The March 22-28, 2021 roundup of major trade developments, with L.C.
China’s confrontation with the US and its allies intensified this week, moving in a direction that may be difficult to steer away from. This week’s events followed and built upon last week’s tense US-China foreign ministers meeting in Alaska. The issue now in the spotlight is Western condemnation of China’s human rights abuses. This week it centered on repression of the Uyghurs that has led to Western boycotts of Xinjiang products, especially cotton. Beijing’s response has been that any such statements and actions amount to unacceptable interference in its internal affairs. Beijing made clear that foreign “interference” in Hong Kong, Taiwan, and the South China Sea would be treated as serious infringements of its sovereignty.
The US government has over the past year put some Xinjiang products, most importantly cotton, under a Customs & Border Protection Withhold Release Order, meaning it can’t be imported into the US by itself or as part of another product. That meant that apparel-makers and sellers had to find alternate suppliers and, in effect, boycott Xinjiang.
This week, both sides stepped up sanctions on the other, and neither appeared ready to step back. Still, it will be hard to keep the West strongly united – though China’s abuses and now its response are making it difficult for anyone in the West to call for a retreat. Beijing isn’t showing signs of backing down.
On March 22nd, the US, Canada, EU, and UK announced coordinated sanctions against Chinese individuals and entities linked to abuses in Xinjiang. Australia and New Zealand didn’t participate in the coordinated sanctions but said they endorse them and released a statement expressing grave concern about “clear evidence of severe human rights abuses.” Thus, the move involved the “Five Eyes” countries – the US, Canada, UK, Australia, New Zealand who share intelligence – plus the EU. Japan did not take part (the only G7 country that didn’t), nor did South Korea or other north or southeast Asian nations. It is not clear whether Washington approached other countries to join the coordinated effort, but Tokyo is busy anyway confronting China over the Senkakus and coordinating with the US on the North Korea threat.
US allies face risks. Canada was already hit hard by China which threw two Canadians in prison in retaliation for Ottawa holding Huawei CFO Meng Wanzhou on a US extradition request. Australia has taken the brunt, thus far, of China’s “commercial diplomacy” as its exports have been thwarted. This week, Beijing finalized duties up to 218.4% for five years on Australian wine.
The US and its allies are not conceding at all to Beijing’s protestations that it is doing nothing wrong in Xinjiang. Secretary of State Antony Blinken and the Canadian and British foreign ministers released a statement on March 22nd saying that the evidence of abuses of the Uyghurs is “overwhelming,” demonstrated by “The Chinese government’s own documents, satellite imagery, and eyewitness testimony.” It doesn’t seem there’s much disagreement with this assessment from any quarters. Rather, those defending China argue, like Beijing does, that the foreign reaction represents improper interference in domestic Chinese affairs.
Beijing claims that its treatment of the Uyghurs is fine even while it prohibits independent investigators from taking a look.
Meanwhile, Robert Redfield, who directed the Centers for Disease Control and Prevention (CDC) during the first year of the pandemic, stated on CNN last week that he thought the coronavirus originated in a Wuhan, China laboratory, possibly as early as September, 2019. The Chinese government went out of its way to delay and obstruct that investigation too, and Australia began being punished by China for issuing an international call for such an investigation.
The Chinese government, through its manipulated media, is now threatening Western brands that engage in the boycott of Xinjiang products that they will risk their position in the Chinese market. On March 25th Sweden’s H&M had its brand erased from e-commerce sites and other relevant social media, a potentially devastating blow to the Swedish company. Nike, Adidas, Burberry, and others face similar threats.
Some analysts said Beijing’s actions will do more to unite the US and its allies in facing off against China than any appeal by the US would have done. Blinken said on March 27th, “Beijing’s attempts to intimidate and silence those speaking out for human rights and fundamental freedoms only contribute to the growing international scrutiny of the ongoing genocide and crimes against humanity in Xinjiang.” A few days earlier, however, he said that “The US won’t force our allies into an ‘us or them’ choice with China.”
China is also trying to rally its allies. Foreign Minister Wang Yi met in China on March 23rd with Russian Foreign Minister Sergey Lavrov. China also signed a 25-year “strategic cooperation pact” with Iran that is linked to China’s Belt and Road Initiative.
L.C. reports on trade matters for business as well as Founders Broadsheet.
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