Because of this blog, our China lawyers get a fairly steady stream of China law questions from readers, mostly via emails but occasionally via blog comments or phone calls as well. If we were to conduct research on all the questions we get asked and then comprehensively answer them, we would become overwhelmed. So what we usually do is provide a quick general answer and, when it is easy to do so, a link or two to a blog post that provides some additional guidance. We figure we might as well post some of these on here as well. On Fridays, like today.
One of the questions both our China lawyers and our international trade lawyers have constantly been getting of late — from clients, from readers, and from the media — is when will the US-China Trade War end.
Most of us respond by saying that it is too early even to foresee an end because the terms on which it is going to end are not the least bit clear.
What will the United States require for this trade war to end? Will it require simply that China buy more American goods? If that were all it wants it would have ended months ago. Does it want China to open its economy to foreign companies? Does it want China to stop with the IP theft? We believe it is the latter two and for that reason we do not see the trade war ending soon, if ever.
We say this because we do not see China making anything resembling major concessions on either of these two things and we say this in part because China refuses even to concede these are real issues. Two things from this week enforce our position on this.
- A number of my firm’s China lawyers attended an event earlier this week to welcome the new China Consul-General from San Francisco. Former US Ambassador Gary Locke kicked it off with a five or so minute talk about how there are many issues between China and the United States but there is the possibility of resolving them and he went into how nobody in the room wanted anything but for relations between the United States and China to improve. The Chinese Consul-General followed this up with a 45 minute speech which he read straight from his notes on how pretty much nothing of which the U.S. was accusing China was actually happening. How can there be resolution of problems when there is not even agreement on whether the problems are real or not?
- The PRC foreign ministry and government media (in Chinese) have lately been encouraging the Chinese people not to be angry with the American people using language like the following: “The Chinese people and the American people are friends. The American people do not think China is doing anything wrong. President Trump and his team are acting against the will of the American people and the basically friendly relations between the people’s of the two countries. China is confident the will of the people will be recognized and the people of the U.S. will force President Trump to back down.” Again, no admission of any wrongdoing but add to that the idea that it is merely President Trump pushing his own agenda and you get the strong sense that China’s plan is to try to wait out the trade war until the United States has a new President.
Bottom line: Right now there has been little to no (really just no) recognition by China that it has done anything to justify the trade war. Until China admits there are real issues we do not see China making real concessions and until China makes real concessions we do not think it even possible to guess as to when the trade war will end. We see President Trump’s “very good phone call” with President Xi as President Trump trying to influence the mid-term elections with “good news.” In the meantime, companies that export Made in China products to the United States are looking for alternatives, and fast. Would the Last Company Manufacturing in China Please Turn Off the Lights.
NOTE: Whenever we write anything that it is less than sunny about US-China relations we get a ton of backlash from people saying either that we have no clue or that we are out to sabotage this or that or that we are saying things just to generate more business. To which I merely note that our blog is called the China Law Blog and well over half of my law firm’s international legal business is China. We have every incentive to say only good things about doing business with China but we also have a greater incentive to do our very best to tell the truth as we see it and that is what we will continue to do.
What are you seeing out there?