China-United States : the situation

Economist Huang Qifan, former mayor of Chongqing, at a June 8-10 seminar, reviews Sino-American relations. He recalls the current context and tensions, then details the battery of sanctions in the hands of the Washington administration. He called on China to take the threats seriously and to fight while remaining flexible and improving in various areas. 
Below is a summary translation of the part of the speech on the relations between the two countries, “积极应对美国对华脱钩的系列措施, Proactive response to the U.S. series of measures to decouple China.”

An agitated environment

“In the context of the health crisis, the United States is trying to blame China for its failure to combat the epidemic. Besides, the trade war is tense, and politicians want the return of the production. With November’s U.S. elections approaching, Sino-US relations are now entering the most challenging phase since the establishment of diplomatic relations.  

Sanctions and restrictions

The United States recently blocked Huawei while at the same time putting restrictions on 33 Chinese companies and institutions. Stock exchange authorities are taking action against Chinese companies. Chinese students will no longer be able to come to study STEM (science, technology, engineering, and mathematics) in the United States, and there is debate about visa suspensions or restrictions. Some politicians call for the cancellation of U.S. Treasury bills, freezing Chinese assets in the U.S., etc. It can be said that there are already the beginnings of a major American push for decoupling from China.

China USA flag

The legal basis for further sanctions

In 2015, the U.S. Congress passed a bill that now provides the legal basis for the U.S. Treasury Department to determine whether a country is a “currency manipulator.” Under this law, if a country is found to be a “currency trafficker,” the United States will be able to impose sanctions in the following ten areas: 

1. Stopping trade. 
2. Prohibit U.S. banks and other financial institutions from providing services to businesses in these countries. 
3. Impose restrictions on technology, prohibiting the export of high technology to rival countries. 
4. Not allowing companies from rival countries to enter the stock market, and those already there will have to exit. 
5. For education and human resources, limit the number and enrolment of students.
6. Take advantage of the Swift monopoly and exclude these countries from the financial system (see the article on the introduction of Chinese digital currency).
7. Use the “long-arm jurisdiction” to drive out foreign companies.
8. Freeze assets in the United States.
9.  Downgrade sovereign debt ratings.
10. Measures to facilitate capital flight from these countries.

Ready to fight

In August 2019, the U.S. Treasury Department, changing its criteria, suddenly called China, a currency manipulator before reversing its decision. Nevertheless, over the past six months or so, many U.S. politicians have, on various occasions, been singing the praises of China’s rejection of responsibility and decoupling. In this respect, we should not take it lightly. Firstly, we must shake off our illusions and prepare for the fight; secondly, we must be confident and maintain our determination; thirdly, we must hold the line and react flexibly.

Constant improvement

In the final analysis, we must do our job well, deepen internal reforms with greater vigor and determination, broaden openness to the outside world and speed up our efforts to close the gaps in the rule of law, innovation, with a higher level of reform and openness to promote quality development. ”   

The very synthetic speech sums up the situation well. What can we hope for? The South China Morning Post reports on a meeting between the two countries in Hawaii with Politburo member Yang Jiechi and Secretary of State Mike Pompeo. Are we heading for a lull?

Source: 意见领袖丨黄奇帆(重庆市原市长、第十二届全国人大财经委副主任委员)

13 June 2020

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