The U.S. and China have entered into the final phase of trade talks while China has risen from a near collapse of its economy. Is a sweeping trade agreement still possible and will it be honored by China?
Gordon Chang:“ I don’t think Beijing has any intention of honoring his promises on changing the structure of its economy. ”
Narration: One of the biggest proponents of a trade deal between the two countries is Wall Street. Why?
Roger Roberson: “The number of companies that are in our capital markets today that are Chinese, we find that some 600 over 650 such enterprises are there. ”
Bannon: Do you think for a second, that these people do not fully understand what’s going on? Of course they do. But they have a hard calling, and that’s money.
蕭茗（Host/Simone Gao）：「當時我聯想到1989年里根總統。 我想知道，當你說『我們能把他們一鍋端』，具體是什麼意思呢？」
Simone:“ At that moment I thought about 1989, Ronald Reagan, you know he doubled down SDI after he walked away from Gorbachev and stuff. I even did a program comparing these two historic moment: Trump’s trade war and the 1989 moment. So I want to ask you what you mean exactly when you said we can take down the whole thing. ”
蕭茗（Host/Simone Gao）：歡迎來到《世事關心》，我是蕭茗。今早正當我要錄製這個開場白時，川普總統發佈推特。川普總統的推特完全改變了美中貿易談判最後階段的走向。總統寫到，在2000億美元中國產品上的10%稅率將升至25%。他還寫到：與中國的貿易協議仍在進行，但是進展太慢。他們想重新談判，沒門！中國股市連同人民幣在幾小時內大跌。股市損失了2.8萬億人民幣，人民幣貶值了1.3%，到了6.8218人民幣對換一美元，這是一月十日以來的最低值。總統對中國採取了又一次強硬態度。這是正確做法嗎？中美貿易會談的最後關頭將會發生什麼？習近平幾乎接受所有美國要求之後，過去的幾個月，中國方面又發生了什麼？美國是否有一小段窗口可以對中共施加最大壓力？ 誰是中共在美最大說客？在這一期《世事關心》，我們探討這些內容。
Welcome to《 Zooming In》, I am Simone Gao. A Tweet from President Trump came in yesterday morning while I was preparing to record these opening remarks. His tweet changed the entire dynamic of the final phase of the U.S. China trade talks. The president wrote that the U.S. would raise the tariffs on 200 billion dollars of Chinese goods, from 10% to 25%. He also wrote: “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Chinese stocks tumbled along with the yuan a few hours after this tweet. The stock market lost 2.8 trillion yuan in value and the offshore yuan fell as much as 1.3 percent to 6.8218 per dollar, its lowest since Jan. 10,. The president is taking yet another tough stance on China. Is this the correct position? What is going to happen at the final phase of the U.S.-China trade talk? What really happened on China’s side in the past few months after Xi Jinping accepted almost all U.S. demands? Is there a small window where the U.S. can give China the maximum pressure? and who is the biggest lobbyist for the CCP in the U.S.? In this edition of Zooming In, we will explore these questions.
Part 1: A rare opportunity
五月一日，美國貿易談判團隊從北京回國，從剛剛結束的最新談判中帶回三個關鍵信息：1. 在幾個禮拜之內，雙方有望就美中貿易談判達成最終協議；2. 中國方面對於關鍵行業的政府補貼問題，仍未解決；3. 關稅作為一種迫使北京遵守承諾的方法，雙方就立即取消或保持現存關稅仍存異議。
On May 1, the U.S. trade team returned home from the latest negotiations in Beijing with three key messages: One, both sides are hopeful that a final U.S.-China trade deal could be struck in a couple of weeks; two: China’s subsidies to key industries remain unresolved; and three, the two sides disagree on whether to immediately remove existing tariffs or keep them in place as an enforcement measure to make sure Beijing honors its word.
US Trade Representative Robert Lighthizer told a Senate committee on Tuesday that “There still are major, major issues that have to be resolved”, “and if those issues are not resolved in a way that’s beneficial to the United States, we will not have an agreement”.
Narration: On May 8, Chinese Vice Premier Liu He will lead more than 100 officials to Washington for another round of negotiations. Major news outlets predicted a likely deal and the U.S. may accept terms less sweeping than it had originally sought.
