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China policy round-up: US-China trade talks drag on, foreign investment law passes, US warns Germany over Huawei

By Rebecca Feng
15 Mar 2019

In this round-up, trade talks between the United States and China continued, the Foreign Investment Law was passed by the National People’s Congress and the US urged Germany to ban Huawei

China’s vice premier Liu He spoke with US trade representative Robert Lighthizer and treasury secretary Steven Munchin on the phone at 7am Beijing time on Tuesday. The trio discussed the next steps of the trade talk, state media Xinhua reported.

The phone call included “specific negotiations over critical issues about the wording of an agreement”. The report did not give further details.

Meanwhile, Lighthizer told the Senate finance committee on Tuesday that “major issues” must be resolved and said he could not predict when or whether a deal would be reached, The New York Times reported.

On Wednesday, US President Donald Trump’s meeting with reporters at the White House heightened the uncertainty surrounding the deal.

“We could do it either way,” Trump told reporters. “We can have the deal completed and come and sign or we can get the deal almost completed and negotiate some of the final points. I would prefer that. But it doesn’t matter that much.”

On Thursday, the two parties talked again at 7am, Xinhua reported on Friday.

“The two sides have made substantial progress on the wording of the agreement,” the report said, without giving further details.

On Thursday evening, Bloomberg reported that a deal-signing meeting between Trump and Xi will not occur this month and will happen in April at the earliest, citing people close to the matter.


The National People’s Congress meeting concluded on Friday morning. During the 30-minute closing session, the Foreign Investment Law, the new basic law governing foreign investment in China, was passed as expected. The law will be in effect from January 1, 2020.

By then, the new law will replace the existing three separate foreign capital laws drafted in the early phases of China’s reform and opening up – the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Contractual Joint Ventures and the Law on Foreign-Capital Enterprises.

Soon after the closing session ended, Chinese premier Li Keqiang hosted a press conference and announced that the previously declared value-added tax cut will be in effect from April 1 and the cut in social contributions by corporations will be in effect from May 1.

The other two key themes of the Two Sessions were easing the funding conditions for private and small enterprises and soliciting opinions from businesses.

The China Banking and Insurance Regulatory Commission published another guidance notice on Wednesday, urging lenders to extend more loans to small and microenterprises. This time, the regulator said it would allow banks to have a higher non-performing loan ratio for any lending to small and micro enterprises.


The European Union referred to China as a “rival” in a report, EU-China – A strategic outlook,published on March 12.

“China is, simultaneously, in different policy areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance,” the report read.

In response, Lu Kang, spokesperson of the Ministry of Foreign Affairs, told reporters during a Wednesday press conference that “healthy competition, instead of vicious competition, should be encouraged.”


The United States issued an official warning to Germany as the latter decided not to ban Huawei from its 5G network development. The US said it would reduce information connections with Germany if it continues partnering with Huawei.

The warning was in the form of a letter to Germany’s economics minister from the US ambassador to Germany, Wall Street Journal reported.

German chancellor Angela Merkel responded that Germany will define its own standards for 5G mobile network security, during a Tuesday press conference.  

By Rebecca Feng
15 Mar 2019