China gave Trump a list of crazy demands, and he caved to one of them

By Josh Rogin 

Trump's scattershot economic policy has surrendered the world stage to China: Trump welcomes Xi Jinping in April 2017 at Mar-a-Lago in Palm Beach, Fla. 

After top Trump officials went to Beijing last month, the Chinese government wrote up a document with a list of economic and trade demands that ranged from the reasonable to the ridiculous. 

On Sunday, Trump caved to one of those demands before the next round of negotiations even starts, undermining his own objectives for no visible gain.
The Chinese proposal is entitled, “Framework Arrangement on Promoting Balanced Development on Bilateral Trade,” and I obtained an English version of the document, which is the Chinese government’s negotiating position heading into the next round of talks. 

That round begins this week when Xi Jinping’s special economic envoy Liu He returns to town.
Bullet point 5 is entitled, “Appropriately handling the ZTE case to secure global supply chain.”
“Having noted China’s great concern about the case of ZTE, the U.S. will listen attentively to ZTE’s plea, consider the progress and efforts ZTE has made in compliance management and announce adjustment to the export ban,” the document states.
Trump took a big step in that direction Sunday when he tweeted that he had instructed the Commerce Department to help get ZTE “back into business, fast,” only weeks after the Commerce Department cut off its supply of American components because it violated U.S. sanctions on sales to North Korea and Iran. 

Trump’s tweet set off a panic both inside and outside the administration among those who worry that Trump is backing down from his key campaign promise to stand up to China’s unfair trade practices and economic aggression.
As Sen. Marco Rubio (R-Fla.) pointed out Monday, the problems with ZTE go well beyond sanctions-busting. 

The Federal Communications Commission has proposed cutting ZTE and other Chinese “national champion” companies off from U.S. infrastructure development funds because the U.S. intelligence community views their technology as a national security risk.
White House spokeswoman Lindsay Walters issued a rare tweet clarification, explaining that Trump wanted Commerce Secretary Wilbur Ross to “exercise his independent judgment” to resolve the ZTE case “based on its facts.” 

Ross told the National Press Club on Monday that the ZTE restrictions are “separate from trade.” Still, Ross added, he is looking at “alternative remedies” for ZTE and expects to find some “very, very promptly.”
What the heck happened here? 

Some officials believe that the camp of Trump officials trying to avoid a trade war with China — led by Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow — are winning the never-ending battle for the president’s limited attention. 

Mnuchin is trying to control the China negotiations and elbow out U.S. Trade Representative Robert Lighthizer and Office of Trade and Manufacturing Policy Director Peter Navarro.
My Washington Post colleagues reported that Trump may have gotten ahead of a brewing “mini-deal” whereby the United States provides relief for ZTE and, in return, China eases its restrictions on U.S. agricultural imports. 

If that’s the case, the Trump administration “just got blackmailed,” according to Derek Scissors, resident scholar at the American Enterprise Institute.
“Our actions against ZTE might have been excessive, but what you can’t do is say, ‘Just kidding’ when the Chinese start complaining about it,” he said. 

“The idea that we did it and then reversed ourselves is awful.”
As I’ve written before, a short-term deal would a penny-wise, pound-foolish approach, because confronting China’s large-scale unfair and illegal practices should be an urgent strategic priority. 

The United States gets one shot to show China that we are serious about forcing it to change its behavior — and, if it won’t, that we are serious about defending ourselves.
Trump is signaling he’s willing to give up the one piece of leverage that is actually getting the Chinese government’s attention before receiving anything concrete in return. 

That’s not only bad negotiating. 

It also sends the message that the United States doesn’t have the stomach for the larger economic battles with China to come.
Nobody knows whether Trump will approve whatever “deal” Mnuchin and company put on his desk after the next round of talks. 

Trump may change his mind again. 

But here are some of the other demands in China’s proposal, to watch out for on Trump’s Twitter feed:

• The United States commits to eliminating the sanctions imposed after China’s crackdown on protesters in Tiananmen Square in 1989
• The United States relaxes export restrictions on technology such as integrated circuits
• The United States allows U.S. government agencies to purchase and use Chinese information technology products and services
• The United States agrees to treat Chinese investment and investors equally to those from other countries and place no restrictions on Chinese investment
• The United States agrees to ensure Chinese businesses can participate in U.S. infrastructure projects
• The United States agrees to strengthen protection of Chinese intellectual property. (Seriously!)
• The United States agrees to drop its anti-dumping cases against China at the World Trade Organization
• The United States agrees to terminate its investigations into Chinese intellectual property theft and not impose any of the sanctions Trump already announced

“They expect to be treated the same way our treaty allies are treated, which is ridiculous,” Scissors said. 