After President Trump’s tweet, the media might have changed their minds on whether the U.S. will accept a less sweeping deal. What 《Zooming In》 wants to point out here is that 4 months ago, when we covered the Trump, Xi summit at G20, the dynamic of the talk was quite different. Back then, Chinese president Xi Jinping gave the impression that he did everything to prove his sincerity and accepted almost whatever the American hawks demanded in order to prevent imminent U.S. tariffs on 200 billion dollars of Chinese goods. At a press briefing after the G20 summit, Larry Kudlow, the director of the national economic council, said this:
Larry Kudlow: “This one covers so much ground and so much detail. We’ve never seen this before. And furthermore, we’ve never seen the hands-on participation by President Xi before. In fact, that dinner was quite remarkable.”
According to the American team, not only was substantial ground covered in the meeting, but the Chinese team used an important word: “immediately.”
Larry Kudlow: “when we met with Vice Premier Liu He, he said several times—and I pushed him on this—that the China changes, with respect to tariffs and non-tariff barriers and other structural issues that we’ll get into in a few moments, would begin immediately. ”
The biggest outcome of the G20 meeting was that the two parties agreed to a temporary ceasefire for 90 days in order for negotiations to continue. If no agreement could be reached, the tariffs on 200 Billion dollars of Chinese goods would take effect on March 1. However, that deadline was again postponed as March approached. When the two countries met again at the end of April, no words such as “immediately” surfaced from the Chinese, and the sense of emergency seemed to have disappeared from the Chinese side. What happened during the past few months?
In March, in an attempt to stimulate the economy, Chinese Premier Li Keqiang announced a tax cut of 2 trillion yuan, a multi- trillion Yuan infrastructure investment and increased loans to small and medium-sized enterprises by 30%. These measures have yielded results. China’s exports exceeded expectation. Real Estate sales went up, the Stock market jumped 33% from January to April and Foreign exchange reserves marked a 8.58 billion dollar increase compared to the same period last year.
The Chinese economy has largely been stabilized from the turmoil it experienced at the end of last year.
In the past three years, China was going through a painstaking de-leveraging in all sectors of its economy. That was to cut down debt and speculative investment, a widespread practice by Chinese companies to accumulate great wealth in a short period of time. This behavior was largely prompted by the Chinese government’s 4 trillion yuan stimulus plan during the 2008 global financial crisis. The amount of currency issued to the market caused high inflation and huge debt problems throughout China.
When President Trump started the trade war against China in April 2018, China was deep in deleveraging. As of the end of December 2018, the market value of most listed companies in A-shares fell by 80%, the Chinese economy nearly collapsed.
Precisely then, Trump and Xi met at G20 when Xi agreed to almost all US demands, and in turn, America agreed to a ceasefire and postponed tariffs on 200 billion dollars of Chinese imports, not once, but twice. This gave the Chinese economy critical breathing room. Confidence was quickly restored and so were the numbers.
According to top experts from China International Trust Investment Corporation, deleveraging will be realized at the end of 2019 in the financial sector and early 2020 for non-financial sectors.
While problems still lie ahead, China is now on or ahead of schedule for completing the deleveraging and stabilizing of its economy. It has successfully persuaded the U.S. to pause tariffs at its most vulnerable moment while domestic pressure for President Trump to make a deal with China is increasing. Who are the proponents of such a deal? At a recent event by the organization “Committee on the Present Danger: China”, Roger Robinson, an expert on financial security, who helped craft Ronald Reagan’s policy for dismantling the Soviet Union, pointed out one group that is getting increasingly Intertwined with Chinese companies.
