WASHINGTON–U.S. and China have different goals for the Wednesday bilateral economic dialogue: President Donald Trump wants tangible success in reducing the U.S. trade deficit with China, while Chinese President Xi Jinping wants to keep the status quo, a number of experts say.
The U.S.-China Comprehensive Economic Dialogue, started after the April summit between Trump and Xi, will kick off its first round on July 19 in Washington. This week’s meeting will review the achievements of the first 100 days before moving onto what lies ahead for the one-year plan, Gao Feng, a spokesman of China’s Ministry of Commerce, said at a press conference last week. The two sides will also talk about economic coordination, global economic governance, and trade and investment issues, he said.
The negotiations have reopened China’s market to U.S. beef after 14 years and pushed the Chinese to buy U.S. liquefied natural gas. Experts however described the initial results as “disappointing” and “modest.” In fact some concessions — such as on beef, electronic payments and credit-rating agencies — China has agreed to on multiple occasions.
The U.S. trade deficit with China was $347 billion last year. In the first five months of 2017, it hit $138 billion, about 5.3% higher than at the same time in 2016, according to U.S. Census Bureau data.
Scott Kenney, deputy director of China Studies at the Center for Strategic and International Studies, said China prefers to set a long-term agenda rather than change how it governs its economy.
“China is happy with the status quo, it benefits tremendously from the current economic relations with the United States and wants to keep it,” said Kennedy. “It tries to avoid any big problems, and [the dialogue] will achieve China’s baseline results of limiting the potential for a major trade war.”
Trump has been using trade as his main bargaining chip to pressure China to rein in North Korea’s nuclear weapons program. On his visit to Paris last week, he said trade deals with China were Washington’s “biggest strength” in pressing China, North Korea’s largest trading partner, to act to contain Pyongyang’s nuclear program, and he “wanted to give it a good shot.” But Christopher Beddor, an associate at Eurasia Group, said Trump’s plan is likely to fall short as China has simply never been willing to be hard on North Korea.
“[China] can take steps here and there, and it has been willing to in kind of a modest fashion increase to tighten the screws on North Korea,” said Beddor. “But is it ever going to actually risk a regime collapse in order to bring North Korea to the negotiating table and engage in serious talks about denuclearization? Absolutely not.”
Trump’s recent announcement that he will investigate steel imports won’t make this week’s discussion easy. Two weeks ago, Trump issued a presidential memorandum that directed Commerce Secretary Wilbur Ross to investigate the effects of steel imports on national security. Last week, Ross said behind closed doors that he intended to present Trump a range of options to restrict steel imports on national security grounds, a move that has been strongly resisted by China as well as America’s NATO allies.
“Chinese and European expectations regarding the first [Comprehensive Economic Dialogue] talks under Trump have moved from cautious optimism to tough realism,” said Dan Steinbock, founder of consulting company Difference Group Ltd. “For now, Trump and Ross are clearly ramping up heat before the CED hoping to extract concessions.”