2017. http://www.theglobalipcenter.com/wp-content/uploads/2018/02/GIPC_IP_Index_2018.pdf
[2] On January 18, 2018, CNIPA press conference on key statistics of the work in 2017 and related updates. http://www.sipo.gov.cn/twzb/gjzscqj2017nzygztjsjjygqkxwfbk/
[3] USCBC: 2019 State Export Report, https://www.uschina.org/reports/2019-state-export-report, May 1, 2019.
[4] General Administration of Customs of China, http://www.customs.gov.cn/customs/302249/302274/302275/2418393/index.html, May 8, 2019.
[5] General Administration of Customs of China, http://www.customs.gov.cn/customs/302249/302274/302275/2418393/index.html, May 8, 2019.
[6] MOFCOM statistics.
[7] MOFCOM: National FDI Briefing for January to December, 2018, http://www.mofcom.gov.cn/article/tongjiziliao/v/201901/20190102832209.shtml, January 15, 2019.
[8] WTO: “WTO trade forecasts: Press conference”, https://www.wto.org/english/news_e/spra_e/spra255_e.htm, April 2, 2019.
[9] US National Retail Federation: “NRF Warns USTR Tariffs Would Cost Americans Billions, Releases New   Study on Consumer Impact”, https://nrf.com/media-center/press-releases/nrf-warns-ustr-tariffs-would-cost-americans-billions-releases-new-study, August 22, 2018.
[10] US Chamber of Commerce and Rhodium Group: Assessing the Costs of Tariffs on the U.S. ICT Industry: Modeling U.S.-China Tariffs, https://rhg.com/research/assessing-the-costs-of-tariffs-on-the-us-ict-industry, March 15, 2019.
[11] Trade Partnership: Estimated Impacts of Tariffs on the U.S. Economy and Workers (2019),
https://tradepartnership.com/reports/estimated-impacts-of-tariffs-on-the-u-s-economy-and-workers-2019, February 5, 2019.
[12] World Bank: Global Economic Prospects, https://www.worldbank.org/en/publication/global-economic-prospects, January 8, 2019.
[13] IMF: World Economic Outlook, https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019, April 2, 2019.


  新华社北京6月2日电 国务院新闻办公室2日发表《关于中美经贸磋商的中方立场》白皮书。全文如下: 









  三是影响美国经济增长和民生。美国商会和荣鼎集团2019年3月联合发布的报告显示,受中美经贸摩擦影响,2019年及未来4年美国国内生产总值将可能每年减少640亿至910亿美元,约占美国国内生产总值总额的0.3%-0.5%。如美国对所有中国输美商品征收25%关税,未来10年美国国内生产总值将累计减少1万亿美元(注10)。美国智库“贸易伙伴”(Trade Partnership)2019年2月发布的研究报告显示,如美国对所有中国输美商品加征25%的关税,美国国内生产总值将减少1.01%,就业岗位将减少216万个,一个四口之家每年支出将增加2294美元(注11)。











  (注3)美中贸易全国委员会(USCBC)网站:2019 State Export Report,https://www.uschina.org/reports/2019-state-export-report,2019年5月1日。
  (注8)世界贸易组织(WTO)网站:WTO Trade forecasts:Press conference,https://www.wto.org/english/news_e/spra_e/spra255_e.htm,2019年4月2日。
  (注9)美国全国零售商联合会网站:NRF Warns USTR Tariffs Would Cost Americans Billions,Releases New Study on Consumer Impact,https://nrf.com/media-center/press-releases/nrf-warns-ustr-tariffs-would-cost-americans-billions-releases-new-study,2018年8月22日。
  (注10)荣鼎集团网站:Assessing the Costs of Tariffs on the US ICT Industry:Modeling US China Tariffs,https://rhg.com/research/assessing-the-costs-of-tariffs-on-the-us-ict-industry,2019年3月15日。
  (注11)贸易伙伴网站:Estimated Impacts of Tariffs on the U.S. Economy and Workers(2019),https://tradepartnership.com/reports/estimated-impacts-of-tariffs-on-the-u-s-economy-and-workers-2019,2019年2月5日。
  (注12)世界银行网站:Global Economic Prospects,https://www.worldbank.org/en/publication/global-economic-prospects,2019年1月8日。
  (注13)国际货币基金组织网站:World Economic Outlook,https://www.imf.org/en/Publications/WEO/Issues/2019/03/28/world-economic-outlook-april-2019,2019年4月2日。

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