After several rounds of “tough” negotiations over the past two years, the long-expected “Phase One” trade deal between the U.S. and China was eventually signed at the White House in Washington by U.S. President Donald Trump and Chinese Vice Premier Liu He.
Negotiation is the art of compromise. Clearly, both sides made certain concessions to reach the deal.
On China’s side, it agreed to increase purchases of U.S. manufacturing, energy and agricultural goods and services by at least $200 billion over two years, to enhance protection for intellectual property, to root out forced technology transfers and further open its financial market, etc.
To save “face,” China emphasized that those compromises were actually in line with Chinese consumers’ growing appetite for U.S. products and the nation’s general direction of deepening reform and opening-up as well as its inherent need to promote high-quality economic development. In other words, China did not give in simply because of U.S. pressure, and the deal was equal.
On the U.S. side, its compromise seemed to be simpler ― reducing both existing and planned tariffs on Chinese products. In fact, the biggest concession Washington made was to leave those thornier issues of government subsidies and state influence in China for the next phase of negotiations.
In the deal, both nations also agreed to abide by the International Monetary Fund’s principles on avoiding the manipulation of exchange rates. Just before the signing, the Trump administration revoked its decision to label China a “currency manipulator.”
Some said that the “Phase One” trade deal was not a real victory for either China or the U.S. However, it is much better than “no deal”. The deal was clearly welcomed by the business community, and most stock markets rallied because of it.
Chinese President Xi Jinping called the deal “good for China, for the U.S. and for the whole world,” while President Trump called it “a momentous step, one that has never been taken before with China, towards a future of fair and reciprocal trade.”
As Deng Xiaoping, the chief architect of modern China, wisely predicted, “The China-U.S. relationship can never be too good or too bad.” Even without the trade war, there will be other conflicts between the two ideologically different nations, such as recent struggles over Huawei, Hong Kong, and Xinjiang issues.
President Trump will travel to China “at a later date” to begin talks on the second phase of the trade agreement before the coming presidential election in November. That is good, as dialogue is always better than confrontation.
The writer (email@example.com) is a China-born independent commentary writer based in Singapore.
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