Has surprising US economic growth strengthened Washington’s hand in China negotiations?
- US economy expanded at annualised rate of 3.3 per cent in fourth quarter, while China is faced with challenges at home and abroad
- Trade and economic talks have increased since Xi Jinping met Joe Biden, with US Secretary of the Treasury Janet Yellen set to return to China this year
Stronger-than-expected economic growth in the United States and China’s contrasting slow recovery could push Beijing to “be more willing to compromise” in its trade and economic negotiations with Washington, though talks are ultimately “driven by politics”, according to analysts.
Mainland China, though, is faced with challenges at home and abroad, and the current economic situation may mean China would “be more willing to compromise”, but not on major political issues such as Taiwan and South China Sea, according to Dexter Roberts, director of China affairs with the University of Montana’s Mansfield Centre.
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But Liang Yan, professor and chair of economics at Willamette University in the US state of Oregon, said negotiations have little to do with economic strength, including interest rate differentials, capital outflows and trade.
“With lower inflation, it’s even more unlikely that they’re going to ratchet down on their tariff rates,” she added.