The U.S.-Chinese trade war isn’t going away under President Joe Biden.
Biden won’t confront Beijing right away, economists say, because he wants to focus on the coronavirus and the economy. But he looks set to renew pressure over trade and technology grievances that prompted President Donald Trump to hike tariffs on Chinese imports in 2017.
Negotiators might tone down Trump’s focus on narrowing China’s multibillion-dollar trade surplus with the United States and push harder to open its state-dominated economy, which matters more in the long run, economists say. But no abrupt tariff cuts or other big changes are expected.
“I think Biden will focus more on trying to extract structural reforms,” said Louis Kuijs of Oxford Economics. “It’s going to take some time before we get any shift or explicit announcements.”
Biden is evaluating tariffs on Chinese goods and wants to coordinate future steps with allies, White House spokeswoman Jen Psaki said Monday. She gave no indication of possible changes.
“The president is committed to stopping China’s economic abuses,” Psaki said.
A Chinese foreign ministry spokesman, Zhao Lijian, appealed to Washington to learn from Trump’s “erroneous policies” and adopt a “constructive attitude” but gave no indication of possible changes by Beijing.
“Cooperation is the only correct choice for both sides,” Zhao said Tuesday.
Trump acted on complaints that are shared by Europe and other traders, but Washington has little to show for its bruising war. It brought President Xi Jinping’s government to the bargaining table but roiled global trade, raised consumer prices and wiped out jobs.
The last major development was a year ago, when Beiing promised in the “Phase One” agreement of January 2020 to buy more soybeans and other U.S. exports and stop pressuring companies to hand over technology.
China fell short on those purchases. Amid the coronavirus turmoil, it bought about 55% of what it promised. As for tech policy, some economists say those changes matter but question whether it counts as a win. They say Beijing might have made them anyway to suit its own plans.
China faces more opposition than ever in Washington due to its trade record, territorial disputes with neighbors, crackdown on Hong Kong, reports of abuses against ethnic Muslims and accusations of technology theft and spying.
“The ground has shifted in a significant way,” said Nathan Sheets, a former Treasury undersecretary for international affairs in the Obama administration.
Katherine Tai, Biden’s choice to succeed U.S. Trade Representative Robert Lighthizer, sounded a hawkish note on China in a speech this month.
“We face stiffening competition from a growing and ambitious China,” said Tai. “A China whose economy is directed by central planners who are not subject to the pressures of political pluralism, democratic elections or popular opinion.’’
That means China has to make changes if wants to make progress, said Raoul Leering, global trade analyst for ING. He said that while many of Trump’s statements were “close to nonsense,” he was right that China has more trade barriers and official intervention in the economy than the United States.
“It will depend on China, the speed at which they reform and change policies, to see whether Biden will roll back trade barriers,” he said.
After 2 1/2 years and 13 rounds of talks, negotiators have yet to tackle one of the biggest irritants for China’s trading partners — the status of politically favored state companies that dominate industries from banking to oil to telecoms.
Europe, Japan and other governments criticized Trump’s tactics but echo complaints that Beijing steals technology and breaks market-opening promises by subsidizing and shielding companies from competition.
Those complaints strike at the heart of a state-led development model Communist Party leaders see as the basis of China’s success.
They are building up “national champions” including PetroChina Ltd., Asia’s biggest oil producer, and China Mobile Ltd., the world’s biggest phone carrier by subscribers. The party in 2013 declared state industry the “core of the economy.”
Outside the state sector, the party is nurturing competitors in solar power, electric cars, next-generation telecoms and other fields.
Beijing could offer to drop its claim to being a developing economy, a status it insists on despite having become one of the biggest manufacturers and a middle-income society, Leering said. Under WTO rules, that allows the Communist Party to protect industries and intervene more in the economy.
Giving that up “would be a very important gesture,” Leering said.
