Asia Business Channel

China – U.S. Trade War – Saturday’s dinner between Trump and Xi at the G20

As he left for the G20 summit, U.S. President Donald Trump told reporters on the lawn of the White House that he doesn't believe a trade deal will be made when he meets Chinese President Xi Jinping for dinner on Saturday night. When asked if he was interested in having an agreement with Xi Jinping, Trump told reporters, “I don't know if I want to do it” because “I like the deal we have now.”

Trump also said that he’s already planning to raise existing tariffs on Chinese goods from 10% to 25%, effective January 1, 2019. The President also reiterated that he is willing impose tariffs on Chinese products that haven’t been subject to tariffs yet, if the dinner meeting with Xi Jinping doesn’t go well.

If the dinner between the Chinese and U.S. president’s at the G20 summit is make-or-break, then Trump is giving every indication that he’s prepared to increase pressure on China and that the trade war will become more intense in the months to come.
Media in both China and the U.S. have reported as follows:

Jonathan Swan, a reporter at Axios wrote that Trump believes to his core that tariffs work and isn't anxious to change course.

Bill Bishop, a contributor to Axios wrote that the Chinese still "don't seem to understand that the tactics that worked in the past in D.C. no longer do."

David Dollar, a senior fellow at U.S think tank, the Brookings Institute says it’s “really hard to see an exit ramp, a real opportunity to get off of that trade war situation over the next couple of months.”

Ben White, the chief economic correspondent for Politico writes, Trump’s trade war is “slamming parts of the American economy, especially in Midwestern and farm belt states that helped propel him to the White House. Soybean crops are rotting in fields with China’s market now closed. Dairy farmers hit by retaliatory charges are selling family businesses. And blue-chip American companies from Whirlpool to Caterpillar and Stanley Black & Decker Inc. have cited higher prices generated by Trump’s tariffs.”

And in a Foreign Affairs article, Ely Ratner writes that “The days when the world’s two largest economies could meet each other halfway have gone. … On most issues of consequence, there is simply no overlap between Xi’s vision for China’s rise and what the United States considers an acceptable future for Asia and the world beyond.”

There is a different attitude in Chinese media, with a key article in China Daily that says: “Beijing ready to work for 'positive results'. In the article, Gao Fang, a spokesman at China’s Ministry of Commerce said that: “China hopes to work with the United States toward "positive results" at the expected meeting between the two countries' leaders in Argentina and that China is also willing to work with other countries to safeguard free trade and push for "positive and practical" results at the G20 Leaders' Summit in Buenos Aires.”

Asian business and government leaders have largely remained silent on the meeting between the leaders of the world’s two largest economies. The consensus across Asia is that there are no winners, but only losers in a protracted trade war between China and the U.S.

U.S. business groups on the other hand have been vocal that they want the trade war to end. On Tuesday, 150 U.S. business groups urged the White House to resolve the ongoing trade dispute with China and requested the removal of the current tariffs and to stop new tariff plans. The Americans for Free Trade, a lobbying coalition stated: "Millions of American farmers, business owners, companies, workers, and families are counting on you to make a deal.”

The South China Morning Post wrote on November 29 that: “Ahead of Trump-Xi summit, China seen as having more to lose from a prolonged trade war but the US would also lose if trade war leads to economic downturn.”

Other analysts note that while the dinner may lead to temporary agreements that will tone down negative rhetoric and stabilize financial markets the long-term outlook still remains grim. China has a goal to lead the world in technology by 2025 and the United States has decided that it should do as much as possible to stop China from reaching this goal and that competition is better than cooperation.

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