Chinese President Xi Jinping (left) and US President Donald Trump share a moment during friendlier times at a G20 summit meeting in Hamburg, Germany, in July 2017. With tensions between China and the US having escalated into a trade war, all eyes will be on the two leaders at this year’s meeting. Photo: Kyodo
The View
by Alex He
The View
by Alex He

A possible Trump-Xi deal on the G20 summit sidelines means other noble priorities will have to wait

  • Alex He says with China and the US under pressure to cut a deal, Argentina’s identified priorities for the summit have been overshadowed

Argentina’s G20 presidency has identified the future of work, infrastructure for development and sustainable food as priorities. However, a decade of history shows that it can be challenging for this high-level forum to stay focused on its agenda and not be distracted by international hot-button issues.

The prolonged trade war between the world’s two largest economies, China and the United States, is likely to steal the spotlight at the coming G20 Leaders’ Summit. The meeting between US President Donald Trump and Chinese President Xi Jinping on the sidelines of the Buenos Aires summit will no doubt make the headlines. As the only planned meeting between the leaders before the pending 25 per cent tariffs come into effect on January 1, it is likely to leave the G20’s agenda in the shadows.
Over the past decade, China’s level of influence at the G20 summits has fluctuated. At the 2008 summit, Beijing emerged as a self-proclaimed saviour for the global economy. In 2010 and 2011, China focused its efforts on resisting pressure on the renminbi exchange rate. In 2016, China hosted the G20 summit and proudly offered solutions to the challenges facing global economic growth and development, calling itself “a leader” in global economic governance. However, it seems that China’s interest in and impact on the G20 have since faded.

Top Chinese leaders appreciate the opportunities the G20 provides to meet other world leaders. The significance of sideline dialogues during the summits has always been an underlining priority for China’s participation. This year will be no different, with the meeting with Trump on trade being of particular importance to China.

The trade war has reached an impasse. Facing unprecedented pressure on its long-standing economic and trade behaviour, as well as its difficult domestic economic restructuring, China must show some flexibility in its policies on market access, strengthened intellectual property protection and industrial policy, in order to reach a truce with the US. This, in addition to defending itself on key issues such as state-owned enterprises’ role in economy and trade, as well as future reform of the World Trade Organisation, will be China’s mission at the G20 in Argentina.

Should there be any expectations of a trade war resolution at the meetings? While eager to settle the issue with the US and to defuse the adverse impact of the trade war on its economic confidence, China fears being further bullied if it appears too keen to cut a deal in Buenos Aires. This make Beijing cautious with its proposed offers for the coming talks.

Media, experts and scholars in both the US and China predict there is a possibility that a truce will be reached, most likely in the form of a framework that lays the foundation for further talks to de-escalate the current tensions. However, in the worst-case scenario, failed talks could lead to an economic cold war.
Trump remains the final decision-maker on US trade policy towards China. Having lost control of the House in the US midterm elections, including seats in agricultural states, and faced with the prospect of a nationwide rise in costs for US consumers if higher tariffs are imposed on Chinese imports, Trump is also in need of a deal to bolster his prospects of re-election in 2020.

China still cherishes the G20 as an important platform to make its stance clear on defending the principles of global free trade, a multilateral approach to trade and development issues, as well as its ideas of shared growth and development. Nevertheless, the trade talks with the US on the sidelines and pressures from other Western powers may push China to put aside the political theatre of the moral high ground and focus instead on getting trade back on track.

For the G20 summit itself, let’s hope that, away from the high-profile trade talks between Trump and Xi, quieter discussions on G20 priorities can yield some positive results. But, for China, there will be great pressure at the summit and a sense of déjà vu of the situation it faced over its currency at the 2010 and 2011 summits.

Dr Alex He is a research fellow at the Centre for International Governance Innovation, author of The Dragon’s Footprints: China in the Global Economic Governance System under the G20 Framework, and a former associate professor at the Institute of American Studies, Chinese Academy of Social Sciences