Trump’s opening shot in 2017 was a tax hike on $360 billion worth of Chinese imports. Beijing retaliated with tariff hikes and suspended soybean imports, hitting farm states that voted for Trump in 2016.
The U.S. trade deficit with China narrowed by by 19% in 2019 over a year earlier and by 15% in the first nine months of 2020.
Also Read: US-China trade conflict a major concern for global economy: ICCB
That failed to achieve Trump’s goal of moving jobs to the United States. Importers shifted instead to Taiwan, Mexico and other suppliers. The total U.S. trade deficit dipped slightly in 2019, then rose nearly 14% through November last year.
Meanwhile, the Congressional Budget Office estimates tariff hikes cost the average U.S. household nearly $1,300 last year. Businesses postponed investments, undoing some of the benefits of Trump’s 2017 corporate tax cut.
A study by the U.S.-China Business Council and Oxford Economics found the U.S. economy lost 245,000 jobs due to the tariffs. It said even a modest reduction would create 145,000 jobs by 2025.
Trump stepped up pressure by cutting off access to U.S. technology for telecom equipment giant Huawei Technologies Ltd. and other companies seen by American officials as possible security risks and a threat to U.S. industrial leadership. Americans were ordered to sell shares in Chinese companies Washington says have links to the military.
The Communist Party responded by vowing to accelerate its two-decade-old campaign to make China a self-reliant “technology power.”
Psaki, the White House spokeswoman, said Biden also was reviewing those issues but gave no indication of possible changes.
Biden wants to hold Beijing accountable for “unfair and illegal practices” and make sure American technology doesn’t facilitate its military buildup, Psaki said.
Also Read: China suspends more penalties on US goods after trade truce
Zhao, the Chinese spokesman, called on Washington not to “politicize or weaponize” science and technology and to avoid “groundless accusations to smear China.”
Biden’s envoys have the option of fine-tuning Trump’s penalties by dropping some in exchange for Chinese policy changes, said Kuijs. But he and other economists say rolling back tariffs and curbs on access to technology and financial markets is unlikely to be a priority.
“It is difficult to see a U.S. reversal of the recent hawkish trends in China policy,” Sylvia Sheng of JP Morgan Asset Management said in a report.
Tech curbs are unlikely to be eased because Washington “regards China as a competitor,” said Tu Xinquan, director of the Institute for WTO Studies at the University of International Business and Economics in Beijing.
Tariff cuts look like the only short-term option, Tu said. He said Biden could defend getting rid of taxes the World Trade Organization says were improperly imposed.
“In that case, he wouldn’t lose face,” said Tu.
The United Nations warned Monday that the world economy is “on a cliffhanger,” still reeling from the COVID-19 pandemic whose impact will be felt for years but still expected to make a modest recovery of 4.7% in 2021 which would barely offset 2020 losses.
The U.N.’s new report on the World Economic Situation and Prospects said the once-in-a-century crisis sparked by the global impact of the coronavirus caused the global economy to shrink by 4.3% in 2020 -- the sharpest contraction in global output since the Great Depression that began in 1929 and far higher than the 1.7% reduction during the Great Recession of 2009.
“The depth and severity of the unprecedented crisis foreshadows a slow and painful recovery,” said U.N. chief economist Elliott Harris, the assistant secretary-general for economic development. “As we step into a long recovery phase with the roll out of the vaccines against COVID-19, we need to start boosting longer-term investments that chart the path toward a more resilient recovery -- accompanied by a fiscal stance that avoids premature austerity.”
According to the report, the lockdowns, quarantine measures and social distancing introduced during the second quarter of 2020 “helped to save lives but also disrupted the livelihoods of hundreds of millions of people worldwide.”
By April, it said, “full or partial lockdown measures had affected almost 2.7 billion workers, representing about 81% of the world’s workforce.” And it said another 131 million people were pushed into poverty, many of them women, children and people from marginalized communities.
