April Politburo meeting; Trade "struggle"; PRC tariff exemptions; Confusing talk of talks; Did PRC officials visit the US Treasury?
The Politburo held its April meeting today, and the topic was the economic situation, as it usually is at the April meeting. I have provided a full translation of the readout below.
The meeting acknowledged mounting external pressures that threaten growth in the world's second-largest economy but did not specify any new stimulus. It did confirm plans to ease monetary policy and accelerate existing fiscal initiatives, while avoiding any commitment to deficit spending beyond what was approved in March. Officials signaled they stand ready with reserve policy tools if needed to counter the impact of U.S. tariffs - suggesting Beijing is preparing contingencies for further trade tensions.
Before diving into the Politburo readout I want to discuss two other issues.
One, it looks like the chatter about some PRC tariff exemptions on some US imports, as I discussed Thursday, is real.
China has waived its retaliatory 125 per cent tariffs on certain semiconductor imports from the US, according to a report from Chinese business magazine Caijing on Friday, citing industry sources.
The report said at least eight integrated circuit (IC)-related tariff codes were exempted from levies imposed earlier this month in response to US President Donald Trump’s tariffs on Chinese products. However, China has maintained tariffs on memory chips.
China’s customs authorities also informed domestic companies on Thursday that any duties paid for these exempted semiconductor imports from April 10 to 24 would be eligible for refunds, according to the report.
China’s government is considering suspending its 125% tariff on some US imports, people familiar with the matter said, as the economic costs of the tit-for-tat trade war weigh heavily on certain industries.
Authorities are considering removing the additional levies for medical equipment and some industrial chemicals like ethane, the people said, asking not to be identified discussing private deliberations.
Officials are also discussing waiving the tariff for plane leases, the people said. Like many airlines, Chinese carriers don’t own all of their aircraft and pay leasing fees to third-party companies to use some jets — payments that would have become financially ruinous with the additional tariff.
I take this as an indication that in spite of the tough talk out of Beijing, policymakers are feeling the pain and are exempting product categories in which they have significant reliance on US imports.
Two, we are still doing the “we are talking”, “no, we are not” dance. In an interview with Time Magazine this week that was published today, President Trump said that “We're meeting with China”. He also said that Xi has called him, though he did not say when:
Will you call President Xi if he doesn’t call you?
No.
You won’t?
Nope.
Has he called you yet?
Yep.
When did he call you?
He's called. And I don't think that's a sign of weakness on his behalf.
But you would think it’s a sign of weakness if you called him?
I don’t–I just look—
Well, what did he say?
If people want to–well, we all want to make deals. But I am this giant store. It's a giant, beautiful store, and everybody wants to go shopping there. And on behalf of the American people, I own the store, and I set prices, and I'll say, if you want to shop here, this is what you have to pay.
The Ministry of Foreign Affairs in its Friday press conference again denied that the US and China are talking:
Reuters: I have two questions. The U.S. side said that trade talks between the U.S. and China are ongoing and a White House official said lower-level in-person talks as well as a phone call between U.S. and Chinese staff have taken place this week. Has the U.S. tried to reach out to the Chinese side? If so, is China willing to engage in trade talks? Second question, China is considering exempting some U.S. imports from its 125 percent tariffs and is asking businesses to identify goods that could be eligible. Can China confirm this?
Guo Jiakun: On your first question, yesterday, both my colleague at the Ministry of Commerce and I gave a clear answer to this question. China and the U.S. are not having any consultation or negotiation on tariffs. The U.S. should stop creating confusion.
On your second question, I am not aware of the specifics. I’d refer you to competent authorities.
Earlier this morning the Ministry of Foreign Affairs tweeted part of that statement, and the PRC Embassy in the US retweeted it:
However, Korea’s JoongAng Ilbo had a reporter outside the US Treasury Department Thursday who saw a group of PRC officials entering the building.
From a ChatGPT translation of the article:
JoongAng Ilbo confirmed that at around 7 a.m. on the same day, a high-ranking official from the Chinese Ministry of Finance, accompanied by about ten aides, entered the U.S. Treasury Department building located next to the White House in Washington, D.C.
The exact identity of the high-ranking official leading the group of about ten aides was not confirmed, but they were all wearing ID cards required for entry to the ongoing G20 Finance Ministers and Central Bank Governors' Meeting in Washington. The ID cards were of the same type worn by Chinese Finance Minister Lan Foan, who met with South Korean Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok the previous day…
Chinese officials strongly blocked reporters from photographing the high-ranking official entering the U.S. Treasury Department building that morning. When reporters said, "You have no right to block the freedom of the press," Chinese officials responded, "We have the right to refuse our personnel being photographed," and demanded that reporters delete all photos taken with their smartphones.
So who was in that group, with whom at Treasury did they meet, and what did they discuss?
Back to the Politburo meeting…
Here is some of the language I found interesting, and please let me know in the comments or the chat what else is interesting.
The section on the assessment of the current situation expresses both confidence and concern, and concludes with a call to “strengthen bottom-line thinking, fully prepare contingency plans”:
Various regions and departments have concentrated efforts on overcoming difficulties, macro policies have been effectively coordinated, the economy has shown a positive trend, social confidence has continued to be boosted, high-quality development has been steadily advanced, and overall social stability has been maintained. At the same time, the foundation for the continued economic recovery and improvement still needs to be further consolidated, and the effects of external shocks are intensifying. It is necessary to strengthen bottom-line thinking, fully prepare contingency plans, and solidly carry out economic work.
The meeting referred to the trade war as a “struggle:
coordinate domestic economic work with international economic and trade struggle [国际经贸斗争], unwaveringly manage our own affairs well, firmly expand high-level opening-up, focus on stabilizing employment, enterprises, markets, and expectations, and use the certainty of high-quality development to cope with the uncertainty of drastic changes in the external environment.
Xinhua English translated 国际经贸斗争 as “endeavors in the international economic and trade field”. "Struggle" for the audience that matters, "endeavors" for external propaganda...