China-U.S. Trade Talks Become A Different Game

CHINESE AND U.S. trade negotiators resume high-level talks in Washington on Thursday. The run-up could scarcely be less promising.

On Monday, the U.S. blacklisted 28 Chinese organisations for their role in what the Trump administration alleges is repression of Uighurs in Xinjiang province. The 28, which include both government agencies and technology companies specialising in surveillance equipment, will be added to the Entity List, which means they will require U.S., government permission to purchase anything from U.S. companies.

This brings a human rights dimension to the trade talks that the Trump administration has mostly sought to keep at arm’s length. In June, U.S. President Donald Trump had told President Xi Jinping in a phone call that he would not condemn the protests in Hong Kong in order not to jeopardise the trade discussions.

Those injected themselves into the conversation regardless over the weekend after Daryl Morey, the general manager of the U.S. professional basketball team, the Houston Rockets of the National Basketball Association (NBA), on Friday evening tweeted his support for the Hong Kong protests. He deleted his tweet overnight, but that did not prevent a deluge of criticism and retaliation from China, and damnation of the NBA within the United States for what many there said was craven capitulation by the NBA to protect what is now its most important market. The Rockets are particularly popular in China as it is the team that made Yao Ming into a superstar.

The Rockets’ attempts to recover from that position has been no less unedifying. It will be intriguing to see how two NBA preseason games to be played in Shanghai and Shenzhen at the week are received.

The affair offers a clear example of Chinese retaliation — perhaps more accurately a chilling threat of retaliation — against a U.S. business expressing a political line unacceptable to Beijing. It also shows the levers of pressure authorities can apply in such circumstances to U.S. businesses that are increasingly dependent on the Chinese market for growth.

However, it underlines how the Trump administration’s tariff-centric approach to applying pressure on the trade negotiations puts excessive emphasis on merchandise trade when so much of the big money in U.S-China trade is no longer that.

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Filed under China-U.S., Sport, Trade

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