A protracted battle: can Washington and Beijing end the trade war

Beijing and Washington are unlikely to reach a trade-off compromise in the near future, experts say. According to them, it will be difficult for countries to come to a common point of view on such fundamental issues as technology transfer and currency regulation. So they commented on the results of the meeting between US President Donald Trump and the head of the Chinese delegation on trade negotiations, Chinese Deputy Prime Minister Liu He. According to its results, the parties announced the achievement of significant progress towards resolving trade disputes.

According to the Xinhua News Agency, Liu He conveyed an oral message to the American leader from President Xi Jinping. It said that the Chinese and American delegations have been in contact over the past few years and have shown goodwill towards each other. He noted that the parties were able to hold a frank, effective and constructive discussion of topics of importance to both countries, as well as achieve “substantial progress” on a number of issues, such as the protection of intellectual property and the exchange rate.

• Donald Trump at a meeting with Chinese Deputy Prime Minister Liu He
• Reuters
• © Yuri Gripas

After the talks, Trump told reporters that the parties had reached preliminary agreements to conclude a "first stage deal." According to the head of the White House, it affects the sphere of intellectual property protection and the financial sector, and also provides for the growth of agricultural exports from the US to China to $ 40-50 billion.

According to the owner of the White House, the preparation of the final document on a trade agreement between China and the United States can take from three to five weeks. He explained that the deal with China will be concluded in two or three stages due to the large number of topics on the agenda. First of all, the American leader expects to resolve the dispute over technology transfer.

He also added that after agreeing on the parameters of the treaty, the American side will immediately sign it.

“One of the great features of the Chinese agreement is that, for various reasons, we don’t have to go through a very long and politically complex process of approval by Congress. When the deal is fully agreed, I sign it on behalf of our country, ”Trump wrote on Twitter.

One of the great things about the China Deal is the fact that, for various reasons, we do not have to go through the very long and politically complex Congressional Approval Process. When the deal is fully negotiated, I sign it myself on behalf of our Country. Fast and Clean!

According to US Treasury Secretary Stephen Mnuchin, as part of a future deal, Beijing will significantly increase imports of US agricultural products and agree to concessions related to foreign exchange regulation and financial services. Washington, for its part, will not enact a decision to increase customs tariffs on Chinese imports from 25% to 30%, which was scheduled for October 15.

“Tension will not ease”

Recall, during his election campaign, Donald Trump talked a lot about the unfairness of the situation in the trade between the United States and China. At the end of 2017, the imbalance in trade relations between the United States and China reached $ 375.2 billion. Given that the total trade between the two countries amounted to $ 505 billion during this period, only about $ 130 billion fell to the share of US exports to China.

The Donald Trump administration accuses Beijing not only of dishonest trade, but also of illegally acquiring American technology and intellectual property.

The trade war between China and the United States began in 2018. Washington was the first to raise duties on a number of Chinese goods, after which Beijing responded. Throughout 2018, the parties exchanged similar attacks.

At the beginning of 2019, the authorities of the PRC and the United States tried to find a compromise, but these efforts failed, and the trade confrontation only worsened.

However, in September, the parties began to gradually reduce the degree of tension: in the middle of the month it became known about the decision of the United States to postpone the next increase in duties from October 1 to the 15th. As Trump explained, this was done at the request of Chinese Deputy Prime Minister Liu He and as a goodwill gesture. At the same time, the Committee on Tariffs and Dues of the State Council of the PRC announced its intention to revise the decision to introduce additional trade duties on a number of articles of American agricultural products.

• Sticker "Made in China"
• Reuters
• © Jason Lee

As Alexander Belchuk, professor of the Department of World and National Economics of the All-Russian Academy of Foreign Trade, explained in an interview with RT, Washington and Beijing have fundamental differences, which are hardly possible to overcome at the moment.

“The most pressing issue is the transfer of US technology to China, the White House was indignant at this practice for a reason. States do not want to help develop and grow China's power. For the American side, this is a matter of fundamental importance, it is in the field of technology that the States are leaders. And they do not intend to share this leadership with anyone, ”the expert said.

Commenting on the US-Chinese talks held, Belchuk noted that we are talking about local agreements. Their results do not mean that a fundamental rapprochement of positions has begun.

“The tension will not subside, since the key task of the States is to slow down the development of China, which has already become a superpower. But during the implementation of this master plan, ups and downs in relations between the two countries will be noted. The talks held on the eve are only one of the episodes along the way. But I don’t think that the USA and China will be able to draw a line under a trade dispute in the foreseeable future, ”the expert added.

A similar point of view is shared by Vladimir Vasiliev, the chief researcher at the Institute of the USA and Canada. According to the expert, Today, the situation looks very uncertain, as Beijing hopes that Trump will lose the 2020 elections, and that he will be replaced by a Democratic president.

“As you know, democrats do not support the outbreak of trade wars. In this regard, they uphold the ideas of globalism. Therefore, now much rests on expectations from the upcoming elections. And even if Beijing and Washington conclude a major trade deal in the foreseeable future, it is unlikely to be long-lived, ”the expert explained in a comment to RT.

Negative effect

The trade war is already having a negative impact on American and Chinese business. While politicians argue about the most profitable trading rules, companies on both fronts suffer losses.

A recent study by the American University of Duke provides forecasts according to which the US will face an economic recession in the second half of 2020. This opinion is shared by the financial directors of hundreds of companies around the world who participated in the study. At the same time, experts call the trade war one of the main factors of a possible recession.

• New york stock exchange
• Reuters
• © Brendan McDermid

As Vasilyev explained, the States did not gain anything as a result of the confrontation with China last year, since the trade balance statistics remained almost unchanged.

“China has lost almost nothing as a result of restrictions. The problem is that lowering customs barriers to American goods in China does not guarantee that these goods will be in demand by Chinese consumers. It’s equally unclear how interstate agreements will stop technology transfer and theft of intellectual property, as this happens at the level of individual companies and people, ”the expert noted.

At the same time, the American economy really began to slow against the backdrop of a trade war. If last year the US economic growth rate reached 2.9%, then by the end of this year they will be about 2%, Vasiliev said.

“Obviously, the increase in duties negatively affects the economy, since in any case it leads to a decrease in goods turnover. And this will not affect Trump’s position in the run-up to the presidential campaign, ”Vasilyev summed up.