China, US to Hold Phase One Trade Call Soon, China Says

China again criticized U.S. restrictions on Huawei, TikTok and WeChat but said the measures will not affect an expected call between officials from the two countries to discuss the phase one trade deal. The call, originally scheduled for Aug. 15 (see 2008170022), will be held “in the near future,” a Chinese Ministry of Commerce spokesperson said Aug. 20, according to an unofficial translation. The call is expected to serve as a six-month compliance check on both countries’ commitment to the phase one agreement. The Office of the U.S. Trade Representative did not comment.

Although it agreed to the call, China’s Commerce Ministry continued to criticize U.S. restrictions on Huawei (see 2008170029), which it called a “serious breach of free trade rules.” It also said the U.S ban on transactions with the parent companies of TikTok and WeChat (see 2008070024) will “undoubtedly shake the confidence” of Chinese investors.

“China firmly opposes the use of investment national security review as a political tool,” a ministry spokesperson said, “and the Chinese government is determined to safeguard the legitimate rights and interests of domestic enterprises.”

Although the U.S. has recently increased restrictions on Chinese foreign direct investment (see 2007150031), the ministry said it continues to welcome U.S. investors and dismissed the notion that U.S. manufacturers are leaving the country as the Trump administration tries to reshore supply chains. China said U.S. companies have “confidence” in the Chinese market, adding that it remains a “hot spot for investors from all over the world, including the United States.” It also said its supply chain is “deeply integrated” with global markets, even though the COVID-19 pandemic has led some countries to try to reduce their reliance on Chinese goods.

“Some companies have adjusted their global industrial layout based on factors such as factor costs,” the ministry spokesperson said. “[But] the overall competitive advantage of the manufacturing industry has not changed, and the economic stability and long-term trends have not changed.”

China also said it is increasing imports of wheat and soybeans due to more demand, and has seen a significant rise in imports of both this year. The spokesperson said China is specifically concerned about maintaining its domestic soybean supply, which is important for the country’s consumption of “oil supply and protein feed demand.”

The spokesperson added that China has seen a decrease in volumes of rare earth exports through the first six months of 2020, down about 20% compared with the same period for 2019. China said its rare earth producers “have slowed down” due to the pandemic.