Chinese and U.S. flags fly near the Bund before a U.S. trade delegation meets with a Chinese trade delegation in Shanghai, China, July 30, 2019.
Ally Song | Reuters
BEIJING — As the United States ramps up pressure on China this week with secondary sanctions on Iran, the world’s two largest economies remain focused on how to cooperate.
It’s a sign that both sides are finding balance, even as the White House’s rhetoric remains harsh.
US President Donald Trump hinted to reporters on Thursday local time that he may impose sanctions on Chinese banks. “We don’t have to announce everything,” he said, according to a Fox News stream of the event.
The comments were made after a meeting between U.S. and Chinese officials in Beijing on Wednesday, according to an official statement.
Ambassador to China David Perdue said in a social media post that he met with Chinese Foreign Minister Wang Yi and three other Chinese officials to discuss President Xi Jinping’s upcoming state visit to Washington.
The Chinese reading also referred to Perdue’s comments that “we are well prepared for the next stage of important high-level exchanges,” according to a Chinese translation by CNBC.
Trump even mentioned Thursday that Xi would be coming in the next few weeks.
U.S. Treasury Secretary Scott Bessent warned on Monday that if Chinese banks “become part of an ecosystem that turns Iranian oil into gold and turns it into oppression, they will be targeted.” This was part of President Trump’s “Economic D-Day” announcement for Iran.
Jody Wen, a postdoctoral fellow at Tsinghua University’s Center for International Security Strategies (CISS), said there were few details about specific actions beyond Bessent’s comments. It’s more of a warning, she said.
Wen added that the Trump-Xi summit in May signaled the Biden administration’s shift toward managed competition rather than a “strategic adversary” view of China.
moderate reaction
China’s official response to the US secondary sanctions against Iran has also remained silent so far.
Beijing responded that it would “take all necessary measures” to protect itself, but did not elaborate on possible actions. Asked about communications with the US regarding Iran, a Foreign Ministry spokesperson said there was no information to share.
But a spokesperson said the two countries were discussing a meeting between Trump and Xi.
Ryan Hass, director of the China Center and director of Taiwan studies at Brookings, said in a social media post that the Chinese government “will note the lack of preparation prior to Mr. Bessent’s ‘D-Day’ announcement, and will conclude that this was largely staged.” Mr. Hass advised the Obama administration as the National Security Council’s director for China, Taiwan, and Mongolia.
“Secretary Bessent had already basically given up the game when he answered the question, ‘Why do you want to blow up the global financial system?’ Beijing will interpret this as a signal that the United States is not going to go after China’s big financial institutions,” Hass said.
He expects the US-China trade ceasefire to remain in place because “the alternative is worse for both sides.”
The Chinese government can also comply with U.S. sanctions and its own interests at the same time.
Han Sheng Ling, Asia Group’s China managing director and a former Wells Fargo Bank executive in China, said Asian countries have basically set up legal mechanisms for Chinese companies to tell foreign banks they must follow U.S. rules, but Chinese laws take precedence within China.
—CNBC’s Anniek Bao contributed to this report.
