What can be expected from a proposed Sino-US summit

It might be the Republican's campaign ploy for the mid-term election. If the proposed Sino-US summit does take place, it might provide the Republicans a boost in the mid-term election, if not, the blame will be on China for letting go the good will. Whatever the choice, substantial changes could hardly be expected for the prolonged, tense, confrontational relation between the two largest economies as neither side was willing to back down from bottom lines.

President Trump welcomed President Xi at his Mar-a-Lago estate in Florida. Photo: Reuters

Since the last negotiation in August, the US-China trade talks have been on hiatus and the two sides have been trading punches for months. The crux of the issue is neither side seems willing to back down from its bottom line negotiating demand.

Apparently Trump’s tack of maximum pressure or trade brinksmanship has made it extremely difficult for the Chinese to even come to the bargaining table. In China's perspective, the US was still “holding a knife to China’s neck”. For China, major compromises are to be made on subsidies to state enterprises, broadening market access, reducing tariffs and even abandoning the "Made in China 2025", all of which are tantamount to challenges to China's fundamental growth mode. There is zero chance such core flashpoints could be solved through low level negotiations. The sooner the two leaders meet, the better the outcome will be. However, a lack of basic consensus and domestic politics have pulled the two leaders further away from each other.

Crafting the Chinese dream of national rejuvenation after century of foreign humiliation, Beijing faces public pressure to project strength while reaching any deal with the brash American leader. Chinese officials have portrayed the US under President Trump as a bully 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 demand and production. For Beijing, Trump's requests to change the state driven growth mode which is very much entrenched in the system are outright meddling in China's domestic policy and should be rejected by all means.

For his part, Trump and his administration has redefined China as the strategic competitor or revisionist power intent on upending the US-led global economic and political order. The speech given by vice President Pence has been construed as a call for a new cold war between the two largest economies. Surrounded by anti-China hawks, it's hard to imagine Trump will wind down his rhetoric in the near future. 

Just as the two countries seems bound for an inexorable collision course, the G20 summit in Buenos Aires, Argentina, at the end of November may offer the two presidents a much-needed ramp-off to de-escalate the current impasse. Before that could happen, the two sides have to make efforts to at least look like they are heading for a positive direction. For President Trump to have the meeting, both sides need to prepare to make sure that there will be changes and that they can have a more balanced trading relationship. For China, the US was expected to recognize China's growth model as its core interest and shall be off the table.

A temporary truce in the trade war

Key White House advocates of a Trump-Xi meeting are Treasury Secretary Steven Mnuchin and National Economic Council Director Larry Kudlow, who fret that the trade brawl poses a growing risk to global financial markets. No word, though, as to whether the idea has support from the administration’s China hawks, or notably trade representative Robert Lighthizer and economic adviser Peter Navarro.

If the meeting plan is secured, it will represent a short-term triumph for US officials like Steven Mnuchin and Larry Kudlow who want to limit the damage of the trade war. Drawing previous lesson from Trump-Kim summit earlier in Singapore, Trump may be tempted by any superficial gains to conclude victory for his trade war tack and agree to meet with Xi. It will play to Republican's campaign for mid-term election, in which Trump's Republican Party risks losing control the House of Representatives, and possibly the Senate, over to Democrats.

China, for its part, hopes the encounter will provide an opportunity for both sides to ease escalating trade tensions. Beijing may be betting Trump will be in a weaker bargaining position by late November if, as expected, the Republican Party loses its majority in the House of Representatives in upcoming mid-term elections. And Beijing was under immense domestic pressure over the rapidly deteriorating ties with the US, was more willing to return to the negotiating table.

Seeing leaders’ summits as a tried and tested way to break an impasse, Chinese officials also hope to 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. China hopes a meeting can reduce the differences, but the US is focused on whether a meeting can yield results which is unlikely given that many of Washington’s demands are still unacceptable to Beijing.

With U.S.-China relations fraying on an array of issues across the economic, diplomatic and military fronts, few analysts anticipate a major breakthrough from the meeting. It’s unrealistic to pin hope on the summit to result in an abrupt thaw in the icy ties. At this point, based on the way things have been developing, there is only a slim chance of them calling a truce. This trade war is going to lead into a much more prolonged, tense, confrontational relation which is unlikely to pass any time soon and consequently polarizing the relationship and even polarizing Asia and beyond.

Given how little the proposed summit may achieve, Beijing may need to rethink cautiously over whether it would be worthwhile to hold such a meeting or accept the olive branch extended by the moderates in Trump’s administration. Agreeing to meet with Trump may be interpreted as capitulation to his demands which Trump has insisted as the precondition for China to be ready for any talks. It might be the Republican’s campaign ploy for the mid-term election to announce a victory in the trade war. If they do agree to meet, China might provide the Republicans a boost in the mid-term election, if not, the blame will be on China for letting go the good will.

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