It was easy to overlook the results of the meeting at the Florida White House between U.S. President Donald Trump and Chinese President Jinping on Thursday and Friday of last week. A joint announcement of any results could easily have been lost in the thunder of those cruise missiles striking an airbase in Syria. But there wasn’t even a formal announcement. Instead the meeting resulted in a vague statement of “Goodwill and friendship” according to a Tweet from President Trump and a promise of negotiations to produce an agreement on trade within 100 days.
Now that may seem like the kind of empty promise that so often emerges from meetings like this when the main parties can’t agree on much of anything concrete.
But because of a fortuitous convergence of self-interest in Washington and Beijing that promise of 100-days of negotiations is likely to result in some meaningful trade concessions from China.
That’s not because Xi was bowled over by Trump or because he has suddenly developed an urge to placate the United States.
Xi and China have an economic problem that greater trade with the United States can address–as long as that trade is in consumer goods.
China would love to get domestic consumption higher as a percentage of total economic activity. If domestic consumption could soak up a few more yuan, Beijing could stop worrying so much about capital controls to keep yuan from flowing out of the country and it could relax a little bit in its fight to keep excessive growth in the country’s money supply from sending domestic inflation higher.
The two concrete moves already proposed are an end to the ban on imports of U.S. beef that has been in place since 2003, and a relaxation of rules that restrict foreign investors to a minority stake in securities and insurance companies in China. Negotiations during the Obama administration had almost resulted in a new treaty on investments and it should be relatively easy to push talks in this area to completion.
Of course, both of these items belong among the easy stuff–the really hard issues include things like strengthening China’s rules to protect intellectual property.
And it’s quite possible that 100 days of talks won’t add up to all that much.
But it already looks like a good result when you remember that the rhetoric during the Trump campaign pointed to a 45% tariff on Chinese exports, a quick designation of China as a currency manipulator, and, very likely, a global trade war.
For a while at least those possibilities seem to be off the table. And we can concentrate on worrying about Syria, a U.S. aircraft carrier task force steaming toward Korea, and the potential for a showdown between some combination of players in the South China Sea.