China, the world’s second-largest economy where COVID-19 first emerged, was the only country in the world to register positive economic growth in 2020 -- 2.4% -- and the U.N. forecasts that it will grow by 7.2% in 2021.
Hamid Rashid, chief of the U.N.’s Global Economic Monitoring Branch and the report’s lead author, told a news conference launching the report that China will account for about 30% of global growth in 2021. If that happens, he said, it will help many countries in Africa, Latin America and the Caribbean that supply resources and commodities to China.
Also read; Global economy to shrink by 3.2pc: UN report
According to the U.N. forecasts, the U.S. economy will grow 3.4% in 2021 after shrinking 3.9% in 2020, Japan's economy will grow 3% this year after contracting 5.4% last year, and economies of Euro-zone countries will grow 5% in 2021 after shrinking 7.4% in 2020.
Developing countries saw a less severe contraction of 2.5% last year, and the U.N. is forecasting a 5.7% rebound in 2021.
The U.N. said “it will remain critical” that the Group of 20 -- the world’s 20 major economies accounting for nearly 80% of world output -- “return to the trajectory of growth, not only to lift the rest of the world economies but also to make the world economy more resilient to future shocks.”
The $12.7 trillion in global fiscal stimulus -- more than half from Germany, Japan and the United States -- “prevented a Great Depression-like economic catastrophe worldwide,” the U.N. said. “In dollar terms, stimulus spending per capital averaged nearly $10,000 in the developed countries, while it amounted to less than $20 per capita in the least developed countries,” the report said.
Rashid, the U.N. official, said the primary goal of the fiscal stimulus was to stabilize the global economy “so there was no drying up of liquidity.” This was achieved, he said, but the secondary goal was to stimulate investments and prevent bankruptcies and “here we see significant slack.”
Rashid said all the major economies saw significant increases in money supply, about 23% for the United States, which isn't surprising since most stimulus money went into the financial markets because households were unable to spend the money or businesses were unable to invest because they were uncertain about the future.
The big winners were stock markets, he said.
Looking at the major stock indexes, Rashid said, Japan’s Nikkei 225 increased about 45% between March and December and the Dow Jones and S&P 500 both went up by more than 30%, compared to average increases below 10% in the previous five years.
“And that is alarming because that shows the disconnect between the real economic activities and the financial sector activities,” he said.
The Biden administration is adding a sign language interpreter to its daily press briefings.
White House press secretary Jen Psaki announced the move during Monday’s briefing, and an interpreter could be seen on the White House’s YouTube stream of the event.
Psaki said President Joe Biden “is committed to building an America that is more inclusive, more just and more accessible for every American, including Americans with disabilities and their families.”
It marks a shift from the Trump administration, which had only sporadic press briefings and didn’t include an interpreter until late in President Donald Trump’s term.
Last August, the National Association of the Deaf joined five deaf individuals in suing Trump and press secretary Kayleigh McEnany, charging the failure to provide an interpreter undermined the ability of deaf and hard-of-hearing Americans to access key information about the coronavirus pandemic.
The next month, a federal judge ordered the White House to include American Sign Language interpretation at all televised briefings on the virus. The ruling said the interpreter could be in the frame physically near the speaker or off-site. It said the White House was required to make the interpreter feeds accessible online and on television using a picture-in-picture format.
White House press secretary Jen Psaki says the Biden administration will provide public briefings on the coronavirus pandemic starting Wednesday.
The briefings will feature public health officials. Psaki says they will occur three times a week and provide details on the government’s response to addressing the pandemic.
That’s a stark contrast to the Trump administration, which kept Dr. Anthony Fauci, the nation’s leading infectious-diseases expert, and other top health officials on a short leash, with the West Wing press shop tightly controlling Fauci’s media appearances and offering few public briefings as the virus raged in recent months.
President Joe Biden signed an order Monday reversing a Trump-era Pentagon policy that largely barred transgender individuals from serving in the military.
