Halt in escalation of trade tensions a step in the right direction

China Plus Published: 2018-12-02 18:31:12
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Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."

China’s President Xi Jinping and his American counterpart President Donald Trump sat down on the sidelines of the G20 summit in Argentina on Saturday for their first face-to-face meeting since the escalation of trade tensions began in March. In what may prove to be a significant turning point in the conflict, they agreed to not impose new tariffs, and to work on addressing each side’s concerns. And they asked their trade teams to step up the negotiations towards the elimination of all the tariffs imposed so far this year, and to push bilateral trade ties back to normal as soon as possible.

Chinese President Xi Jinping speaks during a working dinner with his U.S. counterpart Donald Trump in Buenos Aires, Argentina, Dec. 1, 2018. [Photo: Xinhua/Li Xueren]

Chinese President Xi Jinping speaks during a working dinner with his U.S. counterpart Donald Trump in Buenos Aires, Argentina, Dec. 1, 2018. [Photo: Xinhua/Li Xueren]

By hitting the brakes to avoid a further escalation of the trade frictions, the two presidents have shown a willingness to meet in the middle and resolve their differences through dialogue. At the APEC summit in Papua New Guinea last month, President Xi made the point that “no one wins a cold war, a hot war, or a trade war.” Over the past eight months, the negative impacts of the trade frictions between China and the United States have shown the world the truth of this argument: Aside from the damage that the trade tensions have caused the world’s two largest economies, the growth rate of the global trade in goods is expected to slip by 0.3 percent. And the International Monetary Fund has trimmed its projections for world economic growth this year and next by 0.2 percentage point down to 3.7 percent, so a halt in the escalation of the trade frictions is good news for people everywhere.

According to the agreement reached by President Xi and President Trump, China will, in line with its domestic needs, increase its imports of agricultural products, energy, manufactured goods, and tertiary services from the United States to balance their bilateral trade. High-quality American agricultural products such as oranges, soybeans, pistachios, wine, and beef are very popular among China’s massive cohort of middle-income consumers. In the energy sector, China’s annual output of crude oil and natural gas reached 200 million tons and 138 billion cubic meters respectively in 2016. But annual consumption amounted to 580 million tons and 210 billion cubic meters – this amounts to a big deficit between supply and demand. The United States is one of the world’s biggest producers of oil and natural gas, so an increase in imports of these two resources will help China to diversify its energy supply base as it transitions away from its reliance on coal.

How big of a share the United States can win of China’s import market remains to be seen. China’s market values fair competition, and so doesn’t respond positively to pressure from pushy sellers. And China is expanding access to its market not only to the United States, but also to the whole world. As a result, American sellers have to provide a value proposition that beats that of their global competitors.

The two presidents agreed that their trade delegations should soon begin a new round of negotiations. China will propose practical solutions to the trade issues that protect the interests of both sides and also the world trade system. As President Xi made clear at the G20 Summit in Argentina, “Going forward, win-win cooperation is the only choice for us, be it in good times or bad”. At the same time, China is fully aware that its trade issues with the United States are complicated, and it can’t expect all of the points of difference between the two sides to be quickly resolved. China is ready to weather the potential challenges, because its leadership holds firm to the belief that no waves or tides can overwhelm China’s economy.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of chinaandgreece.com, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.