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Macroscope | Donald Trump needs a trade deal, China not so much – but Beijing may just be ready to settle, too
- Neal Kimberley says the timing seems right for a deal between Washington, where worries about Trump’s 2020 prospects are beginning to bite, and Beijing, which can do without the distraction of a trade war as it focuses on economic reform at home
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Why you can trust SCMP
It’s time to make a trade deal. For China, the trade dispute with the United States is an unnecessary distraction when Beijing is intent on realigning China’s economic model to a slower but more sustainable pace of expansion. As for the US, it may now be politically imperative for the Trump administration to cut a deal.
A trade deal that satisfies both sides partly but neither side entirely surely cannot be beyond reach.
From China’s perspective, structural economic reform remains the main objective, and it is achievable with or without a resolution of the trade war. But fulfilling Chinese economic policy objectives without such a distraction is clearly going to be simpler than if the conflict rumbles on or worsens.
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For China, resolving the trade dispute will remove an economic irritant. For the past few years, Beijing has consciously sought to deleverage the economy so as to reduce risks to financial stability, while seeking to move away from an investment- and export-led economic model to one dominated by domestic consumption. The intention has been to achieve a lower but more sustainable pace of growth.
In recent months, and surely not helped by the deterioration in China-US trade relations, Beijing has felt the need to unveil targeted measures to stimulate the economy, in the wake of lower economic growth, job losses and a drop in consumer confidence, evidenced in lower retail sales growth.
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