Dropping the Ball: NBA Dispute and More Threaten Trade Talks

(Photo by the Associated Press)

by Rob La Terza

Tensions between the US and China have been high for over a year thanks to China’s treatment of Uighurs and the trade conflict, but a recent debacle has emerged from an unexpected source. On Friday, October 4, the Houston Rockets’ general manager, Daryl Morey, tweeted an image saying, “Fight for Freedom. Stand with Hong Kong.” [1]. The Rockets, historically popular in China since drafting Yao Ming in 2002 [1], are now at the center of a social media storm. The NBA finds itself squeezed between defending Morey’s freedom of speech and offending Chinese fans. Although the NBA has struggled to distance itself from the tweet, Morey himself has apologized for the offense the tweet caused, and Rockets player James Harden apologized on Chinese state TV [1], Chinese companies have moved to punish the league. CBS reports that “at least one Chinese sporting goods company has stopped sponsoring the Rockets and a sports news website in China said it was no longer covering the team.” [2]. NBA commissioner Adam Silver acknowledged that the league had already financially suffered because of the tweet. [2]

High hopes for the US-China trade talks this week have diminished as the NBA dispute and President Trump’s allegations against Hunter Biden’s business in China have introduced potential stumbling blocks. The US introduced another source of tension today, placing China’s leading AI startup companies on a trade “blacklist” to prevent US companies from selling components to them without US government approval [3]. The US Commerce Department wrote of the firms placed on the blacklist, “entities have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups.” [3]. Several of the companies involved have protested, saying that they value human rights and have taken steps to ensure compliance they believe the US government has ignored [3]. Chinese Foreign Ministry spokesman Geng Shuang responded by saying the US has “sinister intentions,” called on the US to reverse the move immediately and called on the US to end its interference in China’s affairs [4]. Responding to the US’ criticisms of China’s violation of Uighurs’ rights, Geng denied any human rights abuses, saying “The so-called human rights issue of the US does not exist in Xinjiang. The measures taken by China to eliminate extremism from the roots are fully in line with Chinese law and international practice.” [4].

Despite the aggressive tone of Geng’s responses, analysts have noted that his remarks were restrained compared to earlier Chinese criticisms of US trade practices, indicating that China is concerned about the upcoming trade talks and would like them to be successful [4]. Lower level talks begin today, with high-level talks taking place Thursday [5]. Principals present at the Thursday meeting will include Vice Premier Liu He, US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin [5].

Chinese state media had previously expressed optimism about that outcome of the talks but changed its tune on October 8th [6]. The blog Taoran Notes, run by the state-published Economic Daily wrote that like earlier talks, this week’s negotiations will likely consist of “talking while fighting.” [6] In addition to that statement, Taoran wrote, “Some people may ask, if the US raises tariffs further, is it still necessary to continue the talks … the answer is that it’s as necessary to take countermeasures as to continue the talks.” [6]. Taoran’s post indicates that at this point the Chinese government is willing to let the trade conflict continue if it is not satisfied by the terms the US offers. While China is hurting, it is not yet willing to let the US dictate the trade talks’ outcome. Vice Premier Liu He has reportedly said that the removal of unfair state subsidies and change to China’s industrial policies, subjects of great importance to American negotiators, will not be discussed at the upcoming meeting. Another pessimistic indicator is that in this round of talks, unlike previous negotiations, Liu has not been designated as President Xi’s “special envoy.” [6]. The South China Morning Post writes that Liu’s lack of “special envoy” status indicates that Xi has not provided Liu with specific orders or instructions for the negotiations [6].

China is not the only party feeling frustration ahead of the talks. Foreign Ministry spokesman Geng Shuang also noted that China will not investigate Joe or Hunter Biden as President Trump requested last week [7]. While there is no evidence supporting Trump’s allegations of wrongdoing against the Bidens, the president will likely be frustrated at China’s refusal to carry out his request. Trump is also unlikely to devote significant attention to the trade negotiations, instead being more likely to focus on Democratic efforts to impeach him.

Both sides have much to gain from ending the trade conflict but sour relations between the US and China limit the possibility of finding common ground at this week’s talks. Although US efforts to promote human rights are admirable, the timing of the US’ move to blacklist Chinese AI companies can only worsen the outcome of this week’s talks. It sends the impression that like China, the US is prepared for the trade conflict to stretch even longer. CNBC host Jim Cramer remarked that the move is the equivalent of “torpedoing the talks,” continuing, “Anybody that is hopeful, their hopes are dashed.” [8]. China did not rule out a possible response to the blacklisting, with Geng telling reporters to “stay tuned.” [8]. The US also placed visa restrictions on unnamed Chinese officials on October 8th [9].These visa restrictions have been placed on officials “who are believed to be responsible for, or complicit in, the detention and abuse of Uighurs, Kazakhs, or other members of Muslim minority groups,” per the US State Department. Both actions by the US are likely to exacerbate tensions ahead of this week’s trade talks, especially if China retaliates. These events have conspired to make any trade deal this week unlikely, opening the possibility of more severe tariffs going into effect. If a deal is not reached before December 15, President Trump will impose tariffs on $160 billion worth of Chinese products [10]. The Associated Press reports that if these tariffs go into effect, it “would extend U.S. tariffs to just about everything China ships to the United States.” [10]. For now, that appears to be the most likely possible outcome.

Rob La Terza is an intern in The Carter Center’s China Program. The views expressed in this article are those of the author and do not necessarily reflect those of The Carter Center. 

References:
1. Dan Woike. “Could a Tweet Sink the NBA’s Business Relationships in China? It’s Complicated.” Los Angeles Times. Los Angeles Times, October 8, 2019.

2. “The NBA’s Crisis in China Threatens Multibillion-Dollar Ties.” CBS News. CBS Interactive. Accessed October 8, 2019.

3. David Shepardson, and Josh Horwitz. “U.S. Expands Blacklist to Include China’s Top AI Startups Ahead of Trade Talks.” Reuters. Thomson Reuters, October 8, 2019.

4. Shi Jiangtao. “China Tells US to Reverse Decision to Blacklist Xinjiang Tech Firms.” South China Morning Post, October 8, 2019.

5. Andrea Shalal, and Cate Cadell. “With U.S.-China Tensions Running High, Hopes Dim for End to Trade War.” Reuters. Thomson Reuters, October 8, 2019.

6. Zhou Xin. “China Tones down Expectations Ahead of US Trade War Talks.” South China Morning Post, October 8, 2019.

7. Jacob Pramuk. “China Rejects Trump’s Request to Investigate Joe Biden, Report Says.” CNBC. CNBC, October 8, 2019.

8. Bursztynsky, Jessica. “Cramer: Trump Administration Is ‘Torpedoing’ Trade Talks by Blacklisting China Tech.” CNBC. CNBC, October 8, 2019.

9. Eric Beech and David Shepardson. “U.S. Imposes Visa Restrictions on Chinese Officials over Muslim Treatment.” Reuters. Thomson Reuters, October 8, 2019.

10. Paul Wiseman. “Hopes Are Dim as US and China Resume High-Stakes Trade Talks.” AP NEWS. Associated Press, October 9, 2019.