Can Washington narrow its trade deficit with Beijing in 100 days?
Beijing and Washington will spend three months grappling with tough trade issues that ignited Trump’s rhetoric on the campaign trail
For months US President Donald Trump railed against China over trade but the only concrete outcome he extracted from his first face-to-face meeting with Chinese leader Xi Jinping was a promise to start 100 days of talks on narrowing the substantial US trade deficit.
The compromise pales with Trump’s election-trail threats to label China a currency manipulator and slap punitive tariffs on Chinese imports. Now the big questions are whether Trump can assemble the right trade team to negotiate with Beijing and whether the deal is just a smoke screen to mask the lack of progress with China over trade.
According to the US Census Bureau, the US had a merchandise trade deficit of around US$347 billion with China last year, down slightly from 2015. China insists the deficit is a systemic economic issue and not a result of deliberate Chinese policy.
Just over three months is not long enough to tackle trade disputes between the world’s two largest economies. Even US Commerce Secretary Wilbur Ross admitted the time was too short to discuss issues that were “far more complex and far more deep-rooted”.
Steve Tsang, director of the SOAS China Institute, said the 100-day plan was “at best aspirational, at worst just something to satisfy [Trump’s] core supporters and make him look strong on China”.
Ministry of Commerce researcher Mei Xinyu said the 100-day plan was just a way for Beijing to give face to Trump. Mei said China might boost imports of US agricultural products and fuel to help close the gap.
Huang Jing, a US-China relations specialist at the National University of Singapore, said the 100-day plan exposed the Trump team’s serious lack of expertise on many fronts, including trade talks.
“It’s s basically Trump’s response to high expectations from his voters, following his repeated complaints about China’s unfair trade barriers and practices and widening trade deficits,” Huang said.
From his first day in office, Trump has made reversing the US trade deficit one of his priorities. Late last month, he signed an executive order for a cabinet report pinpointing the countries with big trade surpluses with the US.
But many industry groups and economists argue that Trump would be better off pushing China to open its markets.
Jacob Parker, vice-president of China operations at the US-China Business Council, said China had already indicated it would move ahead to liberalise financial services, agriculture and insurance. “We strongly encourage both sides to use these discussions to detail a specific implementation timeline for these new openings,” Parker said.
AmCham China chairman William Zarit said previous bilateral trade talks did not yield much, and only more market access for US exports and investments could create a fair trade environment for the US.
Economist Louis Kuijs, from Britain-based consultancy Oxford Economics, has argued that if the Trump administration wants to help its people and companies benefit more from globalisation, it is making a mistake targeting the US trade balance with China.
Timothy Stratford, former assistant US trade representive and now a managing partner at law firm Covington & Burling, said concrete results such as greater China access for US companies could be short-lived and reversed when relations soured.
One option for attaining something of far-reaching significance, Stratford argued, could be sealing the Bilateral Investment Treaty, the groundwork for which has been laid over the past nine years.
“What has been missing on the Chinese side is the will to make tough decisions as well as confidence that the US side was ready to sit down and deal,” Stratford said.