Sino-U.S. trade tensions could flare up again as it appears China will miss its obligations under a nearly expired agreement that emerged from a dispute during the administration of former U.S. President Donald Trump, analysts said. 

The Economic and Trade Agreement signed by the two superpowers in January 2020 is set to end December 31. Trade observers say China has not complied with a clause that obligates it to buy imports of manufactured goods, farm products, energy products and certain services from the U.S. at a total of $200 billion more than the 2017 total. China purchased $186 billion in goods and services in 2017 before the trade war, according to U.S. government figures.

China has had trouble complying because of delays in Chinese aircraft orders from the U.S. and pandemic-related setbacks, said Matthew Goodman, senior vice president for economics with the Washington-based Center for Strategic & International Studies, a research group. 

“I do think that the Biden administration is going to follow through on this agreement and hold China to account,” Goodman told VOA. “I don’t see any reason that they’re going to change tack.”

China had met just 62% of its import purchasing goal as of October, according to an analysis by Chad Bown, senior fellow with the Peterson Institute for International Economics, another research organization in Washington. 

U.S. manufacturers may have lacked capacity as well to meet the demand for China-bound goods, said Bashar Malkawi, a University of Arizona law professor who specializes in trade. China’s pandemic-era border closures further harmed U.S. exports, he said.

The nearly four-year-old trade dispute launched by Trump over the Sino-U.S. trade imbalance has placed tariffs on $550 billion worth of goods, including $350 billion originating in China. The dispute also led to a chill in broader two-way relations that would run through Trump’s term. 

“The environment between these two countries is toxic,” Malkawi said. “Trade war and mistrust have been raging since 2018 and will not ease for the foreseeable future.”

What’s next 

The U.S. trade representative’s office did not reply to a query for this report asking whether China had lived up to the agreement. Its website does not indicate what might happen in 2022. 

U.S. Trade Representative Katherine Tai said in a speech at the Center for Strategic & International Studies in October  that the U.S. government will discuss with China its “performance” and that under the agreement, China had made “commitments that benefit certain American industries, including agriculture, that we must enforce.”

The U.S. side will “work to enforce the terms of phase one,” she added, referring to the terms of the deal.

Tai indicated that the United States had yet to review the agreement. 

China hopes the U.S. government “will create favorable conditions for the two nations to expand trade cooperation,” Ministry of Commerce spokesperson Gao Feng said Thursday, as quoted by the China Daily news website. 

Gao said China had “exerted strenuous efforts to offset negative impact from factors such as the COVID-19 pandemic, the global economic recession and the constraint of supply chain” to carry out the agreement, according to the website.

China is the largest goods trading partner of the United States, with $559.2 billion passing both ways in 2020, according to the trade representative’s office.

U.S. goods and services trade with China totaled about $615.2 billion in 2020, with imports at $450.4 billion.

Expiration of the trade deal potentially gives China an opening to negotiate for buying the U.S. goods that it needs, said Song Seng Wun, an economist in the private banking unit of Malaysian bank CIMB. China traditionally buys U.S. foodstuffs, civilian aircraft and aircraft parts. Its tech firms depended on American supplies before the trade war as well. 

“I suppose it always boils down to what China wants to buy and what the U.S. wants to sell,” Song said. “China can be more selective in buying. Politics matters more at this point.” 

Chinese officials might consider asking to buy the U.S. goods that China needs most, possibly swapping out the ones in today’s agreement, said Stuart Orr, School of Business head at Melbourne Institute of Technology in Australia. 

“I think China is probably going to have to try to renegotiate, and the reason probably motivating that will be the volume of supplies of some of the things that it actually needs,” he said.
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U.S. chipmaker Intel is facing criticism in China after it apologized Thursday for a letter the firm sent to suppliers asking them “to ensure that its supply chain does not use any labor or source goods or services from the Xinjiang region.”

On Thursday, Intel posted a Chinese-language message on its WeChat and Weibo accounts apologizing for “trouble caused to our respected Chinese customers, partners and the public. Intel is committed to becoming a trusted technology partner and accelerating joint development with China.”

Intel’s apology came as U.S. President Joe Biden signed the Uyghur Forced Labor Prevention Act, which bans the import of goods produced by Uyghur slave labor. Under the measure, a company is prohibited from importing from China’s Xinjiang region unless it can prove that its supply chains have not used labor from Uyghurs, ethnic Muslims reportedly enslaved in Chinese camps.

Beijing denies complaints of abuses in the mostly Muslim region.

Intel is just the latest multinational firm to be caught up in the struggle over the Uyghurs issue as China prepares to host the Winter Olympics in February. Intel is among the International Olympic Committee sponsors. According to Reuters, 26% of Intel’s 2020 total revenue was earned in China.

Earlier this month, Intel’s letter to suppliers asking them to be sure not to use labor, products or services from Xinjiang cited restrictions imposed by “multiple governments.”

