China-US trade pact threatens to implode amid rising tension

A planned video conference between the big two could put the brake on the phase one deal

President Donald Trump’s administration could threaten to put the trade deal between China and the United States on ice as the New Cold War freezes over.

Senior Washington and Beijing officials are poised to review the phase one agreement next week, media reports have revealed.

Top of the agenda will be mutual grievances amid deteriorating diplomatic relations as the world’s two economic superpowers slug it out.

“In a White House report, China has been front and center in Washington’s prioritization of states-based threats, and the Covid-19 pandemic has accelerated US policymakers’ embrace of great power competition with China,” Giulio Pugliese, of King’s College London, stressed in a commentary for China-US Focus, an academic portal.

Growing ‘threats’

Concerns are growing that these “threats” could materialize on August 15 when US Trade Representative Robert Lighthizer and Chinese Vice-Premier Liu He are due to discuss via video the progress made in the first six months of the trade pact.

“It’s both the normal semi-annual review and also comes at a time when the relationship continues to deteriorate. Naturally, there is much to discuss,” one person familiar with the planned date for the talks, who requested not to be named, told the Reuters news agency.

The Covid-19 pandemic has played havoc with Beijing’s pledge to buy American imports worth an extra US$200 billion on 2017 levels. Included in the shopping list are agricultural produce and manufactured products.

But that has been derailed by the Covid-19 crisis as Sino-US relations become increasingly strained over the crackdown in Hong Kong and China’s militarization of the South China Sea.

Trade conflict

Faultlines have also appeared in a trade conflict that has dragged in 5G juggernaut Huawei and the trendy short-video app TikTok. Finally, a bitter row about how the coronavirus outbreak started in Wuhan has further ratcheted up tensions.

In the end, Trump might decide to walk away from the deal as part of his tough stance on China ahead of the Presidential Election in November.

“There’s a real danger of US-China confrontation spiraling out of control. As a consequence, the US strategic communications and economic offensives resulting from the pandemic must be understood not just as an electoral tool for Trump and the Republican Party, but as a by-product of the zero-sum logic of the security dilemma,” Pugliese said.

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