The demands in the document are crazy, he said, “But we actually accepted one of China’s crazy demands.”
If Trump concedes to Beijing’s other demands, he would be declaring the United States’ surrender in the economic struggle against China before the fight really begins. 

Trump administration officials are now saying that won’t happen. 

But Trump’s unforced error on ZTE undermines the entire effort.

Trump is a Paper Buffoon

Trump went from 'America first' to saving jobs in China. 

By Don Lee

Trump's stunning change in stance toward a Chinese telecom-equipment maker that his administration recently sanctioned drew widespread rebuke Monday, even as it seemed to increase the likelihood that the U.S. and China could soon pull back from the brink of a trade war.
China's top economic official, Vice Premier Liu He, is expected to arrive in Washington on Tuesday for several days of meetings with senior Trump administration officials. 

And Trump's tweet Sunday that he and Xi Jinping are working together to help save ZTE could be a sign that Trump is looking for a potential deal to avert massive tariffs threatened by both sides.
The Trump administration in April banned U.S. companies from selling parts to ZTE for violating a previous settlement over illegal shipments to Iran, penalties so crippling that they were endangering the big Shenzhen company's survival. 

Critics of China's mercantilist policies had applauded the sanctions, and saw them as an indication of the seriousness with which the administration was pursuing change in Beijing.
Trump's about-face on ZTE apparently surprised his own officials, and it was all the more remarkable because the president, advocate of the "America first" policy, tweeted as a reason that "too many jobs in China [would be] lost."
Scott Paul, president of the Alliance for American Manufacturing, called Trump's tweet on ZTE "indefensible," given that the company had been found breaking U.S. laws and was considered by many to be a security threat to the U.S.
Other analysts warned that the president would pay a heavy political price for inexplicably backing away from his get-tough-on-China policy.
"Rhetorically this is a big change," said Derek Scissors, a scholar at the American Enterprise Institute who specializes in China. 

In terms of actions, he said, Trump's highest-impact strike against China thus far was in fact the ZTE penalty, which now looks to be coming off.
"I don't think right now we can believe the president is willing to sustain any cost to take on the Chinese," he said.
Michael Wessel, a longtime member of the U.S.-China Economic and Security Review Commission, tweeted that ZTE had already been told how to stay in business. 

"Abide by U.S. laws. They've broken the rules twice. Bad sign for upcoming trade talks and potential willingness of administration to settle for small steps."
Trump, apparently reacting to the criticisms, including from lawmakers on both sides of the aisle, on Monday suggested that the softening toward ZTE was motivated by a desire to avoid harming American interests. 

"ZTE, the large Chinese phone company, buys a big percentage of individual parts from U.S. companies. This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with Xi."
For American retailers and other businesses worried about tariffs and disruptions to trade and their supply chains, Trump's pledge to help ZTE and the continuing talks between the two sides were seen as a favorable development.
Chinese officials had responded to the penalties against ZTE by holding up San Diego-based Qualcomm's application to acquire NXP Semiconductors. 

But offering its own step to ease tensions, Beijing said it would restart the review of the purchase request.
Scissors and other analysts said Trump may have backed away because of growing pressure from U.S. farmers, who already were finding more obstacles exporting into the big Chinese market.
There was also speculation that Trump's step may have been in exchange for Beijing's support for the president as he gears up to meet North Korean leader Kim Jong Un on June 12 in Singapore.
China has long been Pyongyang's biggest benefactor, and its recent tightening of trade with North Korea, at Trump's behest, is thought to have played a part in Kim's agreement to meet Trump to discuss a denuclearization of the Korean peninsula. 

Trump has repeatedly said that he would cut China slack on trade if it helped him on North Korea.
At the same time, since the start of the year the Trump administration has moved toward taking hard-line actions to shrink the large U.S. trade deficit and blunt Beijing's policies that are harming U.S. innovation and intellectual property rights. 

Trump has threatened stiff tariffs on $150 billion of Chinese goods, and his administration is also preparing restrictions on Chinese investments. 

Beijing has vowed to retaliate in commensurate measure, and was particularly troubled by the sanctions against ZTE.
Trump's change in tune on ZTE also marked a significant shift from just two weeks earlier when his high-level delegation, led by Treasury Secretary Steven T. Mnuchin, presented a list of unusually tough demands to Liu and others during meetings in Beijing. 