“So when we look at, um, the number of companies that are in our capital markets today that are Chinese, we find that some 600 over 650 such enterprises are there. They’re probably around 86 in the New York Stock Exchange, 62 in, uh, in Nasdaq and over 500 in the, over the counter market, which is, as you know, the least regulated and the most popular for those seeking to skirt transparency and disclosure requirements. So here is a, a wide spectrum of companies. Many of them would be seen politely put as as high risk entities, less politely put or outright bad actors. And I’m talking about national security abusers of all stripe as well as human rights abusers. And we can talk about some hard examples of this, but we’re not unfortunately talking about a few tens of millions of dollars. We’re talking about hundreds of billions of dollars and moving rapidly toward $1 trillion dollars. Now that’s a lot of financing that’s being attracted from unwitting American investors. How many people, how many people do we have in our country, in the markets today? 180 million and 200 million Americans. I don’t know the number of but. You can appreciate that it’s disturbingly high and when you look at the pace at which the Chinese are coming into our markets for dollar financing at which they’re desperate for you, you start to see a trend where trillions of dollars are going to flow into our markets over the next two to three years to such an extent that there it is conceivable that one morning the American people wake up and find whether it’s 12% 15% 17% some high number of their investment portfolios of their retirement portfolios are Chinese securities. Well guess what happens that day? The China lobby, as we know it today, appears to be a trivial asterisk next to what’s coming when, again, these folks realize that any American penalties or sanctions toward China based on it’s malevolent behavior could and probably would devalue or damage the value.”
這種關係是雙向的。 高盛（Goldman Sachs）、JP摩根（JP Morgan）、摩根大通（JPMorgan Chase）、黑石（Blackstone）等公司都在中國有巨大投資。美國的主要大公司，如蘋果、沃爾瑪、波音、英特爾、高通等美國大公司都在中國取得了巨大的財富。 大量中共高幹的家庭成員為這些公司工作。 而這些擁有巨額財富的紅色家族也向美國股票市場投入了大量資金。華爾街與共產黨政權之間的關係有多接近？ 前白宮首席幕僚和前高盛執行官史蒂夫·班農說：
This relationship goes both ways. Major Wall Street investment banks such as Goldman Sachs, JP Morgan, JPMorgan Chase, Blackstone and etc. all have significant investment in China. Major American corporations such as Apple, Wal-Mart, Boeing, Intel, Qualcomm have all made great fortunes in China. A large number of family members of top Communist Cadres work for these companies. And these red families with great wealth also have immense investment in the American stock market etc. How close is the relationship between Wall Street and the Chinese Communist Party? Former White House Chief strategist and former Goldman Sachs executive Steve Bannon said this:
“What Xi, and you gotta remember when he’s at Davos and they’re all sitting there you know all the McKinsey guys all the Booz Allen guys all the law firms all the accounting firms Goldman Sachs my old firm all the commercial banks all of them, they’ve went to the best schools in the world they work in the smartest place in the world they’ve got total information at their fingertips. You’re telling me they don’t know about the Uyghurs. They don’t know about the underground Christian church you know about the underground Catholic Church. They don’t know about the Dalai Lama. They don’t know about the social credit score. They do not know about the enslavement of the Chinese people. Sure they know and they don’t care. ”
Host: Bannon went so far as to say Corporate America is the lobbying arm for the Chinese Communist Party and that Wall Street is their investment relations firm. Listen to this heated discussions Bannon had on CNBC.
CNBC: “Really? Corporate America is funding the Chinese Communist Party?”
史蒂夫·班農（前白宮首席幕僚）：「 100％。順便說一下，中國共產黨在中國的整個運作都是由華爾街資助的，凱爾可以給你介紹其中細節。請記住，PBS或NPR前幾天有報導，是關於中共侵入和竊取美國公司知識產權的事情。 這兩家媒體和財政部的官員討論過，他們也訪問了大約200家公司，沒有一家公司想要對中共提出指控，因為他們不想失去進入中國大陸市場的機會。今天的美國商界是中國共產黨的遊說部門，華爾街是投資關系部門。你在特朗普總統的貿易談判中看到了這一點，我說這是經濟戰爭的停戰協定。當劉鶴來到美國時，他先去了哪裏，他去見了：兩個月前吃過午飯的，他來的第一天和民意代表、公關公司、以及中國（美國）最大公司的總裁和首席運營官們共進午餐，為的是向特朗普總統施壓。 逼特朗普總統達成協議的所有壓力不是來自中國，而是來自華爾街和美國商界。」
Steve Bannon: “100%. By the way, the entire operation of the Chinese Communist Party in China is funded by Wall Street, which Kyle can walk through with you how they are funded by wall street. Remember, PBS or NPR had this thing the other day about intrusions and stealing intellectual property in American companies. They talked to our treasury official and they went around 200 companies, not one company wants to press charges because they didn’t want to be blocked out of China. Corporate America today is the lobbying arm of the Chinese Communist Party and Wall Street is the investment relations department. You see this on President Trump’s trade negotiations which I say is the armistice on the economic war. When Liu He came to the United States where does he go first. He goes to meet…had a lunch about two months ago… He comes the first day he had lunch with the representatives, the government affairs guys, the COOs and the presidents of the biggest companies in China (America) to put pressure on President Trump. All the pressure coming for President Trump to get a deal is not from the Chinese, is from Wall Street is from industrial America.”
