With the tariff truce between China and the United States extended for another 90 days, and in the lead-up to a potential meeting of their presidents later this year, room for “piecemeal agreements” exists for the two countries in terms of export controls and purchases of goods, according to analysts. But the odds of significant breakthroughs – at least in the short term – are unlikely, as negotiations between the two countries will continue to be difficult and serve as a long-term test of trade resilience, they added. Pushing Beijing to buy more U.S. goods is one of Washington’s priorities. Just ahead of the tariff truce deadline, U.S. President Donald Trump urged China to quadruple its orders of American soybeans – a major U.S. export to China. Trump said that he and President Xi Jinping could meet “before the end of the year” if both sides can come to a trade deal.
Malaysian Prime Minister Anwar Ibrahim said that Xi was expected to attend an Asean summit to be held in Kuala Lumpur in October, potentially turning the annual talks into a stage for a high-stakes meeting between the leaders of the world’s two largest economies. “Now negotiators can focus their attention on negotiating a trade deal, which would pave the way for a Trump-Xi summit this fall,” said Wendy Cutler, Senior Vice President for the Asia Society Policy Institute and a former Deputy U.S. Trade Negotiator. Compared with the “phase one” trade deal that the two countries reached during Trump’s first term – when China agreed to expand purchases of certain U.S. goods and services by at least USD200 billion, compared with 2017 levels – Beijing will be a more demanding counterpart this time around, after having learned important lessons, she said. Moreover, for soybeans and other agricultural products, the demand is far more inelastic than many assume, according to Zha Daojiong, Professor with the School of International Studies at Peking University.
“For China or any other buyer to commit to new purchasing arrangements from any seller, the usual set of issues is in place: change in consumption levels, contracts already entered into, costs in making a switch, et cetera,” Zha said. Former U.S. Trade Negotiator Stephen Olson, now a visiting Senior Fellow at the Yusof Ishak Institute in Singapore (ISEAS), said China feels it has considerable leverage and will refuse to go along with a one-sided deal as it did with the phase-one agreement. “Additional relief from U.S. technology restrictions on China could be part of the price China extracts for agreeing to a summit,” he said.
If Presidents Trump and Xi do meet this year, they may strike a deal that includes further tariff cuts and progress on export restrictions, but some deeper structural issues such as China’s industrial policies will remain mostly unaddressed, Olson predicted, the South China Morning Post reports.
