In spite of all the delays and all the contradictory claims I remain convinced that a Part 1 trade agreement between the U.S. and China will get signed. Maybe not in the remainder of 2019 but certainly within the early part of 2020.
A wider agreement to settle issues such as greater protection for intellectual property, an end to Chinese subsidies to companies in strategic industries, and an end to forced technology transfers as the price for admission to the Chinese domestic market? I’d say almost no chance at all.
A speech that Chinese President Xi Jinping delivered on Friday sums up why I think a wider Part 2 agreement is extremely unlikely.
As a summary I’d say that the Chinese continue to see issues like these as a question of national sovereignty on which it is impossible to retreat. And U.S. trade negotiators don’t have a clue as to why no Chinese leader can sign an agreement that, from this viewpoint, is a repeat of the historic humiliation of China by the West. Certainly President Donald Trump who, on his record, views everything as a transaction, doesn’t understand the Chinese position.
Here’s what President Xi said. “We didn’t initiate this trade war and this isn’t something we want. When necessary, we will fight back, but we have been working actively to try not to have a trade war.”
But China’s overall goal, Xi said, wasn’t “a dream about hegemony“ but was rather “working to realize the Chinese dream of renewal” and to ensure that the country was never humiliated again.“ We are just trying to restore our place and role in the world rather than reliving the humiliating days of semi-colonial and semi-feudal era,” Xi said. “In those days there were signs in Shanghai saying Chinese and dogs are not allowed inside–and we will not relive those days again.”
One of China’s demands is that any deal be balanced to ensure the dignity of both countries.
Just hours after Xi’s speech, President Trump said,“I didn’t like his word ‘equality’ because we started off so low.” Trump continued in an interview on Fox News to say, “This can’t be like an even deal, because we’re starting off on the floor and you’re already at the ceiling. So we have to have a much better deal.”