Trump, Xi agree on 100-day trade plan
For now, the threat of a trade war between the two biggest economies is on ice
13 April, 2017
Leaders of the world's two biggest economies have agreed on a 100-day plan to jack up American exports to China and shrink the huge trade deficit that bedevils Washington's ties with Beijing. The plan, discussed by US President Donald Trump and his Chinese counterpart Xi Jinping, was the most concrete outcome from the first summit between the superpowers at Trump's Mar-a-Lago estate a week ago. No details of the proposal were available but Commerce Secretary Wilbur Ross said the speedy "100-day plan" was primarily aimed at cutting the $347bn trade deficit that is in China's favour. The winners of such a deal will be US finance companies and beef producers, analysts say. Indirectly, the entire global economy will benefit from the fact that a potentially devastating trade war between the two largest economies has been averted or at least put off by 100 days.
If the bilateral deal is pushed through, the Chinese authorities will make concessions for the US financial sector. At present, foreign investors are prohibited from holding a controlling interest in Chinese insurance and securities management companies. According to Financial Times, China is prepared to lift its ban on beef imports from the US, which was imposed in 2003 due to concerns over mad cow disease found in the US.
The main threat to the successful outcome of the talks is the upcoming Treasury Department’s six-month Report on the Foreign Exchange Policies of Major Trading Partners of the US, which could give Trump carte blanche to accuse Beijing in currency manipulation and slap Chinese imports with tariffs. The US president has repeatedly accused Beijing of “the biggest theft in history”, claiming the country has been deliberately devaluing its currency, and has threatened 45% tariffs on Chinese goods. But perhaps following what was described as a successful bilateral meeting, the US administration will not rush to such measures.
Agence France-Presse quoted unidentified sources as saying there was talk of a package of Chinese investments aimed at creating more than 700,000 American jobs - the same number China's regional rival Japan pledged during Prime Minister Shinzo Abe's own Mar-a-Lago visit in February.
In return, AFP said, president Xi hoped for assurances from Trump on withholding punitive tariffs on Chinese goods and on the delay of an American arms sale to Taiwan, at least until after a major Communist Party meeting later this year. No official confirmation was available.
There was no joint statement or press conference. But Trump told the media: "I think we have made tremendous progress in our relationship with China. The relationship developed by President Xi and myself, I think, is outstanding." Xi also spoke in mostly positive terms. "We have engaged in deeper understanding, and have built a trust," he said. "I believe we will keep developing in a stable way to form friendly relations ... For the peace and stability of the world, we will also fulfill our historical responsibility."
For now, the threat of a trade war is on ice, but how things shake out will depend on negotiations regarding the 100-day plan.
Although the talks were overshadowed by a US strike in Syria, experts have said the meeting was a success given that both sides remained cordial, and took a step toward tackling the trade issue by increasing China's imports from the US.