What the Xi-Trump Summit Left Unanswered for China-US Relations

Posted by Reading Time: 6 minutes

By Alexander Chipman Koty

The summit between Chinese President Xi Jinping and US President Donald Trump at the Mar-a-Lago estate in Florida was billed as a historic meeting between the world’s two most powerful men. As the meeting wrapped up, however, the US missile strikes in Syria overshadowed the cordial affair, which featured the presidents and their families sharing meals and taking informal strolls around the grounds.

The Mar-a-Lago summit produced a 100-day plan to resolve trade disagreements and four dialogue mechanisms for the presidents to discuss bilateral issues. Trump also accepted an invitation to visit China later in 2017.

All of these resolutions are agenda-setting agreements, rather than concrete pacts or deliverables, which many observers expected since it was the first in-person meeting between the two leaders. That the meeting adhered to scripted pleasantries is not insignificant considering Trump’s unpredictable dialogues with other foreign leaders and his bold anti-China remarks on the campaign trail.

The friendly remarks offer reassurances about the China-US relationship. However, the issues that were not publicly resolved indicate lingering uncertainties over what is dubbed “the most important relationship in the world”.

Trade imbalance and market access

In the run-up to the meeting, Trump repeated his campaign remarks that China is the “world champion” of currency manipulation. Just over a week later, he stated, “They’re not currency manipulators.”

While this reversal suggests that Trump’s view of China is warming, several uncertainties regarding bilateral trade and investment remain.

Trump did not explicitly rule out slapping tariffs on Chinese goods, something he has threatened as a response to the bilateral trade imbalance and a comparative lack of market access for US companies in China. Sectors of particular contention for US businesses include automobiles, agriculture, healthcare, internet and IT, logistics, media, and finance.

Xi will reportedly offer Trump “tweetable deliverables”, such as the lifting of a ban on US beef, increasing pork and soybean imports, and allowing more Hollywood films to be shown on the mainland. However, these concessions will not markedly impact what the US considers unfair and unequal market access between the two countries, and arguably may have been coming anyway.

China has been lobbying the EU and WTO to receive market economy status. Despite the concessions to increase imports from the US, the Trump administration will likely continue to lobby against China acquiring this designation.

Further, Trump tweeted that he will offer China a better trade deal if they solve “the North Korean problem”. Tying trade deals to China’s security interests, even if only as a bargaining tactic, increases the chances of a trade dispute breaking out.

Chinese leadership

Cultivating an image as a responsible and steady leader both at home and abroad is an important goal for Xi, particularly in a year that features the politically important 19th Party Congress. Xi accomplished this for domestic purposes with a widely circulated image of him appearing to explain something to an attentive Trump.

However, Trump did not announce any support for a “new model of great power relations”, the concept Xi originally proposed to US President Obama in 2013 to govern China-US relations. Rather, Trump offered a stark reminder of unilateral US power by informing Xi – while enjoying a piece of cake at the dinner table – of the missile strikes in Syria.

Trump also did not endorse either of China’s two principal international projects: the Asia Infrastructure Investment Bank (AIIB) and the One Belt, One Road (OBOR) project. Although close US allies such as Belgium, Canada, and Ireland recently joined the AIIB, Trump unsurprisingly showed no plans to follow suit. Trump also did not indicate whether he would send a cabinet-level representative to the inaugural OBOR conference in May, as Beijing would like.

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Climate change

An agreement to tackle climate change – or even a mention of the subject – was notably absent from the Xi-Trump summit, despite it being the most successful area of bilateral cooperation under the Obama administration. A deal brokered between Xi and Obama was instrumental in putting together the landmark Paris climate change agreement.

Rather, Trump, who previously referred to global warming as a Chinese hoax, has threatened to pull out of the agreement. The unwillingness on the US side to address climate change puts China in a more influential position internationally for its continued action on the environment.

The lack of support also leaves US clean-tech companies at a disadvantage. China has invested heavily in environmental industries, and often requires foreign technology and expertise to meet its needs. Recycling, e-waste management, solar power, wind power, and electric vehicles are among the many sectors where cooperation is mutually beneficial.

Uncertainties remain

The amicable meeting at Mar-a-Lago bodes well for China-US relations considering that Trump challenged its very basis by questioning the One China policy only months earlier. However, the leaders’ warm remarks merely bring the China-US relationship closer towards the status quo rather than advance it further.

The issues that were not resolved at the meeting, or in some cases even addressed, point to ongoing uncertainty in the relationship. Although the leaders stated their willingness to solve fundamental differences, the potential for relations to deteriorate is still more present than under the Obama administration.

US businesses may soon find additional opportunities from the lowering of certain Chinese trade barriers, and the 100-day trade plan offers potential for more. Despite this positive trajectory, however, the possibility of a political dispute between China and the US affecting bilateral trade and investment continues to linger in the background more so than it has in the past.


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Dezan Shira & Associates is a full service practice in China, providing business intelligence, due diligence, legal, tax, IT, HR, payroll, and advisory services throughout the China and Asian region. For assistance with China business issues or investments into China, please contact us at china@dezshira.com or visit us at www.dezshira.com

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