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China is more focused on trade talks than Donald Trump's attack on Joe Biden, observers say

Sarah Zheng

China is unlikely to heed US President Donald Trump's call to investigate his political rival Joe Biden before Chinese top trade negotiator Liu He's trip to Washington next week for the latest round of trade negotiations, analysts say.

Trump said on Thursday he had "tremendous power" and a "lot of options" going into the trade talks. But the negotiations are set to be overshadowed by the impeachment inquiry into his requests for Ukraine to investigate Biden, the former US vice-president in the race to challenge Trump in the 2020 presidential election.

Also on Thursday, Trump repeated his call to the Ukrainian government to investigate Biden " and his son, Hunter " and also looped in Beijing in a winding response to reporters.

"[Ukraine] should investigate the Bidens, because how does a company that's newly formed, and all these companies if you look at " and, by the way, likewise China should start an investigation into the Bidens," Trump said outside the White House.

Chinese Vice-Premier Liu He will travel to Washington soon for another round of trade negotiations. Photo: EPA-EFE alt=Chinese Vice-Premier Liu He will travel to Washington soon for another round of trade negotiations. Photo: EPA-EFE

But analysts said Beijing would be unmoved by calls to wade directly into US domestic policies to investigate Joe Biden.

Christopher McNally, a professor of political economy at Chaminade University in Hawaii, said that although the impeachment inquiry would "certainly overshadow" next week's trade talks, the negotiations were likely to achieve some breakthroughs given the slowdown of the US economy and the political pressures on Trump.

He said possible outcomes included a "ceasefire" in the tariff dispute; "mini deals" on market access, intellectual property rights or the US' restrictions on Chinese telecoms giant Huawei; and China agreeing to buy more American agricultural products.

"We are already seeing a bit of a tit-for-tat in a positive direction rather than each side increasing tariffs on each other. Both sides are stepping a bit away from the brink," McNally said.

"It can go both ways. My hunch is that in addition to or especially because of what's happening in the US economy, there is much more pressure on Trump to do a deal now, mostly from the economy and maybe 20 or 30 per cent because of impeachment."

The US said China this week bought 716,000 tonnes of its soybeans and 130,000 tonnes of its white wheat. Photo: Reuters alt=The US said China this week bought 716,000 tonnes of its soybeans and 130,000 tonnes of its white wheat. Photo: Reuters

Trump has accused Biden of pressuring Ukraine into firing a prosecutor who was looking into his son's ties to a Ukrainian energy company that was facing corruption allegations. There is no evidence of wrongdoing on the part of either Biden, and Joe Biden was not alone in calling for the prosecutor's firing.

Trump also accused Biden of accepting "billions of dollars" in "pay-offs" from Beijing and favourable treatment for his son's business interests in exchange for softer trade policies.

"When Biden's son walks out of China with US$1.5 billion in a fund, and the biggest funds in the world can't get money out of China, and he's there for one quick meeting ... I think that's a horrible thing," Trump said last week.

During a fundraiser on Thursday, Joe Biden hit back at Trump, saying: "He said my son made a billion dollars in China. I don't know where the hell it is."

Hunter Biden has links to a Chinese state-backed equity fund, but public records do not support Trump's claims that Beijing invested US$1.5 billion in it.

According to the National Enterprise Credit Information Publicity System, a public database run by the Chinese government, Hunter Biden is a director of BHR Equity Investment Fund Management, a company incorporated in December 2013 with registered capital of 30 million yuan (US$4.2 million).

According to a report by The New York Times, Hunter Biden bought a 10 per cent stake in BHR in October 2017 " when his father was no longer vice-president " for about US$420,000.

The report matched an equity structure change at the Chinese government registry on October 23 when BHR's former shareholder, Rosemont Seneca Bohai, pulled out to give way to two new shareholders, Ulysses Diversified and Skaneateles.

On its website, the private equity fund gives its corporate address as being in Beijing. Its office was closed for the National Day "golden week" holiday on Friday. The company did not immediately reply to emails seeking comment on Hunter Biden's role in its operations, and telephone calls went unanswered.

A report by CNN, citing unnamed sources, said that Trump discussed both Joe Biden and Democratic presidential candidate Elizabeth Warren in a June telephone call with Chinese President Xi Jinping.

Trump also told Xi during the call that he would not bring up the anti-government protests in Hong Kong while the US-China trade talks were continuing, the report said.

Cui Lei, a research fellow specialising in China-US relations at the China Institute of International Studies in Beijing, said it would not make political sense for China to involve Biden or Hong Kong in the trade talks, since a Chinese investigation into the former vice-president was likely to offend both Democrats and Republicans.

"Trump will eventually leave office, so there is no need to sacrifice long-term interests for short-term ones," he said.

"Nor will China make concessions for Hong Kong, since the Hong Kong issue is primarily caused by internal conflicts and cannot rely on the US for resolution."

As of Friday there had been no response to Trump's call by China's state media.

Zhang Yuquan, a US affairs expert at Sun Yat-sen University in Guangzhou, said Beijing would maintain its principle of not interfering in other nations' affairs.

"It's impossible the Chinese government will agree to help him," he said.

Beijing and Washington have made a number of goodwill gestures recently. After each exempted key products from their tariff lists, the US Department of Agriculture reported that China had this week bought 716,000 tonnes of US soybeans and 130,000 tonnes of white wheat.

The US also earlier delayed a planned tariff increase on selected Chinese products to October 15, from October 1, the day on which Beijing celebrated 70 years of Communist Party rule.

Cui said that while the coming talks might result in "partial progress" towards a resolution of the trade dispute " such as the suspension of additional tariffs " a comprehensive deal was very unlikely and nothing should be taken for granted.

"At the end of last year there was an agreement on making more purchases but the talks still fell apart," he said.

"However, Trump might take the [2020 presidential] election into consideration and seek to reach a deal before then."

Wei Zongyou, an international relations specialist at Fudan University in Shanghai, said China would not be drawn into US domestic politics.

But Beijing's recent agricultural purchases, including of US soybeans, showed that neither side wanted the trade war to drag on, he said.

"Given that both sides have made certain goodwill gestures ... we can't rule out the possibility that the talks will reach a partial consensus," he said.

"If both sides are willing, then it's possible we will see a comprehensive deal by the end of the year, but if only one side shows willingness, the greater likelihood is that a consensus won't be achieved until after the US election."

Additional reporting by Zhou Xin and Liu Zhen

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.