That sparked a backlash in China, with calls for a boycott and criticism of the company in state and social media. Global Times, a Chinese state-run newspaper, called Intel’s request to suppliers “arrogant and vicious,” according to reports.

Wang Junkai, also known as Karry Wang, a singer with the popular boy band TFBOYS, said on Weibo on Wednesday that he would not serve as an Intel brand ambassador. “National interests exceed everything,” he said, according to wire service reports.

Chinese officials acknowledged Intel’s apology.

China’s Foreign Ministry spokesperson said at a daily briefing in Beijing that “we note the statement and hope the relevant company will respect facts and tell right from wrong,” according to Reuters.

The White House also appeared to note the company’s apology.

Without naming Intel, Jen Psaki, the White House press secretary, said at a briefing Thursday that U.S. companies “should never feel the need to apologize for standing up for fundamental human rights or opposing repression,” according to reports.

Some information for this report came from The Associated Press and Reuters. 

 
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Under pressure from U.S. auto safety regulators, Tesla has agreed to stop allowing video games to be played on center touch screens while its vehicles are moving. 

The National Highway Traffic Safety Administration says the company will send out a software update over the Internet so the function called “Passenger Play” will be locked and won’t work while vehicles are in motion. 

The move comes one day after the agency announced it would open a formal investigation into distracted driving concerns about Tesla’s video games, some of which could be played while cars are being driven. 

An agency spokeswoman says in a statement Thursday that the change came after regulators discussed concerns about the system with Tesla.

The statement says NHTSA regularly talks about infotainment screens with all automakers. A message was left Thursday seeking comment from Tesla, which has disbanded its media relations department. 

The agency says its investigation of Tesla’s feature will continue even with the update. 

“The Vehicle Safety Act prohibits manufacturers from selling vehicles with defects posing unreasonable risks to safety, including technologies that distract drivers from driving safely,” NHTSA’s statement said. The agency said it assesses how manufacturers identify and guard against distraction hazards through misuse or intended use of screens and other convenience technology. 

The agency announced Wednesday that it would formally investigate Tesla’s screens after an owner from the Portland, Oregon, area filed a complaint when he discovered that a driver could play games while the cars are moving. 

The agency said that the “Passenger Play” feature could distract the driver and increase the risk of a crash. 

The probe covers about 580,000 Tesla Models S, X, Y and 3 from the 2017 through 2022 model years. 
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The number of Americans applying for unemployment benefits was unchanged last week, remaining at a historically low level that reflects the job market’s strong recovery from the coronavirus recession last year.

Jobless claims remained at 205,000. The four-week average, which smooths out week-to-week ups and downs, rose to just over 206,000. The numbers suggest that the spread of the omicron variant did not immediately trigger a wave of layoffs.

Altogether, 1.9 million Americans were collecting traditional unemployment aid the week that ended Dec. 11.

The weekly claims numbers, a proxy for layoffs, have fallen steadily most of the year. Employers are reluctant to let workers go at a time when it’s so tough to find replacements. The United States had a near-record 11 million job openings in October, and 4.2 million Americans quit their jobs — just off September’s record 4.4 million — because there are so many opportunities.

The job market has bounced back from last year’s brief but intense coronavirus recession. When COVID hit, governments ordered lockdowns, consumers hunkered down at home and many businesses closed or cut back hours.

Employers slashed more than 22 million jobs in March and April 2020, and the unemployment rate rocketed to 14.8%.

But massive government spending — and eventually the rollout of vaccines — brought the economy back. Employers have added 18.5 million jobs since April 2020, still leaving the U.S. still 3.9 million jobs short of what it had before the pandemic. The unemployment rate has fallen to 4.2%, close to what economists consider full employment.
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Росія продовжує створювати перешкоди для кораблів, які прямують до українських портів у Азовському морі
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Cambodia is basing hopes for a post-pandemic economic recovery on free trade agreements with China and South Korea, and membership in the Regional Comprehensive Economic Partnership.

RCEP is a free-trade agreement including the 10 members of the Association of Southeast Asian Nations, as well as China, Japan, South Korea, Australia and New Zealand that will come into effect Jan. 1. RCEP trade pact member countries will have a combined gross domestic product of $26.2 trillion, or about 30% of global GDP.

Analysts said Phnom Penh had aggressively pursued these trade deals amid the crushing economic impact of the COVID-19 pandemic and withdrawal of some trade perks by the European Union prompted by Cambodia’s human rights and democratic record.

Planning Minister Chhay Than has said more than 6 million jobs in the informal economy have been lost or will be lost due to COVID-19, and the United Nations Development Program expects Cambodia’s poverty rate could double to 17.6% of the population this year.

“They’re absolutely vital to Cambodia’s economic future. The markets for Cambodia in the next several years are going to be primarily its neighboring countries,” said Bart Edes, senior associate at the Center for Strategic and International Studies in Washington.

