Share on facebook
Share on twitter
Share on telegram
Share on whatsapp
Share on linkedin
Share on print
Share on email

Politics Watch: Subtle Signals of Sino-US Trade Progress Surface

◎ Beijing has the incentive to make trade concessions to prevent a deterioration of relations with America.

On May 7, Chinese financial magazine Caixin carried an interview with new People’s Bank of China president Yi Gang. Yi said that China would persevere with its strategy of opening up financial markets, a decision based on national circumstances. He added that China’s opening up would continue regardless of trade tensions with the United States.

Meanwhile, Taiwanese chip designer MediaTek Inc. confirmed to international media outlets that it had received approval from Taiwan’s Ministry of Economic Affairs on May 4 to resume exporting microchips to China’s ZTE.

The backdrop:
April 16: The U.S. Department of Commerce banned American suppliers from selling services and software to ZTE for seven years. The ban was handed out because ZTE didn’t comply with a settlement regarding shipping U.S.-made products to Iran, a move which violated U.S. sanctions.

April 23: Taiwan’s Ministry of Economic Affairs instructed its local firms to apply for permission to sell goods to ZTE.

May 3 – May 4: A delegation of top Trump administration officials visited Beijing for trade discussions. Most observers believe that little headway was made at the talks.

Our take:
1. We believe that there was good progress at the Sino-U.S. trade talks. The Yi Gang interview and the Taiwanese government approving MediaTek to sell chips to ZTE corroborate our analysis.

A recap of our key argument points follows:

  • China and America have, to a certain degree, reached an agreement on trade. The U.S. could have already obtained some tangible benefits.
  • The Chinese Communist Party (CCP) would never admit making concessions to America. Instead, the CCP would repackage concessions as self-initiated economic reform and market opening up measures.
  • Should the CCP carry out what was agreed at the Sino-U.S. talks, America could suspend or delay its ban affecting ZTE, but place the company under strict “probation.”

2. There are other signs that the U.S. could consider putting ZTE on “probation.”

A May 4 internal memo to ZTE employees suggested that the company’s troubles could be resolved in “a shorter period” and that they should be “full of hope to welcome the coming of dawn.”

On May 6, ZTE formally requested that the U.S. Department of Commerce suspend the seven-year business ban. We believe that ZTE might not have petitioned the Commerce Department so soon after the Sino-U.S. trade talks if discussions were truly unproductively.

3. Beijing has the incentive to make trade concessions to prevent a deterioration of relations with the U.S. and worsen the plight of its high-tech industry. Huawei, the other state-backed Chinese tech giant, is under criminal investigation. If Huawei is severely punished, the CCP’s myth of high-tech dominance would be broken and its regime imperiled.

Search past entries by date
“The breadth of SinoInsider’s insights—from economics through the military to governance, all underpinned by unparalleled reporting on the people in charge—is stunning. In my over fifty years of in-depth reading on the PRC, unclassified and classified, SinoInsider is in a class all by itself.”
James Newman, Former U.S. Navy cryptologist
“Unique insights are available frequently from the reports of Sinoinsider.”
Michael Pillsbury, Senior Fellow for China Strategy, The Heritage Foundation
“Thank you for your information and analysis. Very useful.”
Prof. Ravni Thakur, University of Delhi, India
“SinoInsider’s research has helped me with investing in or getting out of Chinese companies.”
Charles Nelson, Managing Director, Murdock Capital Partners
“I value SinoInsider because of its always brilliant articles touching on, to name just a few, CCP history, current trends, and factional politics. Its concise and incisive analysis — absent the cliches that dominate China policy discussions in DC and U.S. corporate boardrooms — also represents a major contribution to the history of our era by clearly defining the threat the CCP poses to American peace and prosperity and global stability. I am grateful to SinoInsider — long may it thrive!”
Lee Smith, Author and journalist
“Your publication insights tremendously help us complete our regular analysis on in-depth issues of major importance. ”
Ms. Nicoleta Buracinschi, Embassy of Romania to the People’s Republic of China
"I’m a very happy, satisfied subscriber to your service and all the deep information it provides to increase our understanding. SinoInsider is profoundly helping to alter the public landscape when it comes to the PRC."
James Newman, Former U.S. Navy cryptologist
“Prof. Ming’s information about the Sino-U.S. trade war is invaluable for us in Taiwan’s technology industry. Our company basically acted on Prof. Ming’s predictions and enlarged our scale and enriched our product lines. That allowed us to deal capably with larger orders from China in 2019. ”
Mr. Chiu, Realtek R&D Center
“I am following China’s growing involvement in the Middle East, seeking to gain a better understanding of China itself and the impact of domestic constraints on its foreign policy. I have found SinoInsider quite helpful in expanding my knowledge and enriching my understanding of the issues at stake.”
Ehud Yaari, Lafer International Fellow, The Washington Institute
“SinoInsider’s research on the CCP examines every detail in great depth and is a very valuable reference. Foreign researchers will find SinoInsider’s research helpful in understanding what is really going on with the CCP and China. ”
Baterdene, Researcher, The National Institute for Security Studies (Mongolian)
“The forecasts of Prof. Chu-cheng Ming and the SinoInsider team are an invaluable resource in guiding our news reporting direction and anticipating the next moves of the Chinese and Hong Kong governments.”
Chan Miu-ling, Radio Television Hong Kong China Team Deputy Leader
“SinoInsider always publishes interesting and provocative work on Chinese elite politics. It is very worthwhile to follow the work of SinoInsider to get their take on factional struggles in particular.”
Lee Jones, Reader in International Politics, Queen Mary University of London
“[SinoInsider has] been very useful in my class on American foreign policy because it contradicts the widely accepted argument that the U.S. should work cooperatively with China. And the whole point of the course is to expose students to conflicting approaches to contemporary major problems.”
Roy Licklider, Adjunct Professor of Political Science, Columbia University
“As a China-based journalist, SinoInsider is to me a very reliable source of information to understand deeply how the CCP works and learn more about the factional struggle and challenges that Xi Jinping may face. ”
Sebastien Ricci, AFP correspondent for China & Mongolia
“SinoInsider offers an interesting perspective on the Sino-U.S. trade war and North Korea. Their predictions are often accurate, which is definitely very helpful.”
Sebastien Ricci, AFP correspondent for China & Mongolia
“I have found SinoInsider to provide much greater depth and breadth of coverage with regard to developments in China. The subtlety of the descriptions of China's policy/political processes is absent from traditional media channels.”
John Lipsky, Peter G. Peterson Distinguished Scholar, Kissinger Center for Global Affairs
“My teaching at Cambridge and policy analysis for the UK audience have been informed by insights from your analyzes. ”
Dr Kun-Chin Lin, University Lecturer in Politics,
Deputy Director of the Centre for Geopolitics, Cambridge University
" SinoInsider's in-depth and nuanced analysis of Party dynamics is an excellent template to train future Sinologists with a clear understanding that what happens in the Party matters."
Stephen Nagy, Senior Associate Professor, International Christian University
“ I find Sinoinsider particularly helpful in instructing students about the complexities of Chinese politics and what elite competition means for the future of the US-China relationship.”
Howard Sanborn, Professor, Virginia Military Institute
“SinoInsider has been one of my most useful (and enjoyable) resources”
James Newman, Former U.S. Navy cryptologist
“Professor Ming and his team’s analyses of current affairs are very far-sighted and directionally accurate. In the present media environment where it is harder to distinguish between real and fake information, SinoInsider’s professional perspectives are much needed to make sense of a perilous and unpredictable world. ”
Liu Cheng-chuan, Professor Emeritus, National Chiayi University