Shi Yinhong: Best outcome of Xi-Trump meeting at G20 could be an easing of trade tensions
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Recently, the Trump administration has been sternly demanding China to considerably change its economic mode and industrial policies, which will amount to fundamentally changing China’s development trajectory.

The “unscrupulous” behavior has stranded bilateral trade talks, lowering the possibility of reaching a sustainable agreement, and casting a shadow over the G20 meeting.

This May, when the US delegates arrived in Beijing for “trade negotiations”, they gave a long list of demands for China to decrease the trade gap by $200 billion in two years’ time, stop the Made in China 2025 strategy, not to subsidize domestic enterprises and force the technology transfer. The targets are specific and concrete, while also so arrogant and high-handed that China could not accept.

During the process, China has agreed to expand US imports and relax control over market access with sincerity, although China never agreed to Trump’s new requirements or requirements with new contents. China hopes to reach framework agreement over the current trade war, in bid to gain more consensus.

If the US simply wants to solve the trade gap problem, it’s necessary for the two parties to sit down for negotiations and it’s actually not difficult to achieve each other’s pursuits. However, the US has been for several months playing tricks, unscrupulously pressuring and extorting the other side, dragging bilateral relations into abyss.

All along, the US has not been sincere in the trade talks, and its elite groups and China hawks would definitely continue to play roles in the bilateral relations. Observing the current situation, the trade war fought by Trump has gained some support from the general public, and widespread endorsement domestically. It’s not just his whim.

Taking global industry chain into consideration, the US and China could not be totally delinked. The US technology giants are quite dependent on the Chinese market. If they intend to become bigger, they need to invest heavily into cutting-edge technology, and the Chinese market could provide the funds they may need.

China is deeply embedded into the global industry chain, so delinking could never be a choice. In manufacturing, China has to import key technologies and components, although sources of the products are mostly not the US, but countries like Japan and Germany. So, China is not that dependent on the US.

The best result for the Xi-Trump meeting would be an easing of trade tensions. That’s to say, Trump would not increase the current 10 percent tax to 25 percent and the remaining $267 billion of Chinese products could be saved from being taxed.

If the meeting failed to bring the highly anticipated result, then the worst could happen. If the US intends to sign a treaty with coercion, China definitely would not go with it. Under the circumstances, the trade frictions would get worse. The US has been pressuring China to make quite big concessions, including not merely buying a lot more US products, but considerably relaxing restrictions on market access. Most importantly, it’s real goal has been to “change China’s financial system and economic policies, especially its state-backed and empowered technological upgrading.”

No matter what result the negotiations bring, China is supposed to deepen its reform and restructuring efforts in bid to be more open to the outside world. Meanwhile, the country should decrease its dependence on external market, resources and technology, but cultivate its own independent and innovative minds in the technological sector.
 
Shi Yinhong is a professor with Renmin University’s School of International Studies.
 

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