Larry Kudlow, the White House’s top economic advisor has accused Beijing of doing nothing to diffuse the ongoing trade war. The United States and China are two of the largest economies in the world. Both countries consider the other as a partner in trade and an adversary in geopolitics..
Larry Kudlow, the White House’s top economic advisor has accused Beijing of doing nothing to diffuse the ongoing trade war.
Background
The United States and China are two of the largest economies in the world. Both countries consider the other as a partner in trade and an adversary in geopolitics. The U.S.–China Strategic and Economic Dialogue was created in 2009. Every year, high level representatives from both nations open up dialogue to improve economic partnership. In 2017, the meetings that occurred were reported as being “tense”. Upon conclusion, the two countries cancelled a joint press conference and did not release a statement. They also did not release a plan of action.
US President Donald Trump has previously been a critic of China. He blamed the country for loss of jobs within the US and has often criticized the US trade deficit with China. China’s trade surplus with the United States widened in 2017 while total foreign trade volume maintained rapid growth.
Analysis
The White House’s top economic adviser has accused Beijing of doing “nothing” to defuse trade tensions ahead of a likely meeting between Donald Trump and Xi Jinping at the G20 in Argentina next month, dampening expectations of a truce in the economic warfare between the US and China.
In an interview with the Financial Times, Larry Kudlow, director of the National Economic Council, said China had offered no sign that it was willing to meet US demands in a way that could lead to a breakthrough between the countries.
This year, the US has slapped tariffs on $250bn of Chinese goods — or nearly half of its imports — while the Chinese have retaliated with tariffs on $110bn of US goods in an escalating conflict that has clouded the global economic outlook.
Mr. Trump has demanded sweeping changes to Chinese economic policy, including a reduction in their bilateral trade deficit, and a clampdown on practices such as industrial subsidies, and forced technology transfer. However, these have so far been met with resistance by Chinese officials, who judge them as unrealistic and contrary to their interests.
“We gave them a detailed list of asks, regarding technology for example, [which] basically hasn’t changed for five or six months. The problem with the story is that they don’t respond. Nothing. Nada,” Mr. Kudlow said.
“It’s really the President and the Chinese Communist party, they have to make a decision, and so far they have not, or they have made a decision not to do anything, nothing. I’ve never seen anything like it,” Mr. Kudlow said. For their part, Chinese officials have complained of a lack of flexibility on the US side, as well as unpredictability and lack of a single voice within the Trump administration.
Counterpoint
Larry Kudlow’s statement does come with a sense of irony as Kudlow had earlier aggressive pushed for greater tariffs on China and has famously denounced China’s trade practices in a series of lectures. China has been responding to American sanctions instead of provoking new ones. Kudlow’s comment on how Beijing is doing “nothing” to stop the escalation is a logically fallacy as the trade war was kicked off and subsequently escalated by consecutive US sanctions.
Assessment
Our assessment is that Larry Kudlow’s comment follows the fall of the benchmark Shanghai Stock Exchange Composite Index to its lowest level in four years as trade tensions and concerns about an economic slowdown weighed on sentiment. We also feel that comments have come at a time when Chinese economic growth has decelerated to 6.5 per cent in the third quarter of 2018.
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