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Foreign Policy

Talks Bring Semblance of Balance

Sep 14, 2020
  • Su Jingxiang

    Fellow, China Institutes for Contemporary International Relations

Senior Chinese and U.S. officials held a virtual meeting on Aug. 25 to review the implementation of the phase-one trade deal, with both sides agreeing the deal has been well implemented so far and agreeing to continue pushing forward. This success illustrated that China’s diplomatic measures in recent months had been reasonable and effective and — despite the complex and tense political atmosphere — helped calm the bilateral relationship to some degree.

Under the phase-one deal signed on Feb. 15, China would, in a span of two years, increase its purchases of American products, including farm produce such as corn, wheat, pork and beef. In return, the U.S. would not continue its tariff war against China.

International media reported that U.S. President Donald Trump consented to sign the deal, with an eye on the November presidential election. Exporting more farm products to China, could help Trump win votes from American farmers. For China, the deal represents a transitional measure that could help eliminate tariff threats from the U.S. while providing an opportunity to focus on national economic development.

The outbreak of the coronavirus pandemic obviously changed the world. With many countries taking rigorous epidemic control measures, service industries such as international air transport and tourism came to an abrupt standstill. Trade in commodities plummeted. The U.S., with the service industry accounting for 85 percent of its economy, was hit hard, as more than 27 million people lost their jobs. With the U.S. economy was mired in recession, tens of millions of Americans found it difficult to make ends meet.

On top of that, the U.S. was caught in serious social and political crises, with massive protests raging across the country with an intensity rarely seen in the past century. In an attempt to shift domestic attention from the turmoil, the Trump administration maneuvered its diplomatic resources to open a new round of political and economic assaults against China, the regular U.S. whipping boy in an election year.

Confronted with both radical rhetoric and concrete moves by the Trump administration, China has remained exceptionally calm and restrained as it sought to avoid conflict and confrontation with the U.S. It adhered to its long-term strategy of peaceful development and sustainable growth, and avoided falling into a tit-for-tat trap set up by America’s right-wing hawks.

With the coronavirus outbreak taking a toll on the Chinese economy, China had to slow down purchases of American products, but as agreed in the phase one deal continued to make purchases of all 50 kinds of American products listed, and remained committed to maintaining a stable economic and trade relationship.

At a symposium with experts in social and economic fields in Beijing on Aug. 24, President Xi Jinping talked about economic and trade relations with the U.S. Stressing that opening-up is a fundamental national policy, he said that for “all countries, regions and enterprises that are willing to cooperate with China, including individual states, regions and enterprises in the U.S., we will actively cooperate with them so as to form an all-around, multilayered, multifaceted pattern for opening-up and cooperation.”

The American economy remains mired in a deep recession and hope for a swift recovery is dim. China, however, has already returned to a path of sustainable growth. According to the Federal Statistical Office of Germany, German exports to China in June grew 15.4 percent year-on-year, while its exports to the U.S. declined by 20.7 percent, clearly reflecting the real-world economic situation.

A survey in July by the American Chamber of Commerce in China found that 84 percent of American companies said they would not exit from the Chinese market. Of those, 38 percent said they would maintain or increase their investments. The survey’s findings showed that the economic decoupling, financial decoupling and technological decoupling repeatedly hyped by the Trump administration have run up against the aspirations and interests of American enterprises.

The China-U.S. discussion in August, originally scheduled for Aug. 15, was postponed by Trump by 10 days, and the international community was concerned that he might simply cancel the trade deal and fire up anti-China rhetoric. Fortunately, he made a rational choice and came to realize the importance of the deal to the American economy. Amid rising political and economic uncertainties, China and the U.S. restated their commitment to the trade deal and expressed hope for a phase-two agreement to further deepen bilateral economic and trade relations.

Doing so is extremely important for the two countries and the world as a whole. In the face of the current China-U.S. tensions, one virtual meeting may not produce much substantive progress, but it meant a great deal symbolically when the two sides came together and talked. The meeting provided a stabilizing influence and boosted confidence in global economic recovery.

Regardless who wins the presidential election in November, be it Trump or Biden, the U.S. will continue to seek to contain and isolate China. For its part, China wants to transform its model for economic growth and is working to form a new development pattern known as “dual circulation,” which takes the domestic market as the mainstay while letting domestic and global markets boost each other. This was meant to cope with recent changes in the international geopolitical environment.

It’s difficult to predict how China-U.S. relations will develop in coming years, but China’s unremitting efforts did seem to bring due respect from the Trump administration in the phase one trade deal, thus maintaining a sort of subtle balance in overall relations between the two nations.

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