China experts back Donald Trump’s ‘phased’ trade war deal, but say US must reject unilateral approach

Chinese Academy of Social Sciences report finds that US tariff exemptions have exceeded expectations, indicating economic harm

Researchers suggest that phased approach proposed by US President Donald Trump is ‘best solution’ but US must abandon ‘belief in unilateralism’ for it to work

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China and the United States are close to finalising an interim trade deal. Photo: Xinhua

Published: 6:15am, 30 Oct 2019Updated: 9:02am, 30 Oct 2019

A group of Chinese academics have backed a “phased” approach to achieving a deal to de-escalate the 16-month trade war with the United States, in the latest indication that Beijing is veering away from an “all or nothing” stance on an agreement.

However, the report by the 10 researchers suggested that the approach will fail unless Washington abandons the unilateral approach which has seen it tear up the World Trade Organisation (WTO) rule-book in favour of punitive tariffs on its trading partners.

China has reciprocated in kind, with the world’s two largest trading nations now in regular contravention of WTO rules, which has been marginalised by the tit-for-tat dispute.

“Plurilateral mechanisms are the best solution, but also the most unrealistic, as the Trump administration believes in unilateralism. The WTO used to be the most important multilateral mechanism, but now finds itself is in crisis,” said Xu Qiyuan, a fellow with the Chinese Academy of Social Sciences, also a co-author of the report.

Multi-phased agreements are the best solution, but also the most unrealistic, as the Trump administration believes in unilateralism. The WTO used to be the most important multilateral mechanism, but now finds itself is in crisis

Xu Qiyuan

The report reflected the reality that appears to have been accepted by both sides in recent weeks: that a deal on the perceived low-hanging fruit of tariff removal in exchange for large scale purchases of agricultural goods will be easiest to achieve. However, it encouraged negotiators to persevere with more complicated issues around technology and security in the next phase, if they are serious about de-escalating the trade war.

Presenting the report at the Bund Summit in Shanghai on Tuesday, Xu said the escalation of the trade war had pushed the US-China rivalry “beyond the economy and has changed the traditional concept of security”, but said the world’s two largest economies should not decouple, and highlighted the economic pain being felt on both sides.

“There are three stages in the conflicts between the US and China, which includes traditional trade, global value chain trade and investments, and also the dual use of technology and China’s rise in this area. The third stage is critical, which is beyond the economy as it changed the nature of disputes from trade and institutional frictions to a security threat,” added Xu.