On Sunday 2 June, the State Council released a "White Paper" clarifying facts surrounding the current US-China "trade frictions" (avoiding the "war" word) and China's position on the matter. The Paper confirms speculation that months of painstaking negotiations with substantial agreement reached on multiple fronts finally became derailed because of US insistence on inserting specific provisions infringing on China's sovereignty. It was also felt that the Americans kept on upping ""impossible" demands without giving anything in return, including insistence on retention of tariffs. Click here and here .
Download 白皮書 (2019.6.1.) (Official Chinese version)
Without sounding too belligerent, the Paper enumerates facts and statistics that bilateral trade between the United States and China has been mutually beneficial. The US has been reaping much gains in services (including royalties for proprietary technology) and in lower prices for high-quality goods for American consumers. It reaffirms that China will not back down on "core interests", including its own development model and rights of economic and technological advancement. It appeals to better judgment that mutual cooperation trumps all-out conflict.
While showing confidence and resolve, the Paper is an attempt to redress the imbalance in rhetoric in the international media. It tries to portray China as a sincere, reasonable and consistent negotiator while highlighting the American side as "unreasonable", "capricious", and "bullying".
As the US is pushing back against China on multiple fronts including Huawei and the South China Sea, the White Paper serves as a shot across the bow that while preferring to resolve differences through negotiations, China is able and ready to dig in its heels for prolonged conflict and rivalry with the United States.
By adopting a firm, measured and rational approach, China is showing signs of wanting to harness more soft power as the Trump administration seems not bothered about losing America's.
However, knowing that soft power alone is not enough, running out of retaliatory tariffs, China is gearing up for non-tariff weapons starting with implementing China's own list of "unreliable entities" of organizations and individuals considered hostile to China's firms or national security interests on account of non-commercial or underhand behaviour. Separately, China may be reaching for its rare earth gun, according to a Stratfor Worldview article reprinted in The National Interest of 2 June, 2019.
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