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.
萧茗（Host/Simone Gao）：“当时我联想到1989年里根总统。 我想知道，当你说‘我们能把他们一锅端’，具体是什么意思呢？”
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. ”
萧茗（Host/Simone Gao）：欢迎来到《世事关心》，我是萧茗。今早正当我要录制这个开场白时，川普总统发布推特。川普总统的推特完全改变了美中贸易谈判最后阶段的走向。总统写到，在2000亿美元中国产品上的10%税率将升至25%。他还写到：与中国的贸易协议仍在进行，但是进展太慢。他们想重新谈判，没门！中国股市连同人民币在几小时内大跌。股市损失了2.8万亿人民币，人民币贬值了1.3%，到了6.8218人民币对换一美元，这是一月十日以来的最低值。总统对中国采取了又一次强硬态度。这是正确做法吗？中美贸易会谈的最后关头将会发生什么？习近平几乎接受所有美国要求之后，过去的几个月，中国方面又发生了什么？美国是否有一小段窗口可以对中共施加最大压力？ 谁是中共在美最大说客？在这一期《世事关心》，我们探讨这些内容。
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，美国贸易谈判团队从北京回国，从刚刚结束的最新谈判中带回三个关键信息：1. 在几个礼拜之内，双方有望就美中贸易谈判达成最终协议；2. 中国方面对于关键行业的政府补贴问题，仍未解决；3. 关税作为一种迫使北京遵守承诺的方法，双方就立即取消或保持现存关税仍存异议。
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.”
这种关系是双向的。 高盛（Goldman Sachs）、JP摩根（JP Morgan）、摩根大通（JPMorgan Chase）、黑石（Blackstone）等公司都在中国有巨大投资。美国的主要大公司，如苹果、沃尔玛、波音、英特尔、高通等美国大公司都在中国取得了巨大的财富。 大量中共高干的家庭成员为这些公司工作。 而这些拥有巨额财富的红色家族也向美国股票市场投入了大量资金。华尔街与共产党政权之间的关系有多接近？ 前白宫首席幕僚和前高盛执行官史蒂夫·班农说：
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·班农（前白宫首席幕僚）：“ 100％。顺便说一下，中国共产党在中国的整个运作都是由华尔街资助的，凯尔可以给你介绍其中细节。请记住，PBS或NPR前几天有报导，是关于中共侵入和窃取美国公司知识产权的事情。 这两家媒体和财政部的官员讨论过，他们也访问了大约200家公司，没有一家公司想要对中共提出指控，因为他们不想失去进入中国大陆市场的机会。今天的美国商界是中国共产党的游说部门，华尔街是投资关系部门。你在特朗普总统的贸易谈判中看到了这一点，我说这是经济战争的停战协定。当刘鹤来到美国时，他先去了哪里，他去见了：两个月前吃过午饭的，他来的第一天和民意代表、公关公司、以及中国（美国）最大公司的总裁和首席运营官们共进午餐，为的是向特朗普总统施压。 逼特朗普总统达成协议的所有压力不是来自中国，而是来自华尔街和美国商界。”
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.
罗杰·罗伯逊（布拉格安全研究所总裁）：“关于贸易谈判，总统受到来自多个游说团体前所未有的压力。从农业到华尔街的融资金融家。我完全相信，游说到这个程度，特别是金融方面的游说群体，说明有一个巨大的群体希望达成贸易协定，无论那个协定内容是什么，而且要快，所以我认为这里有巨大利益。但是大多数人很少把中国在美国资本市场的行为与贸易谈判联系在一起。我认为华尔街在中国方面收取钜额费用。他们在某些案子上谋求巨大回报。所以他们非常热心，你可以看到很多中国公司被加入摩根斯坦利资本新兴市场指数（MSCI Emerging Market Index），最近是加入彭博巴克利全球汇总指数。”
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（专栏作家／中国问题专家）：“北京不会兑现改革经济结构的承诺。 别忘了，习近平坚信国有企业垄断经济命脉。他上台以来，出现了所谓‘国进民退’的现象，外资企业和民企都在失去生存空间。所以在贸易谈判中，我们要求中共完全改变国有企业垄断经济命脉的局面，建立真正的市场经济。中共不可能接受这一改革要求。习近平不会同意。依我看，贸易谈判无法迫使中共改革经济体制。我们和中共有许多贸易协议，中共无一遵守。 习近平是个毛派，相信国家掌控一切，他主政下的中共不会遵守协议。”
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
萧茗（Host/Simone Gao）：33年前当里根总统认识到苏联经济是多么脆弱，苏联是多么害怕他的星球大战计划时，他毫不犹豫地采取了摧毁苏联的行动。人们从里根这里能学到什么? 让我们回顾一下20世纪80年代发生的事情。
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.
萧茗（Host/Simone Gao）：毫不夸张地说，里根总统的经济战摧垮了苏联。我们能从里根总统那里学到什么？10个月前，我看到了史蒂夫·班农的这段视频，他当时在Delivering Alpha会议上接受采访，让我联想到里根总统在1987年对当时局势的考量。请看。
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. ”
萧茗（Host/Simone Gao）：斯蒂夫·班农欢迎川普总统提高在2000亿美元中国产品上的关税，称这是川普当选总统以来最重要的一天。美中贸易战在中国经济最脆弱时，打了中国一个措手不及。贸易战揭示了比贸易更为深层的问题，其结果可能也远远超过贸易本身。这全看人们如何把握这个历史时机了。《世事关心》将带给您有关美中贸易战的独到视角，敬请关注。请在twitter告诉我您的想法， @zoominginSimone，您也可以在《世事关心》脸书专页或者我们的youtube频道留言，他们的名字都是：Zooming In with Simone Gao，让我们下次再见。
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