They made little progress as both sides appeared to talk past each other.
"Easing up on ZTE probably makes it more likely that there will be an outcome that avoids tariffs," said Nicholas Lardy, a China economy expert at the Peterson Institute for International Economics, although he added that "there are now so many moving pieces that it is hard to be confident about anything, at least from the outside."
Whether planned or not, Trump has kept trading partners and others off-balance, with tweets and sudden policy pronouncements. 

And the ZTE tweet on Sunday may have topped them all as it left most everyone scratching their heads about the administration's objectives on China.
"What this is, is just another example of a very undisciplined policy process, so that every action isn't necessarily well thought out," said David M. Lampton, director of China studies at the Johns Hopkins School of Advanced International Studies in Washington. 

Rather, he said, "it's a spontaneous kind of combustion in the mind of one admittedly important actor, namely the president."
He and other experts expect that the Chinese delegation in Washington this week will make some concessions, including those previously offered, such as a cut in auto import tariffs, opening up markets in services and other steps to reduce the U.S. trade deficit. 

But no one is expecting Beijing to abandon its industrial policies such as subsidies and market protections for key industries that some in the Trump administration want to tear down.
"The bottom line," Lampton said, "what is the Trump administration prepared to accept? Under what circumstances will it declare victory?"

China Policy: Trump is a Paper Buffoon

The lesson China will take away is that Donald Trump’s threats are not to be taken seriously.

BY MICHAEL H. FUCHS

Trump is probably the world's most stupid leader

Donald Trump spent a lot of time during the campaign criticizing China, and promising to get tough on China if elected president. 

In just his first few weeks in office, however, Trump has proved to be a paper tiger with China, making himself look weak in the eyes of Chinese leaders, which, in turn, will embolden China’s own assertive behavior.
During the campaign, Trump consistently lashed out at China, making the case that the United States didn’t know how to deal with China. 

Bad trade deals were a prime focus for Trump, who said, “the money they’ve drained out of the United States has rebuilt China.” 

When it comes to the United States’ handling of North Korea and the South China Sea, Trump claimed that “China’s toying with us.”
But as president, Trump doesn’t know how to deal with China. 

During the transition period, Trump took a shot across China’s bow by questioning the One China policy — the premise that Taiwan is a part of China, which had undergirded U.S.-China relations since the 1970s — and by taking a call from Taiwan’s president. 

Trump justified his stance on Taiwan by saying that he did not see why the United States had to be “bound by the ‘One China’ policy unless we make a deal with China having to do with other things.” Some likewise spun his actions as a strategic ploy to shake things up and gain leverage with China on other issues, such as trade.

As Trump began the usual series of initial calls with leaders from around the world, according to The New York Times, “administration officials concluded that Xi would only take a call if Mr. Trump publicly committed to upholding the 44-year old policy.”
And so, merely three weeks after his inauguration, Trump reaffirmed the One China policy in a phone call with Xi Jinping. 

In other words, Trump’s first act as president with respect to China policy was to fold in his own first bluff with China. 

And despite Trump’s claims to know how to negotiate with China, he has gotten nothing in return for backing down on his previous One China statements.

The messages that China will take away from this event are clear and not good for U.S. interests: An irresponsible U.S. president backed away from a threat with nothing to show for it. 

Even the official White House readout of the phone call between Trump and Xi admitted that Trump had to give in: “President Trump agreed, at the request of President Xi, to honor our ‘One China’ policy.”

The lesson China will take away is that Donald Trump’s threats are not to be taken seriously.
This incident would be bad enough of a start by itself. 

But Trump decided in his first week in office to unilaterally weaken the U.S. position with China by withdrawing from the Trans-Pacific Partnership, or TPP. 

The goal of TPP was to provide the United States advantageous trade relationships with key Asian partners in a region where China’s trade relationships were expanding rapidly.
If Trump really wanted to get tough with China on trade, he would have pushed to improve the TPP to advance America’s economic position in the region and give himself more leverage in trade talks with China. 

By simply canceling U.S. participation in the TPP, Mr. Trump gave China a gift, and again got nothing in return.
The ramifications of these initial stumbles could be significant. 

Not only will China believe that the new U.S. president can be pushed around, but China will also believe that it can get away with being more assertive in bullying its neighbors. 

Likewise, U.S. allies and partners in Asia will have less confidence that the new administration can be relied upon to stand up to China, sapping U.S. credibility in the region.
From North Korea to the South China Sea, trade issues to cyber-security, there is no shortage of thorny challenges in the U.S.-China relationship that may require the new U.S. administration to get tough. 

Handing away U.S. leverage in the relationship with China is not the right way to get started.