Trump and China's Xi to meet in bid to end trade war tensionsOctober 11, 2018
President Trump and Chinese leader Xi Jinping have agreed to meet next month at the G-20 summit in Buenos Aires in hopes of resolving their intensifying trade conflict, according to three people briefed on the arrangement who spoke on the condition of anonymity because they were not authorized to speak to reporters.
The planned sit-down — which Beijing sought to forestall further U.S. tariffs — would represent the first direct talks since August, as well as a temporary victory for administration moderates. Yet with U.S.-China relations fraying on an array of issues, few analysts anticipate a major breakthrough.
“The problem is neither side seems to be confident that it understands the other side’s bottom line negotiating demand,” said Michael Pillsbury, director of the Center on Chinese Strategy at the Hudson Institute, and an occasional White House adviser.
The agreement to restart negotiations comes three weeks after Trump slapped tariffs on $200 billion in Chinese imports, prompting China to respond with levies on $60 billion in American goods. With the world’s two largest economies trading punches, the International Monetary Fund this week lowered its global growth forecast, citing the trade war’s impact.
The president has threatened to levy 25 percent tariffs on the remaining $257 billion of Chinese imports if Beijing refuses to eliminate trade and economic policies that Washington regards as discriminatory.
In an interview with Fox & Friends on Thursday, Trump defended his tariff strategy.
“It’s had a big impact,” Trump said. “Their economy has gone down very substantially and I have a lot more to do if I want to do it.”
Xi is expected to push the president to abandon or at least defer plans for further tariffs, according to Pillsbury.
The meeting represents a short-term triumph for U.S. officials who want to conclude the trade war before economic damage spreads, including Treasury Secretary Steven Mnuchin and Larry Kudlow, the director of the National Economic Council.
Chinese officials hope they can circumvent hard-liners, such as U.S. Trade Representative Robert E. Lighthizer and Peter Navarro, a White House trade adviser, by making a personal appeal to Trump in Buenos Aires.
“They basically see in this political environment that you can’t do much because President Trump is surrounded by anti-China people,” said Cheng Li, a China scholar at the Brookings Institution. “It’s difficult to know what Trump will do.”
The deepening divide between the two nations is likely to limit expectations of a breakthrough. Along with the trade dispute, U.S. officials in recent dayshave accused China of military expansionism, human rights violations and planning to interfere in the November congressional elections.
Secretary of State Mike Pompeo clashed with Chinese Foreign Minister Wang Yi during a visit to Beijing this week, where the two men discussed trade and North Korea’s nuclear program.
“Given the direction of things, it doesn’t sound too promising,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies, referring to the talks. “I suppose they could staunch the bleeding.”
In his Fox interview, Trump said the Chinese would be forced to bandon their unfair trade practices because they had “lived too well for too long” at Americans’ expense. Per-person income in China last year was $8,827 versus $59,532 in the United States, according to the World Bank.
During earlier talks, Chinese diplomats offered to buy larger amounts of American agricultural and industrial products to narrow the $375 billion U.S. trade deficit with China, which Trump vows to eliminate. But the president rejected those offers, holding out for more comprehensive changes.
“There’s evidence that the Chinese elite has acknowledged an intelligence failure about the intentions of the Trump administration,” said Pillsbury, author of “The Hundred-Year Marathon: China’s Secret Strategy to Replace America As the Global Superpower.”
Roughly half of the $635 billion in goods traded between the U.S. and China last year now face higher trade barriers. Some executives say they’re preparing to raise the price of consumer products and lay off workers.
Jim Hackett, Ford Motor Co.’s chief executive, told Bloomberg recently that Trump’s tariffs on imported steel and aluminum had cost the company “about $1 billion in profit.”
Trump said he aims to force Beijing to end predatory trade practices, including stealing intellectual property from U.S. companies — even if it hurts Americans in the short run.
Many American business groups support the president’s complaints about China, but oppose the use of tariffs to force an adjustment. The seven weeks that remainbefore the G-20 leaders meet represents an opportunity for working-level officials in the U.S. and China to reach the outlines of a deal.
“There’s sufficient time between now and the end of November for the two sides to be talking specifics,” said Erin Ennis, senior vice president of the U.S.-China Business Council.
The scheduled meeting follows the collapse of talks last month. Beijing had planned to send Vice Premier Liu He, one of Xi’s closest aides, to Washington. But Chinese officials canceled after Trump said he would levy fresh tariffs on Chinese importsand tweeted that China’s markets were “collapsing.”
Analysts say Xi faces public pressure to project strength while reaching a compromise with the brash American leader. Chinese officials have cast the American leader as a bully out to contain China and have refused to bend. Beijing also says it could replace lost U.S. orders with other trading partners or ramp up domestic production.
“Trump’s aggression has made it difficult for the Chinese to even come to the bargaining table,” said James Zimmerman, partner in the Beijing office of the international firm Perkins Coie and former chairman of the American U.S. Chamber of Commerce in China. “But we still need an off-ramp to de-escalate the current impasse.”