Xi Jinping's Empty Promises

China always promises to stop cheating on trade, but never does
President Trump’s tariffs are beginning to make Beijing uneasy
By DAN DIMICCO

President Donald Trump announces tariffs on steel and aluminum imports during a meeting with leaders of the steel industry at the White House in March 2018.

China’s Vice President Wang Qishan recently announced that Beijing is ready to have discussions with the United States and “work for a solution” on trade challenges. 

It sounds impressive, especially since Xi Jinping just made a similar pledge that China is ready to “advance an open world economy.”
Unfortunately, we’ve heard this from Beijing literally hundreds of times before. 

And nothing ever changes.
Here’s the bottom line: China remains the most protectionist nation on earth. 

For years, Beijing has undervalued its currency, the yuan, to lower the price of its exports. 

It dumps steel and other goods on the world market at below the cost of production in order to put U.S. manufacturers out of business. 

It funnels billions and billions of dollars in shadowy subsidies and “loans” to its many state-owned enterprises. 

And, it repeatedly hacks U.S. companies to steal their intellectual property.
China has benefited beyond its wildest dreams from the world’s openness. 

And it has grotesquely abused the privileges that come with membership in the World Trade Organization (WTO).
Of course, Xi and Wang are now making encouraging statements about open markets and global trade. 

They want us to believe that things are going to be “different” this time. 

Finally, their authoritarian regime wants to dedicate itself to “supporting the multilateral trading system and promoting free trade.”
But we’ve been down this road many times before, and Beijing has never actually changed course.
In 2005, when the U.S. Senate moved forward on a bill targeting currency manipulation, Beijing suddenly “untethered” the yuan from its longstanding dollar peg. 

Ahead of a contentious G20 summit in 2010, Beijing quickly adjusted the yuan’s exchange rate. 

And shortly before Vice President Joe Biden’s visit to Beijing in 2011, China suddenly tweaked the value of the yuan.
History repeats itself again.
Undoubtedly, President Donald Trump has brought a newfound vigilance and assertiveness regarding China. 

And his steady stream of tariff actions has finally caught Beijing’s attention. 

But the U.S. is still a long way from coercing Beijing to stop its endless cheating and conniving.
What would the U.S. need to see, if China were to honestly and finally change course? 

Beijing would need to fundamentally alter its approach on trade: Immediately fulfill its WTO commitments — particularly on currency, dumping, and subsidies; stop it’s state-owned economic, cyber, and military aggression; and halt all of its intellectual-property theft and forced technology transfer.
In short, Beijing needs to dismantle its entire “China 2025” focus on predatory trade and global dominance, particularly in the world’s high-tech sectors.
The good news is that President Trump’s tariffs are starting to take a bite out of China’s economy. 

A key manufacturing indicator for China, the country’s purchasing managers’ index, reported slower manufacturing growth in October for the second straight month. 

In fact, the October level was the lowest for China since July 2016, and new export orders contracted for the fifth straight month.
This kind of sustained economic pressure can give the U.S. important leverage.
Ronald Reagan famously said, “Trust, but verify.” 

If China really wants to prove that it can be an open, reliable partner, it’s time for Beijing to make a major shift. 

But President Trump should keep the pressure on — for many years, if need be — to make sure that America doesn’t get conned again. 

There’s simply no excuse to give Beijing room to keep taking advantage of the United States and other countries that maintain free and open markets.

Xi Jinping's Empty Promises

U.S. accuses China of violating bilateral anti-hacking deal
Reuters

U.S. President Donald Trump and Chinese dictator Xi Jinping shake hands after making joint statements at the Great Hall of the People in Beijing, China, November 9, 2017. 

WASHINGTON -- China has been violating an agreement with the United States aimed at stopping cyber espionage through the hacking of government and corporate data, a senior U.S. intelligence official said on Thursday.
When asked if China was violating the 2015 agreement between then President Barack Obama and Chinese dictator Xi Jinping, National Security Agency official Rob Joyce said: “We think they are.”
“While it’s not black and white, (China) met the agreement or they didn’t meet the agreement, it’s clear that they are well beyond the bounds today of the agreement that was forged between our countries,” Joyce said.

In September 2015, Obama announced he had reached a “common understanding” with China’s Xi on curbing economic cyber espionage, but threatened to impose U.S. sanctions on Chinese hackers who persist in committing cyber crimes.
The two leaders said they agreed that neither government would knowingly support cyber theft of corporate secrets or business information.
The agreement, however, stopped short of any promise to refrain from traditional government-to-government cyber spying for intelligence purposes.
That could include the massive hack of the U.S. federal government’s personnel office this year that compromised the data of more than 20 million people. 

U.S. officials have traced that back to China.
The United States and China will hold a delayed top-level security dialogue on Friday, the latest sign of a thaw in the countries’ strained relations amid an ongoing trade row ahead of a planned meeting between U.S. President Donald Trump and Xi at the Group of 20 summit meeting in Argentina at the end of November.

