New US-China trade talks: 'We'll see what happens'

July 02, 2019 11:36
Donald Trump has announced another truce in the trade war with Beijing following a meeting with Chinese leader Xi Jinping during the G20 summit in Osaka. Photo: Reuters

In a virtual replay of events that took place seven months ago, Donald Trump and Xi Jinping met on the sidelines of a G20 summit on Saturday and agreed to resume negotiations on the trade dispute between their two countries. Again, the United States promised to hold off on imposing new tariffs but, this time, there was no deadline on the talks.

The China-United States bilateral meeting was but one of a host of bilateral meetings held by the 20 participating countries in Osaka, Japan. While its official mission is to bring together industrializing and developing economies to discuss key global economic issues, each meeting also provides a valuable platform for discussing bilateral or multilateral issues on the side.

Canada wanted a bilateral with China to discuss two Canadians incarcerated in China, apparently in reprisal for Canada’s arrest of Meng Wanzhou, chief financial officer of Huawei, who is being held as a result of an extradition request by the United States. Prime Minister Justin Trudeau failed to secure a full-fledged bilateral but apparently was able to spend some time with Xi to discuss the issue.

The United States had promised to help Canada but it is unclear if Trump raised the issue with Xi.

China made it clear that it would not countenance discussion of the troubles in Hong Kong, which it called an internal affair, even though the Sino-British Joint Declaration, an international treaty, calls for economic ties between Hong Kong and foreign countries and the Hong Kong Basic Law affirms that Hong Kong, “on its own,” may maintain and develop a host of economic, trade, financial, shipping, tourism and cultural relations with other countries.

Japan was apparently the only country to raise the issue. A Japanese spokesman, Takeshi Osuga, said that Abe, while meeting Xi, had “pointed out the importance of [maintaining] a free and open and prosperous Hong Kong under the one country, two systems formula.”

Naturally, the US-China meeting captured by far the most attention as did the antics of the American leader himself. Trump called the Chinese president a “brilliant man” and one of the greatest Chinese leaders of the last 200 years.

The Chinese are not given to such extravagant remarks. But a few weeks ago, while speaking at an economic forum in St. Petersburg, Xi referred to Trump as a friend for the first time. This was an indication that China wanted to stem the deterioration in relations with the US.

China frequently attempts to depict itself as superior to other countries, including the United States.

For example, the Osaka meeting was first announced by Trump in a tweet on June 18 when he wrote, “Had a very good telephone conversation with President Xi of China.” He said that the two would meet at the G-20.

China’s foreign ministry, reporting the telephone call, put a spin on it. It said: “President Xi Jinping held telephone talks with President Donald Trump of the United States at request.” That is to say, the United States made the request and China granted it.

On June 25, four days before the two leaders held talks in Osaka, their chief trade negotiators spoke on the phone. Again, the official Xinhua news agency pointedly reported that Vice Premier Liu He had spoken with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin “at the request of the U.S. side.”

While Trump had said that he had no preconditions for talks with China, it now seems clear that China had preconditions. The Wall Street Journal reported on June 27 that one Chinese precondition for a trade agreement was for the US to remove its ban on the sale of American technology to Chinese telecommunications giant Huawei Technologies. Not coincidentally, perhaps, Trump announced after the Xi meeting that he would allow American companies to continue to sell products to Huawei, except for goods relating to national security.

The two sides may have a better chance of reaching an agreement this time around. Each now knows what the other side wants and may realize that it will have to accept a less than ideal accord. The fact that they have not set a deadline also suggests a new appreciation of reality.

One indication of progress in the coming months is the amount of US agricultural products China will buy. According to Trump, the US will “give China lists of things that we’d like them to buy” and China very soon “is going to be buying a tremendous amount of food and agricultural product.”

In Trump’s famous words, “We’ll see what happens.”

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Frank Ching opened The Wall Street Journal’s Bureau in China in 1979. He is now a Hong Kong-based writer on Chinese affairs.