The new order, which Biden signed in the Oval Office during a meeting with Defense Secretary Lloyd Austin, overturns a ban ordered by President Donald Trump in a tweet during his first year in office. It immediately prohibits any service member from being forced out of the military on the basis of gender identity.
Biden's order says that gender identity should not be a bar to military service.
“America is stronger, at home and around the world, when it is inclusive. The military is no exception," the order says. "Allowing all qualified Americans to serve their country in uniform is better for the military and better for the country because an inclusive force is a more effective force. Simply put, it’s the right thing to do and is in our national interest.”
The order directs the departments of Defense and Homeland Security to take steps to implement the order for the military and the Coast Guard. And it says they must reexamine the records of service members who were discharged or denied reenlistment due to gender identity issues under the previous policy.
It requires the departments to submit a report to the president on their progress within 60 days.
Biden had been widely expected to quickly overturn the Trump policy. And the move also was backed by Biden's newly confirmed defense secretary, retired Army Gen. Lloyd Austin, who spoke of the need to overturn it during his Senate confirmation hearing last week.
“I support the president’s plan or plan to overturn the ban,” Austin said. “If you’re fit and you’re qualified to serve and you can maintain the standards, you should be allowed to serve.”
Under Biden's new policy, transgender servicemembers won't be discharged based on gender identity, and they can serve in their preferred gender once their transition is complete and recorded in the defense reporting system.
The decision comes as Biden plans to turn his attention to equity issues that he believes continue to shadow nearly all aspects of American life. Ahead of his inauguration, Biden's transition team circulated a memo from Ron Klain, now the White House chief of staff, that sketched out Biden's plan to use his first full week as president “to advance equity and support communities of color and other underserved communities."
The move to overturn the transgender ban is also the latest example of Biden using executive authority in his first days as president to dismantle Trump's legacy. His early actions include orders to overturn a Trump administration ban on travelers from several predominantly Muslim countries, stop construction of the wall at the U.S.-Mexico border, and launch an initiative to advance racial equity.
Until a few years ago service members could be discharged from the military for being transgender, but that changed during the Obama administration. In 2016, Defense Secretary Ash Carter announced that transgender people already serving in the military would be allowed to serve openly. And the military set July 1, 2017, as the date when transgender individuals would be allowed to enlist.
After Trump took office, however, his administration delayed the enlistment date and called for additional study to determine if allowing transgender individuals to serve would affect military readiness or effectiveness.
A few weeks later, Trump caught military leaders by surprise, tweeting that the government wouldn't accept or allow transgender individuals to serve “in any capacity” in the military. “Our military must be focused on decisive and overwhelming victory and cannot be burdened with the tremendous medical costs and disruption that transgender in the military would entail,” he wrote.
After a lengthy and complicated legal battle and additional reviews, the Defense Department in April 2019 approved the new policy that fell short of an all-out ban but barred transgender troops and military recruits from transitioning to another sex and required most individuals to serve in their birth gender.
Under that policy, currently serving transgender troops and anyone who had signed an enlistment contract before the effective date could continue with plans for hormone treatments and gender transition if they had been diagnosed with gender dysphoria.
But after that date, no one with gender dysphoria who was taking hormones or has transitioned to another gender was allowed to enlist. Troops that were already serving and were diagnosed with gender dysphoria were required to serve in their birth gender and were barred from taking hormones or getting transition surgery.
As of 2019, an estimated 14,700 troops on active duty and in the Reserves identify as transgender, but not all seek treatment. Since July 2016, more than 1,500 service members were diagnosed with gender dysphoria; as of Feb. 1, 2019, there were 1,071 currently serving. According to the Pentagon, the department spent about $8 million on transgender care between 2016 and 2019. The military’s annual health care budget tops $50 billion.
All four service chiefs told Congress in 2018 that they had seen no discipline, morale or unit readiness problems with transgender troops serving openly in the military. But they also acknowledged that some commanders were spending a lot of time with transgender individuals who were working through medical requirements and other transition issues.