Cambodia’s economy has rapidly evolved since the end of 30 years of war in 1998, with Phnom Penh moving firmly into China’s orbit over the last decade. Two-way trade topped $8 billion in 2020 and is expected to reach $10 billion in 2023 with October’s signing of the FTA.

A similar agreement was also inked with South Korea after two-way trade reached $880 million in 2020. Under that deal Cambodia will lift tariffs on 93.8% of all products traded, and South Korea will remove tariffs on 95.6% of all items.

RCEP will eliminate up to 90% of tariffs on goods traded between signatories over the next 20 years, which analysts said would further underpin regional integration by building upon China’s Belt and Road Initiative infrastructure projects.

Edes said the world’s booming economies are disproportionately located in Asia, where Cambodia is strategically positioned as a regional hub among much bigger neighbors Thailand, Vietnam, and the rest of ASEAN, making it an attractive investment destination.

“It’s not just China, it’s other countries in Asia. But these trade agreements, by having rules to the game are very important to Cambodia, these are positive moves for the country, for the people and for the economy and job opportunities,” he said.

Just 20% of Cambodia’s workforce is employed in the formal economy and the remaining 80%, which includes farmers, work in the informal economy, government sources said.

Thirty percent of Cambodians live on or just above the poverty line of $1.90 a day.

The situation was not helped by the withdrawal of some EU trade benefits under its Everything But Arms policy in August of last year, which tied tariff-free access to European markets to ensuring standards of democracy.

Brendan Lalor, a director with Ernst & Young in Cambodia, said the loss of tariff-free access for some goods, such as garments, to the EU and the pandemic had spurred the government into ratifying FTAs.

“With the FTA coming into effect obviously all your import tariffs, quotas, taxes, export restrictions all fall away so that should stimulate further bilateral trade between the two countries,” he said, referring to the FTAs with China and South Korea.

“So there is every chance that an FTA with Korea and China should offset the effects of the partial removal of the EBA,” he said, referring to the EU policy, adding Cambodia was ideally placed to take advantage of RCEP and cross-border trade.

Prime Minister Hun Sen has also said he wants an FTA with Russia.

Cambodia exports include garments, footwear and other apparel, travel products, beverages, electrical and electronic components, pharmaceuticals and agricultural products ranging from rubber to palm oil, cassava and cashews.

Under RCEP, Commerce Minister Pan Sorasak forecast the Cambodian GDP would grow by 2%, with exports up by 7.3% and investment by 23.4% with the elimination of tariffs on 90% of goods traded among signatories over the next 20 years.

“The RCEP agreement will become the core foundation for trade and investment in the region, further expand regional value chains and create more employment and market opportunities for peoples and businesses in the region,” he told Parliament.

However, Wim Conklin, country program director for the Solidarity Center in Cambodia, sounded a note of caution, warning FTAs and RCEP could result in a flood of cheaper goods coming into this country, including plastics, batteries and small household appliances.

“Overall, there could be some positive benefit but at the same time who benefits is always a question,” he said. “A much bigger country having a free trade agreement with another country is never going to be a real level playing field.”

He said FTAs had to be achieved for the benefit of the whole population, as opposed to specific sectors, such as banks and financial services, but he added that cheaper imports could provide a boost for producers and that in turn could benefit workers.

“Will that mean they might get higher wages because greater profits’ being made or certain costs are going down? We hope that might be the case but I’m not sure,” he said. 

 
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The U.S. Securities and Exchange Commission has declined an effort by Apple Inc. to skip a shareholder proposal asking the iPhone maker to provide greater transparency in its efforts to keep forced labor out of its supply chain. 

A group of shareholders earlier this year asked Apple’s board to prepare a report on how the company protects workers in its supply chain from forced labor. The request for information covered the extent to which Apple has identified suppliers and sub-suppliers that are a risk for forced labor, and how many suppliers Apple has taken action against. 

In a letter from the SEC reviewed by Reuters on Wednesday, regulators denied Apple’s move to block the proposal, saying that “it does not appear that the essential objectives of the proposal have been implemented” so far. 

The letter means that Apple will have to face a vote on the proposal at its annual shareholder meeting next year, barring a deal with the shareholders who made it. 

Apple did not immediately respond to a request for comment. 

American lawmakers last week passed a bill banning imports from China’s Xinjiang region over concerns about forced labor. 

“There’s rightfully growing concern at all levels of government about the concentration camplike conditions for Uyghurs and other Turkic Muslims living under Chinese government rule,” Vicky Wyatt, campaign director for SumOfUs, a group supporting the shareholder proposal, said in a statement on Wednesday. 

Apple routinely asks the SEC to skip shareholder proposals, and the requests are granted about half the time. 

The SEC also denied Apple’s request to skip a shareholder proposal that would give investors more information about the company’s use of nondisclosure agreements.
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