China Blames Washington for Trade Talks Breakdown

BEIJING —

Joyce Huang contributed to this report.

China says Washington bears the “sole and entire responsibility” for the breakdown in trade talks earlier this month and that Beijing won't back down on matters of principle. In a defiant rebuttal of who is to blame, China released a white paper Sunday, arguing that it is the United States that has backtracked in the talks and that tariffs will not resolve the two country’s trade issues.

Since talks broke down earlier this month, Beijing has doubled-down, issuing its own tit-for-tat tariffs in response to Washington’s increase to 25% of a tax on $200 billion in Chinese goods. Beijing has also been stepping up anti-American propaganda through state media. On Friday, China’s Commerce Ministry announced the establishment of a “non-reliable entity list.”

That move was a response to Washington’s ban on the sale of American made goods to Huawei and 68 of its affiliates. The ban is expected to go into effect in less than 90-days.

Speaking at a press conference on Sunday, China’s vice minister of commerce Wang Shouwen said it was Washington, not Beijing that was backpedaling.

"If the U.S. side wants to use extreme pressure, to escalate trade friction, to force China to submit and make concessions, this is absolutely impossible," he said. Wang is a member of China’s trade negotiating team.

Speaking to reporters, he said that by announcing a decision to raise tariffs earlier this month while talks were ongoing and then later launching procedures for tariffs to cover $300 billion more in Chinese goods, Washington had broken an agreement reached by President Donald Trump and Xi Jinping late last year in Argentina.

"During the consultations, China has overcome many difficulties and put forward pragmatic solutions. However, the U.S. has backtracked, and when you give them an inch, they want a yard," he said.

In Argentina, Xi and Trump agreed to a temporary truce on raising tariffs. But there was no agreement to take that option off the table. Trump originally agreed to 90 days and later extended that period in early March citing progress in talks.

In early May, however, Trump Tweeted that talks were moving too slowly and accused Chinese negotiators of trying to renegotiate the text of the agreement.

That was one instance where the white paper argues that Washington backtracked, it also gives two other examples.

The white paper also said American negotiators “insisted on mandatory requirements concerning China’s sovereign affairs in the deal.” It was not clear what that refers to, but earlier reports have suggested that having an enforcement mechanism as part of a trade agreement between the two sides has long been a tough pill for Beijing to swallow.

In an April interview with CNBC, Treasury Secretary Steven Mnuchin said that the countries had “pretty much agreed” on an enforcement mechanism, adding that both sides would set up “trade offices.”

It is unclear when the two sides may be able to resume talks, if at all. President Trump has said he is willing to meet with Xi later this month on the sidelines of Group of 20 Nations summit in Japan. China has yet to confirm the meeting.

When asked about it on Sunday, Wang said he did not have any information to provide.

One thing that is clear from the white paper is that China cares a lot about tariffs. The white paper said that one prerequisite for a trade deal is that the U.S. should remove all additional tariffs imposed on Chinese exports and keep demands for Beijing’s purchase of goods “realistic.”

The paper gave several examples of how tariffs are having an impact on the United States and not good for either country or the global economy, but those critiques have all been part of the robust debate that is ongoing in the United States and elsewhere.

In China, however, as Beijing struggles with a slowing economy, concerns about jobs and ballooning debt, authorities have clamped down on any reporting about the trade war that strays from the communist party’s narrative.

China has also stepped up anti-American propaganda, airing decades old movies about the Korean War, which Beijing fought alongside the North against international forces led by the United States.

The Global Times claims the trade dispute “reminds Chinese of the military struggles between China and the U.S. during the Korean War.” Some state media have called the trade war a “people’s war” and there have been suggestions Chinese consumers should boycott American goods. But the effort to stir up nationalist fervor is a risky one for Beijing, analysts note.

Too much public backlash could have an impact on stability and hurt investment as well, said Liu Meng-chun, director of the Chung-Hua Institution of Economic Research’s mainland China division in Taiwan.

“The reason why there are arising calls or nationalistic sentiment is because China is to a certain degree trying to reach a consensus in society and rally support behind the government so that the country can shoulder the consequences of the breakdown of the trade talks,” Liu said.

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