I asked Roger Roberson the same question: how much pressure does President Trump receive from Wall Street on the U.S. – China trade talks.
羅傑·羅伯遜（布拉格安全研究所總裁）：「關於貿易談判，總統受到來自多個遊說團體前所未有的壓力。從農業到華爾街的融資金融家。我完全相信，遊說到這個程度，特別是金融方面的遊說群體，說明有一個巨大的群體希望達成貿易協定，無論那個協定內容是什麼，而且要快，所以我認為這裡有巨大利益。但是大多數人很少把中國在美國資本市場的行為與貿易談判聯繫在一起。我認為華爾街在中國方面收取鉅額費用。他們在某些案子上謀求巨大回報。所以他們非常熱心，你可以看到很多中國公司被加入摩根斯坦利資本新興市場指數（MSCI Emerging Market Index），最近是加入彭博巴克利全球彙總指數。」
Roger: “It’s a matter of record that the president has been under a great deal of pressure on the trade talks from various lobbies. Everything from agriculture to finance financiers on Wall Street. So I do believe that this level of engagement particularly on the financial side is such that there is a huge constituency that wants a trade agreement. Almost irrespective of its content. And soon. So I do think there is a great interest there but there is relatively little connection. Between China’s activities in the capital markets and the trade talks in the minds of most people. I think that Wall Street is making huge fees on the China dimension. And they are seeing some impressive returns in some cases as well. So there’s great enthusiasm and you can see it in the number of Chinese companies that are being added to the MSCI Emerging Market Index. And more recently the Bloomberg Barclays Global aggregate index.”
Coming up, can the Chinese Communist Party ever be trusted?
Part 2: Can CCP Ever Be Trusted?
On Oct. 9, 2018, at the Center for Strategic and International Studies, Dr. Peter Navarro, assistant to the President and Director of Trade and Industrial Policy recounted The promises China has made to the U.S. in recent years.
Peter Navarro: “The game that China has played—and they played people in the Bush administration like a violin—is to do the tap dance of economic dialogue. That’s all they want to do. They want to get us to the bargaining table, sound reasonable, and talk their way while they keep having their way with us. And this is—this is—I mean, look, here’s all you need to know when you think about the prospect of a deal, OK? We had a high-ranking member of the Chinese government agree with Barack Obama on two things back in 2015. Two things, OK? The Chinese official agreed to no militarization of the South China Sea. Within two years those artificial islands were armed to the teeth. The second thing that official agreed to was to stop hacking American businesses. Yeah, well, that lasted about six months, and now the U.S. government will tell you unequivocally that those hacks are back up, they’re serious, and they’re coming to get us.”
To people who are familiar with the history of the Chinese Communist Party, this behavior is not surprising. It has been consistent throughout its history. In the wake of the second World War, this is one of the key tactics the CCP used to defeat the Kuomintang to take control of China.
After the Japanese were defeated in 1945. A Full-scale civil war between the Communists and the Chinese Nationalists represented by the KMT resumed. The KMT was the official Chinese government recognized by the international community at the time. The Communist army, previously a minor faction, grew rapidly in influence and power and eventually defeated the KMT. There are many reasons why the KMT was defeated, but one of the main tactics that the Communists used repeatedly during the civil war was the so called “Cooperation talks”. What happened was that whenever the Communists were on the verge of losing, they initiated the so called “Peace Talks’ or “Cooperation Talks” with the KMT. There were three such “cooperation” talks altogether. The agreement from the last talk in 1945 recognized the legal state of the KMT government, and agreed to end the civil war. The Communist Party did not honor that agreement and kept fighting until they expelled the KMT from mainland China.
