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Trade war

Trump impeachment drama muddles China deal timeline

Cornered and pressured, US president's options limited, experts say

U.S. and Chinese trade delegates pose for a family photo at the Xijiao Conference Center in Shanghai in July. The Chinese delegation will visit Washington in mid-October.   © Reuters

NEW YORK -- As U.S. President Donald Trump prepares for high-level trade negotiations with China next month, a sharp turn of events has blurred the timeline of a deal.

On Tuesday, Democratic House Speaker Nancy Pelosi shocked the nation when she announced an impeachment inquiry into Trump. Pelosi had resisted calls to start formal proceedings against the president during and after the Mueller investigation, but the latest allegations about Trump pressing Ukrainian President Volodymyr Zelensky to investigate former U.S. Vice President and Trump's political rival Joe Biden's family pushed her to act.

Trump on Wednesday sought to shift the focus away from the inquiry, praising the U.S. economy and an imminent trade deal with China. 

"We have created the greatest economy in the history of our country, the greatest economy in the world.... Right now China is way behind us and they will never catch us if we have smart leadership," Trump told reporters. "We have picked up trillions of dollars and they have lost trillions of dollars and they want to make a deal very badly. It could happen. It could happen sooner than you think."

The comment came an hour after Trump released a transcription of his phone call with Zelensky from July 25. The president was under pressure from Democrats and some Republicans to make public the transcript after a whistleblower filed a complaint saying he pressured the Ukrainian president to investigate Biden's son Hunter Biden as well as a Democratic National Committee computer server related to Russian interference in the 2016 election.

Trump said last week that China would like to see someone else win the 2020 presidential election, but they think he is going to win. He has warned Beijing that if the deal comes after the Nov. 3, 2020 election, trade talks will be on "far worse" terms. 

The announcement of an impeachment inquiry came just after Trump severely criticized China for illicit trade practices at the 74th U.N. General Assembly, accusing Beijing of currency manipulation, forced technology transfers as well as stealing intellectual property and trade secrets.

China's Foreign Minister Wang Yi hit back at Trump's comments at the UN, saying China "will not be blackmailed or yield to pressure."

Early October's trade talks -- which will include Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin -- remain on track. The two sides are under pressure to inch closer to a deal.

"They want to make a deal," said Trump during a Wednesday news conference at the UN. "Because they're losing their jobs, their supply chain is going to hell, and companies are moving out of China and they're moving to a lot of places, including the U.S. And that's far worse than they thought."

Edward Alden, senior fellow at the Council on Foreign Relations specializing in trade, said that an impeachment investigation would make Trump more cautious on trade negotiations with China.

"Especially with [Democratic candidate Senator] Elizabeth Warren rising in the polls, Trump will likely be even more sensitive than he already is to any accusation that he is weak on China. The only realistic deal is a fairly modest interim deal, which will be politically risky for Trump, especially in the midst of impeachment proceedings," Alden told the Nikkei Asian Review. "The big question is whether there will be further escalation. That could be costly to the president if it hurts the economy going into 2020."

Alden also said that challenges from Congress tend to make the president "double down on a hard-line, noncooperative stance."

Michael Hirson, analyst focusing on China at Eurasia Group, said he was skeptical that the two sides will reach a comprehensive deal by 2020 as it takes tremendous effort from Trump and Chinese President Xi Jinping. He said neither side seems desperate enough to compromise.

"Trump may be a bit more inclined now to strike a 'mini-deal' with Beijing that features agricultural purchases by Beijing and provides some relief to U.S. farmers. He will also be somewhat more cautious about sharp escalation of tariffs," Hirson said. "If Trump seeks out a deal because he is politically vulnerable, Beijing will likely drive a harder line and insist on fewer concessions -- and a weak deal will be criticized by many in the U.S.." 

China's Foreign Ministry spokesman Geng Shuang declined to comment on the impeachment inquiry at Wednesday's news conference, but an analysis published in China's state-run Xinhua News Agency said an impeachment investigation of Trump would more likely affect his 2020 presidential election rather than actually kicking him out of office.

"If [China] thinks [Trump] is in really deep trouble, and essentially no deal is going to get through Congress or any deal with Trump may be vulnerable to be revisited by the next president who might have very different views, then it creates an incentive not to make a deal," said Jacques deLisle, a professor focusing on Chinese law and politics at the University of Pennsylvania. "But I think the most likely immediate thing is wait and see, because as Trump's opponents in the U.S. have discovered on many occasions, a lot of things that looked like they will be very politically damaging seem to fade quickly... If I'm sitting in China, I will probably not do anything dramatic soon to just see where this is headed and how much trouble Trump is in."

Hu Xijin, editor-in-chief of Chinese state media outlet the Global Times, claimed that half of the U.S. presidents in the last 30 years faced impeachment investigations.

"American presidents have to spend more than half of their time playing these political games, actively or passively," wrote Hu on Twitter. "So don't complain that China grows too fast."

According to the transcript of Trump's July phone, the U.S. president asked his Ukrainian counterpart for a "favor" regarding claims Biden had stopped an investigation involving his son. 

"I would like you to do us a favor, though," Trump said to Zelensky. "Because our country has been through a lot and Ukraine knows a lot about it."

Trump told Zelensky to "look into" the investigation and talk to Attorney General William Barr and Trump's personal attorney Rudy Giuliani.

Trump also asked Zelensky to locate a Democratic National Committee computer server in Ukraine, which was related to a probe into Russian interference in the 2016 presidential election. DNC computers were hacked, which led to Hillary Clinton's email scandal.

Trump said Wednesday he referred Zelensky to Giuliani because he wants to know how the Russian "witch hunt" investigation started. He also accused Clinton of deleting 33,000 emails before she received a subpoena from Congress and accused Biden of walking out of China and Ukraine with millions of dollars.

Trump has officially become the fourth U.S. president to face serious impeachment proceedings. If the House Judiciary Committee recommends articles of impeachment, a simple majority vote in the House can impeach Trump. Then, he would face a trial in the Senate, where a two-thirds majority vote would be needed to remove him from office. That would require a significant amount of Republican senators to break rank. 

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