Trade talks seen as unlikely to mend US-China divide

Fears over Chinese state interference in its economy have changed how Washington views Beijing, in both Democrat and Republican circles. (AP)
Updated 17 September 2019

Trade talks seen as unlikely to mend US-China divide

  • China’s Communist Party will mark 70 years of ruling the country on Oct. 1

BEIJING: US and Chinese officials will restart trade talks this week, but any agreement between the two is expected to be a superficial fix.

The trade war has hardened into a political and ideological battle that runs far deeper than tariffs, experts in both countries say.

China’s Communist Party (CCP) will not budge on US demands to fundamentally change the way it runs the economy, while the US will not backtrack on labelling Chinese companies national security threats.

The conflict between the two could take a decade to resolve, White House economic adviser Larry Kudlow warned on Sept. 6. Yu Yongding, an influential former policy adviser to China’s central bank, told Reuters that China was in no rush to make a deal.

Presidents Donald Trump and Xi Jinping may hammer out an agreement in October to soothe markets and claim political credit.

But any final agreement is “extremely unlikely to meaningfully address Chinese structural reforms” sought by the US and others, said Kellie Meiman Hock, a former US Trade official and managing partner with McLarty Associates.

Negotiators have made little progress on points of disagreement since talks broke down in May, sources suggest.

Beijing is unwilling to address its support for state-owned companies, they add. The US continues to label Chinese tech company Huawei a national security threat, and to threaten new trade tariffs.

“The result of talks must be the dropping of all tariffs,” said He Weiwen of the Chongyang Institute for Financial Studies. “This is the baseline for China.” 

Since trade negotiations between the world’s largest economies collapsed in May, both have also broken promises and traded public insults. The mood is upbeat, but a single Trump tweet could turn that around, analysts say.

“They’re locked in this uncomfortable embrace,” said William Reinsch, a former senior Commerce Department official. “Both presidents undercut their negotiators and neither side can rely on what the other has said.”

Trump’s “tough on China” stance has swept in a new way of thinking about Beijing in the US, despite his personal unpopularity. Congress, bitterly divided along partisan lines on most issues, is united about the need for Chinese reform.

Democrats running against Trump are unlikely to repair the relationship if they take the White House in 2020. Presidential candidates have used terms like “corruption” and “theft” to discuss China’s trade practices.

“There’s been a tectonic shift,” said Warren Maruyama, former general counsel for the US Trade Representative’s office and partner with law firm Hogan Lovells.

“The old idea that China was in the middle of free market economic reforms that would lead them our way is effectively dead. There’s bipartisan support for a tougher China policy.”

Lawmakers are responding, with China-related bills in Congress, from legislation punishing Beijing for human rights abuses against Muslims in Xinjiang to support for protesters in Hong Kong.

The 2020 National Defense Authorization Act, or NDAA, could include provisions targeting China on issues ranging from technology transfers to synthetic opioids.

Trump faces a worsening economy at home, thanks in part to his tariffs, but key constituencies have stood by him. US executives in China say Beijing is miscalculating if it thinks the trade war will undermine Trump’s support.

“The problems are deep and structural,” said Craig Allen, who now heads the US-China Business Council. The countries’ high-tech sectors may be permanently decoupled, he said, over concerns about Chinese espionage, hacking and intellectual property theft.

The CCP also faces a slowing economy as it prepares to celebrate 70 years of rule.

Many in Beijing believe that Trump has provided Xi with convenient political cover, allowing him to blame tariffs for the slowdown.

In a throwback to the Mao Zedong era, Xi said this month there must be a “resolute struggle” against  challenges to the party’s leadership, the country’s security and anything that threatens the country’s core interests.

Cirque du Soleil walks a tightrope through pandemic

Updated 06 June 2020

Cirque du Soleil walks a tightrope through pandemic

  • Suitors wage backstage battle to rescue debt-stricken Canadian circus icon
  • Among the potential bidders is former fire eater Guy Laliberte, who fouded the acrobatic troupe in 1984

MONTREAL: Its shows canceled due to the COVID-19 pandemic, an already heavily indebted Cirque du Soleil’s fight for survival has invited an intense backstage battle to try to save the Canadian cultural icon.

High on a list of potential suitors is former fire eater Guy Laliberte, who founded the acrobatic troupe in 1984 but later sold it.

“Its revival will have to be done at the right price. And not at all costs,” said the 60-year-old, determined not to see his creation sold to private interests.

The billionaire clown said after “careful consideration,” he decided “with a great team” to pursue a bid, but offered no details.

Under his leadership, the Cirque had set up big tops in more than 300 cities around the world, delighting audiences with contemporary circus acts set to music but without the usual trappings of lions, elephants and bears.

Then the pandemic hit, forcing the company in March to cancel 44 shows worldwide, from Las Vegas to Tel Aviv, Moscow to Melbourne, and lay off 4,679 acrobats and technicians, or 95 percent of its workforce.

Hurtling toward bankruptcy, the global entertainment giant and pride of Canada commissioned a bank in early May to examine its options, including a possible sale.

Meanwhile, shareholders ponied up $50 million in bridge financing for its “short-term liquidity needs.”

Laliberte, the first clown to rocket to the International Space Station in 2009, ceded control of the Cirque for $1 billion in 2015.

It has since fallen into the hands of American investment firm TPG Capital (55 percent stake) and China’s Fosun (25 percent), which also owns Club Med and Thomas Cook travel. The Caisse de depot et placement du Quebec (CDPQ) retains the last 20 percent.

The institutional investor, which manages public pension plans and insurance programs in Quebec, bought Laliberte’s last remaining 10 percent stake in the business in February, just before the pandemic.

Since 2015, the Cirque has embarked on costly acquisitions and renovations of permanent performance halls, while its creative spirit waned, according to critics in the Quebec press.

Meanwhile, it piled on more than $1 billion in debt.

Fearing that the Cirque would be “sold to foreign interests,” the Quebec government recently offered it a conditional loan of $200 million to help relaunch its shows as restrictions on large gatherings start to be eased worldwide.

But the agreement in principle is conditional on the Cirque headquarters remaining in Montreal and the province being allowed to buy US and Chinese stakes in the company at an unspecified time in the future, “at market value” and with “probably a local partner,” said Quebec Minister of the Economy Pierre Fitzgibbon.

“The state does not want to operate the circus, but the circus is too important to Quebec (to leave it to foreigners),” he said.

In addition to Laliberte, other prospective buyers include Quebecor, the telecoms and media giant of tycoon Pierre Karl Peladeau, whose opening lowball bid was outright rejected.

“It is essentially the value and reputation of the brand” that has piqued interest in the company, says Michel Magnan, corporate governance chair at Concordia University in Montreal.

But “as long as there are restrictions on gatherings of people, the future is not very rosy” for the Cirque, he said.

Several challenges await, according to Magnan.

“There were a lot of people working in all of these shows. Where are they now? What are they doing? How are they doing? In what shape are they, what state of mind?” he said.

“The more time passes, the more this expertise risks evaporating.”

Small consolation: The Cirque resumed its performances on Wednesday in Hangzhou, China, five months after a coronavirus outbreak in the city.