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Trump Talks Up China Deal, But Xi Shows No Signs Of Caving

Last week, U.S. President Donald Trump reported back approvingly on a “long and very good conversation” he had over the phone with his Chinese counterpart, Xi Jinping, ahead of talks between the two at the G20 summit in Argentina later this month. Trade discussions were “moving along nicely,” Trump said, claiming “it’s going to work out good.”

Stock markets liked the news of progress in the Sino-American conversation (as Trump probably intended,) but then Trump economic advisor Larry Kudlow said there was “no massive movement”—and now President Xi has made a thinly veiled swipe at the Trump administration while showing no signs of giving in to American demands.

“In a world of deepening economic globalisation, practices of the law of the jungle and winner takes all only represent a dead end,” Xi said Monday in a much-anticipated speech at the China International Import Expo.

Xi reportedly did not name Trump or the U.S., but his target was apparent to all. “All countries should strive to improve their business environment and solve their own problems,” he said. “They shouldn’t always whitewash themselves and blame others, or act like a flashlight that only exposes others, but not themselves.”

Importantly, while Xi promised to cut import tariffs—a plan his government already unveiled back in September—he did not provide any indication of giving way on the issues that have led the U.S. to impose massive tariffs on Chinese imports.

These issues include state support for many enterprises, and the technology transfers to which U.S. firms must agree if they want to partner with Chinese companies that have close ties with the state.

One such state-backed firm is Fujian Jinhua, a maker of memory chips that last week found itself slapped with export restrictions by the U.S. Commerce Department. As was the case with ZTE before it, the restrictions mean Jinhua cannot use U.S. components or software.

The U.S. accused Jinhua of stealing technology from an American rival, Micron. On the weekend, the Chinese company denied this charge, claiming that it “has been pursuing self-independence in research and development.”

Jinhua also suggested that Micron had orchestrated the export restrictions. “Micron regards the development of Jinhua as a threat and has tried various means to stall or even sabotage it,” the company said, urging its rival to “immediately stop wrongdoings and facilitate the resumption of normal trade and cooperation activities between the two parties.”