The CCP has been in power ever since. Today, the Trump administration demanded structural changes to the U.S.-China trade relations. This was essentially asking the CCP to change the way it runs its economy, the way it runs its country and basically a political reform of some sort. I asked Gordon Chang, a columnist and China expert if China will really do it, and he said this.
章家敦（專欄作家／中國問題專家）：「北京不會兌現改革經濟結構的承諾。 別忘了，習近平堅信國有企業壟斷經濟命脈。他上臺以來，出現了所謂『國進民退』的現象，外資企業和民企都在失去生存空間。所以在貿易談判中，我們要求中共完全改變國有企業壟斷經濟命脈的局面，建立真正的市場經濟。中共不可能接受這一改革要求。習近平不會同意。依我看，貿易談判無法迫使中共改革經濟體制。我們和中共有許多貿易協議，中共無一遵守。 習近平是個毛派，相信國家掌控一切，他主政下的中共不會遵守協議。」
Gordon Chang: “I don’t think Beijing has any intention of honoring his promises on changing the structure of its economy. Remember, Xi Jinping believes in a state dominated system. And during his tenure, we’ve seen state enterprises crowd out the private sector, not just foreign companies, but also the domestic Chinese private sector. So what we’re asking for in our trade talks with the Chinese is for them to completely change the state dominated system and go to a free market economy. That’s just impossible. Xi Jinping is not going to do that. So I don’t think that we can change China with a trade agreement. We had so many trade agreements with the Chinese and they violated them all. Why would they start honoring their deals under Xi jinping who is a believer of the Maoist state dominated China?”
Coming up, what should the end goal of the trade war be?
Part 3: Reagan’s Economic Warfare against the Soviet Union
蕭茗（Host/Simone Gao）：33年前當里根總統認識到蘇聯經濟是多麼脆弱，蘇聯是多麼害怕他的星球大戰計劃時，他毫不猶豫地採取了摧毀蘇聯的行動。人們從里根這裡能學到什麼? 讓我們回顧一下20世紀80年代發生的事情。
32 years ago, when President Reagan gained insight into how vulnerable the Soviet Union’s economy was and how they feared his SDI program, he didn’t hesitate to make a decisive move to bring down the whole thing. Is Reagan’s rationale still relevant today? Let’s revisit what happened in the 1980s.
By the winter of 1986, President Reagan had come a long way in combating the Soviet Union during the cold war. Reagan agreed with Churchill that the Soviet Union only respected strength and resolve in their dealings with other nations.
President Reagan started a multi-billion-dollar modernization of U.S. strategic forces to regain a milit ary advantage over the then more powerful Soviet Union. Among those efforts was the Strategic Defense Initiative (SDI), also known as Star Wars, an initiative aimed at rendering nuclear weapons impotent and obsolete. While trying to keep up with the Star Wars program the Soviets went bankrupt. The Soviet Union increased defense spending by 45 percent. They also suffered from Reagan’s other measures. They lost billions in oil sales thanks to Reagan’s strategy in boosting Saudi oil production. They had to spend billions more on third world dictators. They could not keep up.
蕭茗（Host/Simone Gao）：毫不誇張地說，里根總統的經濟戰摧垮了蘇聯。我們能從里根總統那裡學到什麼？10個月前，我看到了史蒂夫·班農的這段視頻，他當時在Delivering Alpha會議上接受採訪，讓我聯想到里根總統在1987年對當時局勢的考量。請看。
it is not an over statement that President Reagan’s economic warfare brought the Soviet Union down. Is his thinking still relevant today? Ten months ago, I came across this short video of Steve Bannon being interviewed at the Delivering Alpha conference. It reminded me of Reagan’s thinking in 1987. Take a look.
