The presidential summit aims to boost bilateral trade relations

By Li Wei

The Chinese President Xi Jinping and United States President Donald Trump wrapped up a two-day presidential summit in Mar-a-Lago estate by announcing a 100-day plan to improve strained trade ties and boost cooperation between the two competing nations.

The talks were described as productive between the leaders, saying they exhibited "positive" chemistry. Commerce Secretary Wilbur Ross said the two sides agreed to speed up trade talks to help close a lopsided imbalance in China's favor, a common campaign-trail complaint of Trump's.

So far, we know very little about the details of the 100-day plan, China still must attach great importance to the uncertainty posed by China-U.S. economic and trade relations during Trump's presidency. But Trump's fairly weak domestic ruling foundation leads to various challenges of implementing his aggressive policies, so China does not have to overestimate his capacity to overturn the existing situation and order. However, China should conscientiously study various policies Trump may adopt and prepare contingency plans.

First of all, prepare mentally and strategically to confront economic conflict with the US. Trump blustered and blamed many domestic issues on China; so China-U.S. economic and trade relations are faced with many challenges. In this context, China has to establish a thinking model of "seeking peace out through war". On the one hand, China should design elaborately coping strategies, hit hard at particular industries and sectors and fight in a focused manner back against America's industries ranging from aviation, produce, medical devices, products of films and information products. On the other hand, China should make full use of WTO rules so as to address economic and trade frictions with the U.S., to counter trade litigation filed by U.S., to enhance China's ability to grasp rules and to defend China's national interests.

Second, increase contacts with American think tanks, lobby groups, media, business groups, and congressmen, make use of American political system of separation of powers and check and balance and the diversified social system to counter the U.S. Various interests, views and policies compete in America, as the presidential election in 2016 further exposed how divided America was, embodied in major economic and social issues ranging from income distribution, health care, race, immigration, abortion, gun control. As a president, Trump possess the weakest social support in recent years, which is proved by the fact that Trump had won fewer votes than Hillary Clinton. Trump will be a President who does not have honeymoon with voters. There is great opposition against Trump in America, so those who oppose him all would attack him fiercely, if he made policy mistakes. Therefore, China should pay much attention to the social organizations, think tanks and media which oppose Trump to make the fortress defeated from within.

Third, continue to establish a positive image that China is actively participating in global governance in the international community and make every effort to improve China's position and win bigger voice in the established global governance system. Against the backdrop of sluggish growth of the world economy, rising anti-globalization sentiments and America's constant threats to withdraw from the global governance system and unwillingness to take on its international responsibilities, China should not follow its example, but continue to play a constructive role in global governance instead. China should actively participate in global economic and financial governance, continue to support the Doha Round of Trade Talks which is dominated by WTO, safeguard the multilateral trading system based on WTO, make unremitting efforts to promote the reform of the international financial system based on IMF and the World Bank, and contribute China's ideas and wisdom to the global governance system. China's basic strategy is that it is time for China to play a bigger role in the global economic governance in the context of America's rising isolationism and populism. That America withdraws from the global economic governance system is self-defeating. America's negative attitude is contrast to China's positiveness, thus enlarging China's circle of friends and improving China's soft power. In the meantime, China should avoid being too offensive, maintain good relations with established powers, especially enhance policy coordination with the European Union and emerging countries, and emphasize that reforming the world economic governance system is gradual.

Fourth, step up efforts to implement China's free trade area strategy and construct China's FTA network, which both can reduce the dependence on the American market and can make China take a favorable position in the competition of international economic and trade rules. The essence of the current international competition is competing for international institutions. Trans-Pacific Partnership (TPP) which is led by the U.S. was reached, but Trump has signed a decree to withdraw from TPP. China can take the opportunity to actively promote the China-centered FTA strategy, such as RCEP and FTA negotiations among China, Japan and South Korea. China should continue to move China-U.S. BIT negotiations forward, through which we can expand our trade rules to border measures, and take the prime position in the new round of setting new international trade rules. 

Fifth, enhance cooperation with the U.S. on issues such as energy and infrastructure and make them a new growth point of China-U.S. economic and trade relations. China and the U.S. have much more to cooperate in the natural gas. The shale gas revolution makes natural gas cheaper in America. To spur job growth, the Trump administration will intensify efforts to develop American domestic energy. China proposes that it will increase the share of natural gas in primary energy consumption to over 10% by 2020 to 2025. To attain this goal, China can encourage America to lift the restrictions on natural gas exports, assist America to set up liquefied natural gas piers, and increase the imports of natural gas. China and America can explore possibilities of cooperation on infrastructure, which is the core content of Trump administration's economic policies. China is conducting infrastructure investment through the The Belt and Road Initiative, so infrastructure investment can be a new starting point for China-U.S. economic and trade cooperation. China and America can consider to set up a "infrastructure construction commission", make full use of the advantages of both sides, considerably improve American infrastructure in the short term, and revitalize China's stock funds in America. 

Sixth, optimize the domestic industrial structure, and keep phasing out overcapacity represented by the steel industry, and speed up the upgrade of its manufacturing industries. Trump nominated Robert Lighthizer as U.S. trade representative, who represents the interests of the steel industry and is known for the "trade war" under President Ronald Reagan. So a China-U.S. trade war may first take place in the steel industry, and even like "voluntary export restraint" negotiations which were targeted at Japan in the past may happen. In this context, China has to quicken its pace to phase out domestic overcapacity, and cannot wish exports to America to absorb the excess capacity. In the meantime, China needs to speed up the transformation and upgrade manufacturing industries, to climb the global value chain in the global economic competition. The whole world is undertaking a new round of industrial revolution, and China should seize the opportunity to keep pushing the strategy of "Made in China 2025" forward, to make China a strong manufacturing country, and to improve the structure of export, so as to address the waves of trade protectionism which may arise.

The author is a research fellow of National Academy of Development and Strategy, RUC.