Experts predict that US-China trade war deal may be imminent

Experts predict that US-China trade war deal may be imminent

Monday, September 23rd 2019 – 13:20 UTC

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Many hope this could signal the end of a war that is hampering trade and business investment. Source: Pixabay
Many hope this could signal the end of a war that is hampering trade and business investment. Source: Pixabay

Prominent Chinese economist Chen Wenling has recently advised that a trade deal between the United States and her home country may be imminent, marking the beginning of the end for the damaging conflict between these two nations.

Ms. Wenling, who works as Chief Economist at the China Center for International Economic Exchanges, made her comments as a Chinese delegation flew into Washington to start preliminary talks with their American rivals.

With a member of China’s negotiating team set to make a personal visit to Midwestern farm states within the week, in order to support the country’s interest in purchasing US agricultural produce, many hope this could signal the end of a war that is hampering trade and business investment and contributing to the slowest global growth in a decade.

An interim trade deal by October?

On the back of these fledgling moves by China and the United States, experts like Ms. Wenling believe that the two nations could have an interim trade deal in place as early as next month, with this likely containing an agreement that Beijing up its purchase of American agricultural products, the Donald Trump US administration lift restrictions on telecommunications giant Huawei, and that they put off any additional tariff increases.

It is hoped that such an agreement will stimulate the global economy and promote increased business investment between these two nations, but not all commentators are convinced that this one-month timescale is realistic.

Instead, some argue that the situation is likely to continue unabated for some time, although they do suggest there could be some upsides to such a scenario. Foremost among these is that the continuation of the trade war encourages the purchase of domestically produced consumer goods (such as Apple devices), as opposed to their cheaper overseas rivals.

They state that this could actually be beneficial to the US in an environment where consumerism is at its peak and credit cards for financing – in particular, those with zero percent interest rates – allow the average buyer more flexibility with regards to spreading the cost of their purchase.

Others, however, remain of the opinion that an interim trade deal must – and will – be agreed, in order to support global trade both within and without the United States. Indeed, those responsible for the negotiations appear to be of this opinion themselves, with concerted efforts being made to set out an agenda in advance of talks that are set to take place in October.

Talented negotiators and a personal touch

The Chinese delegation will be headed by the country’s Vice-Minister of Finance, Liao Min, who flew out to Washington on September 17th. It will be his responsibility to work with his team between now and then in order to outline an agenda for the high-level negotiations taking place next month.

These will include a number of key figures, from Vice Premier Liu He on the Chinese side to trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, who will bargain on behalf of the United States’ government.

Prior to these talks, China and its trade war rival have also arranged a personal visit from a member of the former’s negotiating team to America’s Midwestern farming states. While it is public knowledge that this trip is intended to support the future purchase of US agricultural products by China, commentators suggest it may specifically be a means of finalizing the details of such an arrangement.

However, according to Ms. Wenling, for a deal to be agreed in October, it may take more than talented negotiators. She suggests that the US government will also need to postpone their proposed tariff increases, explaining: “The US should rescind its tariffs and, in particular, it shouldn’t impose any new tariffs. That’s definitely the bottom line for Beijing.”

This could arguably prove tricky, with President Donald Trump having already put off a planned increase at the request of Vice Premier Liu, meaning he may be reluctant to capitulate further.

A beneficial agreement or a blow for the US?  

Although there are those who feel that President Trump and his administration are unlikely to fall in line with what’s being asked of them, Ms. Wenling says that delaying the December 15th increase in tariffs actually benefits the United States as well, as it ensures that Christmas gifts don’t suddenly become more expensive during the holiday season.

On the part of China, she says it is not necessary for them to agree to any significant concessions. Having already made it clear that they are willing to purchase US agricultural produce, such as pork and soybeans, she argues that they now hold the stronger position with regards to negotiating a deal.

She concludes by saying: “Trump [winning] the election… would be good news for China. He is completely clueless in fighting the trade war, without any strategies or master plans, and has bullied US allies.”

With President Trump in a seemingly weaker bargaining position than he’ll admit, and Beijing apparently eager to bring their trade war to a close, it seems that an October agreement to end their rivalry may be realistic after all.