Steve Bannon:“ It is not just the trade, it is the scale and the depth of the trade. In the way Trump propose it, he says, it is 50, it is 200, another 200 hundred if you retaliate, and by the way, if you even retaliate again, it maybe another 500. He is talking about now maybe a half trillion dollars. That’s just one. The 301s is what the silicon valley came to us about. It is not the technology theft, it is the forced technology transfers, the third part is ZTE, we can basically impluck these companies..”
MSNBC host:“ I am trying to game this up.”
Steve Bannon: “yeah, this is the game. Right now, we are converging on a point and they understand this, we can take the whole thing down. We can take the whole built on the house of sand…”
We can take the whole thing down. I always wanted to ask Bannon what he meant by that so I did at the Present Danger: China event:
Simone: “One thing you said during that interview is we can take down the whole thing. We can take down the whole thing. I don’t know if you still remember it, but that line just struck me. At that moment I thought about 1989, Ronald Reagan, you know he doubled down SDI after he walked away from Gorbachev and stuff. I even did a program comparing these two historic moment: Trump’s trade war and the 1989 moment. So I want to ask you what you mean exactly when you said we can take down the whole thing. ”
Steven Bannon: “it’s just like 1989. Remember the Soviet Union collapsed because the West put pressure, but it was the people in slave in Eastern Europe and Russia and the rest of the Soviet Union that brought the system down. At some point of the day they said, we’re not gonna do this anymore. And the whole system collapsed in a couple of months. it was so dramatic. you know, no shots fired. The way that the radical cadre that has enslaved the Chinese people, and that’s what happened here. They’ve enslaved the Chinese people. The way to bring it down is the Chinese people have to do that, and what the West has to do, and I think you’re seeing start to come together, not just president Trump’s trade, you know, now to engage in this confrontation China’s had in this trade war. That’s one element. The other element is to militarily, to least be aware like in the South China Sea, the East China sea, in the defense of Taiwan, the defense of Hong Kong, the rights of the people in Hong Kong, the implementation of the deal that we caught in, you know, the one nation, two systems, which is being totally thrown out the door, right? The Hong Kong people are now being enslaved, the people in China will stand up because they want freedom. They understand what they can do with freedom, right? the great economic powerhouse they can have. And so I think it’s come upon the west to a system of that, and that I think the whole thing can collapse, I think the entire radical Cadre, the CCP, the whole thing can collapse. You can see rule of law, you can see democracy, you can see all of it come to the Chinese people. ”
蕭茗（Host/Simone Gao）：斯蒂夫·班農歡迎川普總統提高在2000億美元中國產品上的關稅，稱這是川普當選總統以來最重要的一天。美中貿易戰在中國經濟最脆弱時，打了中國一個措手不及。貿易戰揭示了比貿易更為深層的問題，其結果可能也遠遠超過貿易本身。這全看人們如何把握這個歷史時機了。《世事關心》將帶給您有關美中貿易戰的獨到視角，敬請關注。請在twitter告訴我您的想法， @zoominginSimone，您也可以在《世事關心》臉書專頁或者我們的youtube頻道留言，他們的名字都是：Zooming In with Simone Gao，讓我們下次再見。
Steve Bannon applauded President Trump’s increase of tariffs on 200 billion dollars of Chinese goods, saying this is the biggest day of his presidency. The U.S. – China trade war caught China off guard when it was in its most vulnerable economic moment. The trade war speaks to much deeper issues than trade and the result of it could also go much further beyond trade as well. It all depends on how this historical moment is being handled. Stay tuned, Zooming In will bring you perspectives on the U.S. – China trade war you won’t see anywhere else. Let me know what you think on twitter @zoominginSimone. You can also join the conversation on our facebook page or subscribe to our youtube channel at Zooming In with Simone Gao. Until next time, Goodbye.
Writer：Simone Gao, Katherine Hu
Editors：Julian Kuo, Bonnie Yu, Frank Lin, Melodie Von, York Du
Narrator: Rich Crankshaw
Transcription: Jim Battaglini
Translation：Greg Yang, Juan Li, Xiaofeng Zhang, Charles Hugo
Cameraman：Wei Wu, Jimmy Xie, York Du
Special Effects：Harrison Sun
Assistant producer： Bin Tang, Merry Jiang
Host accessories are sponsored by Yun Boutique
New Tang Dynasty Television