Monday 6 May 2019

Can China be trusted to do a trade deal with the US?

It's the oldest game in the book. In order to get a deal, whether a peace deal, a trade deal, an arms deal or any other sort of deal, one or other side ramps up the pressure in the lead up to the crucial talks that are intended to produce results. Thus, the Taliban kills more and more people just as peace talks are underway with the US in Qatar, North Korea fires off short-range missiles and "new" tactical weapons as part of the message-sending to Donald Trump to be more concessionary the next time there is a summit. Now Trump is piling the pressure on China to do a proper trade deal by tweeting that he is going to more than double the tariffs on $200 billion of Chinese goods on Friday. This week a Chinese trade negotiating team is due in Washington and there has been speculation based on hints from US officials that a deal is in the making. But can the Chinese really be trusted to compromise and agree a trade arrangement to suit everyone? Trump clearly doesn't think so which is why he is threatening to boost tariffs on Chinese goods just as the Beijing team arrives in Washington.However, the Chinese were traders before the United States of America was even founded. Trading is in their blood. They are the world's masters of exporting everything from computers to plastic dolls and T-shirts. "Made in China" is on almost everything you pick up in the shops. The Chinese economy which is growing at more than six per cent a year depends on it. Millions and millions of Chinese containers cross the oceans to every part of the globe. So why would Beijing be happy to do a deal with Trump that will impact on this mighty export machine? If there ever is a deal between Beijing and Washington it's likely to be so watered down that it won't have the sort of beneficial gains which Trump has been promising ever since he came into office. But at least he has taken on China and the threat of higher tariffs might, just might, make Xi Zinping twitch and tell his negotiating team to sound conciliatory. President Xi is, like most Chinese leaders, a master of cunning and political intrigue. His legacy will depend on his success at keeping the Chinese economy booming but he also realises that in this globalisation world China cannot be isolationist and he probably believes that Trump's threats are real. But who is the better player of poker? I would put my money on Xi. Trump is desperate for a political and diplomatic triumph and if Xi is cunning eough, which he undoubtedly is, he will give just enough to Trump to let him boast about his amazing trade victory without it having any real impact on the Chinese economy. The best poker player always wins.

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