Will the Xi-Trump call roll out the red carpet for trade negotiation?
Yu Feng

Editor’s note: Yu Feng is an assistant research fellow, Institute of American Studies at the Chinese Academy of Social Sciences. The article reflects the author's views, and not necessarily those of CGTN.

On Tuesday, U.S. President Donald J. Trump posted a tweet saying he just “had a very good telephone conversation with President Xi Jinping of China” and confirmed that the two parties would be having an extended meeting at the G20 Osaka summit.

The news led to surges in the stock markets of both China and the U.S. Investors of capital markets viewed the phone call between the two presidents as an optimistic sign for the world economy and a potential turning point in the raging trade war between the two countries in the past few months.

But will it be the turning point? It's still too early to say.

It indicates the seemingly softened attitude of the Trump administration towards China on the trade issue and shows America’s willingness to ease or even end the trade war through peaceful discussion instead of imposing tariffs on and on. Yet whether it stands for a fundamental change in the Trump administration’s policy towards China still remains to be seen.

Traders work on the floor of the New York Stock Exchange, May 20, 2019, New York City. /VCG Photo

Traders work on the floor of the New York Stock Exchange, May 20, 2019, New York City. /VCG Photo

On the one hand, there are still officials in the administration who held negative view on the effect of negotiation. For example, the U.S. Trade Representative Robert Lighthizer stressed the necessary use of tariffs and believed China was “stealing” technologies from the U.S.

On the other hand, Trump wants to make a deal with China, but “it has to be a good deal for everybody.” In other words, the U.S. is not going to give up its original appeals easily. Just as White House economic adviser Larry Kudlow said at the White House on Tuesday, the new round of Sino-U.S. negotiation would focus on structural changes and enforcement mechanisms. He also warned that nothing was guaranteed in the coming meeting of the two presidents.

It should also be noted that Trump’s taking the initiative to “call” was out of certain practical reasons but not an ideological change.

Firstly, China’s playing hardball in Sino-U.S. trade war has made the U.S. realize that tariffing alone would never restrain China. Instead, it would hurt both sides heavily.

Secondly, the U.S. economy has been affected in a bad way due to the escalating trade tension. The U.S. Chamber of Commerce has urged the Trump administration to end its trade war with China, warning of a loss of 1 trillion U.S. dollars in the next 10 years.

VCG Photo

VCG Photo

Thirdly, with Trump officially announcing his re-election bid on the same day, it was possible for him to use trade war with China as a tool for his re-election. The U.S. president might intend to spark the stock market by softening his stance in the Sino-U.S. trade conflict, sending a message to his supporters that he has been doing a great job during his presidency and that he could keep making America great.  

Thus, how this phone call might change the trade conflict between China and the U.S. still remains to be seen. Last time Trump spoke highly of his conversation with President Xi over the trade issue in his tweet and then the negotiation broke down. It could still happen unless U.S. stops seeing China as a potent challenger to its hegemony in the world. 

As for the future development of the Sino-U.S. trade conflict, China should prepare itself for both eventualities of further negotiations and escalating trade war. China should also bear in mind that its trade relationship with the U.S. could blow hot and cold as the U.S. presidential election proceeds. Trump may be gentle to China to attract supports from giant companies but may also be tough on China to show his determined commitment of “America First” to hold onto his firm supporters.

Anyway, Beijing’s stance on Sino-U.S. trade tension has been explicit and consistent. China has always welcomed the achievement of a win-win trade deal with the U.S. through effective discussion as long as its bottom line of non-interference into Chinese sovereignty and domestic affairs stays intact. The trend of Sino-U.S. trade conflict depends on how the U.S. would respond to a large extent. Let’s just wait and see what would happen at the G20 meeting in Japan.

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