I I have just returned from Beijing, where the government and business leaders warned of tensions with the United States, but kept hope that an agreement is still at hand. There is no doubt that if negotiations fail, we are on the brink of another full -fledged trade war. And no one wins in this scenario, especially China.
I spent 30 years engaging with Chinese leaders in the trade, and this moment feels different. The Chinese economy is lower than at any time in the past two decades – unemployment unemployment is stubbornly high, the real estate market collapses and frustration rises among the middle class. Little in China will recognize Xi Jinping’s political vulnerability, but its ability to manage these pressures is closely. Meanwhile, China hides against American pressure by strengthening trade links with Russia and the world South. Some African and Latin American leaders see their country flooded with Chinese products and push this effort. Although diversification in other export markets can work in the long term for China, in the short term, there is no substitute in the United States
President Donald Trump, while holding a solid negotiation hand, also has reason to avoid a break in the American-Chinese ties. Its growth -focused program could be compromised if prices feed inflation and weaken the demand for American exports. Trump has already increased prices on Chinese products in recent weeks, and Beijing has responded with countermeasures. With the trade battles which also take place with Canada and Mexico, a prolonged bitter struggle with China could further reduce world supply chains. The impact would not stop in the United States and China-markets across Europe, Asia and beyond, which depend on trade with the two economies, feel tension. The two largest economies in the world cannot afford to leave this spiral uncontrollable.
One of the reasons for optimism is that the two leaders keep the canals open as they exchange trade in trade war.
The annual meetings which have just concluded from the Chinese legislative assembly and the first government advisory body approved stronger, but modest measures to consolidate the Chinese dull economy by increasing consumption expenses and strengthening confidence in the private sector. The stricter links with the United States would help China focus on domestic restructuring. If Xi signals a real desire to negotiate, Trump should seize the moment.
Trump’s prices on China – and how Beijing reacts
There is a way forward, if both sides are pragmatic. Trade obstacles and technological controls are leading the programs of the two countries. To increase the chances of success, negotiations should also be linked to time – six months, no more, to prevent talks from getting bogged down. Beijing has a story to drag the negotiations or cancel them when pushed in a corner. A firm deadline maintains the pressure on both sides to act in good faith. If the talks are won, the rate increases should be back on the table.
At the top of the agenda must be fentanyl. The Ministry of Justice has determined that Chinese companies have provided chemicals with the Mexican cartels to make deadly opioid, and Chinese networks are suspected of whitening drug profits. Trump clearly indicated that any significant commitment with China must include a stronger application on fentanyl trafficking – and he counts on his good relationship with XI to arouse the help of China. A trade war will not solve the problem, but a pragmatic agreement and results in the results could. Given the Bipartite political pressure in Washington to become hard in China above fentanyl, solve this problem before official trade negotiations are tactically intelligent. Anyway, Beijing must be willing to repress at home to cut the supply – and this can, if it is serious.
Commercial commitments must be the next priority. During Trump’s first term, Beijing undertook to buy American, agricultural and energy planes, but its follow -up failed. If China expects the United States to withdraw on prices, it must demonstrate in good faith by filling previous commitments. A trade agreement that has no leisure activities does not make sense.
As a demonstration of faith, a new climbing of prices should be suspended during negotiations. None of the two parties benefits from the uncertainty caused by the continuous increase in tasks. The markets react negatively to instability, and companies on both sides are forced to rethink the supply chains and investment strategies. A temporary break on new prices would create the breathing room necessary for real negotiations to occur. This suspension, however, must be conditional – if China undermines the talks or unjustly retaliated, the United States should reserve the right to reimpose sanctions.
Restrictions on technologies have been at the center of American-Chinese tensions in recent years and must also be part of the discussion. The American concerns that exports of advanced semiconductors or other cutting-edge technologies could benefit the Chinese army are legitimate-and the United States must protect intellectual property. At the same time, excessive restrictions may suffocate investments and innovation. Washington and Beijing must find a way to define clear and enforceable railings that prevent national security risks while allowing most exchanges and investments in the technology sector to continue without hindrance.
China overproduction of industrial goods, exports of electric vehicles and investment restrictions also feed disputes with the European Union and other trade partners, which weigh trade barriers against China. An American agreement which removes the uncertainty of a trade war would generate positive undulations in the world economy. By engaging in a broader economic dialogue, Washington and Beijing can help prevent a broader fragmentation of world trade.
In his first mandate, Trump reshaped American policy towards China, rightly calling on its unjust commercial practices and translating it as a geopolitical competitor. This more athletic position is now anchored in Washington, but the transition to confrontation and economic nationalism has gone too far.
We are on the precipice of a cold war -style fracture, each side considering the other as an existential threat. It will take a strong political leadership on both sides to withdraw from the edge.
I have seen American-Chinese relations change spectacular over the years. One thing remains true: when the two parties choose pragmatism rather than confrontation, agreements occur. President Trump has an opening to conclude a significant agreement – and he should take it.
