China-U.S. trade truce a positive step in the right direction

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Editor's Note: Ken Moak, co-author of the 2015 book "China's Economic Rise and Its Global Impact," taught economic theory, public policy and globalization at the university level for 33 years. This article reflects his opinion, and not necessarily the views of CGTN.

On December 1, the first face-to-face meeting between Chinese President Xi Jinping and U.S. President Donald Trump, since the trade war broke out, ended with a positive result in Argentina, at least good enough to give the two sides and the rest of the global economy temporary relief.

According to the statements released by the two sides, they both agreed to not impose additional tariffs on each other's goods and showed the willingness to explore ways to address trade and other long-rooted issues, such as intellectual property rights.

U.S. President Donald Trump (middle) attends a working dinner with Chinese President Xi Jinping (unpictured) after the G20 leaders summit in Buenos Aires, Argentina, December 1, 2018 /VCG Photo‍

Without the threat of additional tariffs hanging over their heads, enterprises in both countries and those of nations involved in the global supply chain could resume normalcy in their businesses.

The trade truce allows enterprises in China and the U.S. to be a part of the global supply chain, reaping the benefits of globalization.

Further, the trade truce established by the Trump-Xi meeting could lead to lowering of existing tariffs, particularly on agricultural, electronic and automobile products. U.S. farmers have new hope of re-entering the huge Chinese market. That would increase China's food security and lower prices. Automobile and electronic goods producers on both sides of the Pacific could return to profitability.

Last but not least, geopolitical and military tensions could subside. Trump might have given Xi some assurances that the U.S. will not increase “freedom of navigation operations” in the south Pacific.

However, China and the U.S. still have different ideas when it comes to the trade. And the U.S. has long accused China of conducting “unfair” trade practices. In this sense, the world should not be overly optimistic over the trade truce.

In any event, the trade war might not be about China's “unfair” trade practices, but could be about China's economic development and governance architecture. They have exceeded everyone's expectations, leading to a challenge of America's economic, technological and military supremacy.

VCG Photo

And with the success of its Belt and Road Initiative, the recent China International Import Expo, and other globalization-enhancing postures, China could very well be a peer power of the America. That prospect “scares” many in the U.S. Congress.

As indicated in my past articles, there are no foreign policy differences between the Democrats and Republicans, both will do “whatever it takes” to sustain U.S. global dominance. Then there are the neoconservatives vowing to prevent any nation from challenging U.S. supremacy at any cost.

Domestic politics plays an important role in U.S. foreign and trade/investment policies, forcing Trump, like his predecessors and possibly successors to formulate and implement policies accordingly.

Over the next few months, U.S.-China economic and geopolitical relations might very well improve, giving the world a sigh of relief and the stock market a much-needed uplift.

The world can only hope that Mr. Trump and the U.S. Congress would turn the truce into a trade agreement. Increases in trade and investment between the world's two largest economies could enhance global long-term sustainable economic development, a “win-win-win” situation.

The ball is in the U.S. court to improve relations with China. The trade truce reached between Trump and Xi could be the first step in making that a reality.

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