Xi Jinping's Empty Promises

China puts on a big show, but not everyone is buying its trade message
By Evelyn Cheng

SHANGHAI, China — China's largest city rolled out the red carpet this week to help Xi Jinping try to show other nations how "serious" his country is about becoming their best customer.
By official figures, more than 400,000 buyers — including representatives from nearly all of China's state-owned enterprises — had the chance to meet with more than 3,600 businesses from 172 countries at the China International Import Expo. 

Johnson and Johnson, Honeywell, General Motors and Google were among the nearly 180 American companies reportedly attending.
To welcome the businesses, a handful of international state leaders and the Chinese dictator, Shanghai lit up its buildings across town on Sunday night. 

Roads shut down, local schools and government offices closed for two days and tech giant Didi partially suspended its ride-hailing service. 

Roughly 300 students from the local prestigious colleges volunteered to direct visitors around a four-leaf clover exhibition space the size of at least 55 football fields near Shanghai's Hongqiao Airport on the western edge of town. 

An army of security officers hovered the grounds, and sometimes made guests walk through gated entrances with roughly 30 turns.
Of the Communist government's many goals for the import expo — billed as the first of many — "one is to increase China's prestige as a market, as a global leader in international commerce," said Craig Allen, president of the U.S.-China Business Council.
But as for Xi's stated aim of turning China into a global market importer, "a trade show is probably not particularly relevant," Allen said. 

Rather, he said, "the real test is whether or not the policy measures promised by Xi will be implemented in the near term."
Xi kicked off the expo on Monday with a speech that mostly reiterated past empty promises to further open up the world's second-largest economy to foreign players.
As his country faces rising tensions with its largest trading partner, Xi pledged again greater punishments for intellectual property theft — a point of contention with the Trump administration. 

The Chinese dictator who this year abolished presidential term limits also said his country will further lower import tariffs and speed up the opening of sectors such as education and culture.
Those are moves in the direction the West would like to see, but not enough.
"What matters to us is that concrete actions are forthcoming and that reforms are clearly timetabled," Carlo D'Andrea, vice president of the European Union Chamber of Commerce in China and chairman of the Shanghai Chapter, said in a statement. 

"If China really will continue to open up, we would have expected additional and specific commitments to have been announced by Xi (on Monday)."
Although many companies may not yet have the open access to China they would like, they may be selling more to the country if promises sealed at the expo are met.
"What we are hearing anecdotally, both state-owned enterprises and municipal provincial governments are here in a big way," Allen said. 

"They are working on lots of contracts. I hope at the end of the show there will be a final accounting (of deals)."
When contacted by CNBC, the expo said provinces, autonomous regions, municipalities directly under the central government and those with independent planning status, the Xinjiang Production and Construction Corps, state-owned enterprises and the National Health and Health Commission have set up 39 trading groups with 592 subdivisions, for a total of more than 400,000 buyers. 

There are also several thousand foreign buyers, the expo said.
Information on how much the groups were purchasing was not immediately available.
On Tuesday, the country's State-owned Assets Supervision and Administration Commission announced that so far, 13 of China's state-owned enterprises have signed deals "with large foreign businesses and enterprises on imports, services and technology cooperation projects."
The companies include Volkswagen, Westinghouse Electric, robotics and power grid company ABB, Carnival, Rolls-Royce and Standard Chartered, according to the announcement. 

Total deal amounts were not disclosed, although two of the agreements had a listed combined value of about $3 billion. 

A press event scheduled for Thursday on the transactions of Chinese state-owned enterprises during the expo was cancelled without explanation.
Carnival and Standard Chartered confirmed the deals. 

Volkswagen said it signed a memorandum of cooperation with its Chinese joint venture under which the Asian arm will import parts and vehicles worth a total of about 62 billion yuan ($8.9 billion). 

The other companies did not immediately respond to an emailed request for comment.
Many other businesses and buyers were busy signing purchase agreements throughout the exhibition halls and country pavilion. 

Swedish medical equipment company Elekta said many hospitals came to sign such contracts.
"During the past two days, many purchasing (delegations have) expressed their positive intentions, further indicating the huge demand of (China's) market," Richard Hausmann, president and Chief Executive Officer of Elekta, said in a statement to CNBC.
Liu Qianqian, a marketing supervisor for U.S.-based industrial diagnostic equipment company Fluke, said in an interview the company had signed purchase agreements with many state-owned and private companies. 

Chinese e-commerce giants Alibaba and JD.com also used the expo to announce plans to help China import $200 billion and $14.4 billion of foreign goods, respectively.
It's not clear if these agreements or purchases would have happened anyway without the expo. 

China wants to boost consumption as it is in the middle of a years-long process of reducing reliance on manufacturing-driven growth.
Shanghai residents also paid a cost to host the event. 

Last-minute road closures for motorcades of visiting dignitaries caused traffic jams that more than doubled travel time. 

The office holidays merely shifted the working days to the weekend. 

Anecdotally, tickets to the expo itself were also very difficult to get.
Still, China is already gearing up for round two. 

Advertisements in the exhibition center encouraged businesses to sign up for next year — an office at one end of the building was set up for that very purpose. 

If Beijing is short on reforms, Xi appears set on trying to make good on his Monday pledge to import $30 trillion in goods and $10 trillion in services in the next 15 years.