US president Donald Trump tweeted Thursday that he had a “long and very good” talk with China’s Xi Jinping with an emphasis on trade, amid an ongoing tit-for-tat tariff-hiking contest that threatens to spook the global economy.
Trump also said he was on track to meet with Xi at the end of the month at the G20 Summit in Buenos Aires, Argentina. In a conflict in which negotiations have faltered, a direct meeting between the two leaders could be the only thing that will bring an end to the mounting economic hostilities.
Although the US maximum pressure approach – which saw the US place tariffs on over US$250 billion of Chinese goods – successfully brought Beijing to the negotiating table, talks between delegates have stalled, with no trade talks taking place since September.
Last week, the Wall Street Journal reported the US was refusing to resume negotiations until China was ready to offer concrete proposals to address Washington’s concerns about forced technology transfers – in which companies are forced to share tech knowledge and intellectual property if they want to do business – and other economic issues.
The Chinese were reluctant to go down this route, according to the Journal, fearing any offer could be easily undermined with a single tweet and risk China’s administration losing face back home.
The impasse had the potential to threaten any future meetings between Xi and Trump. But this appears to have been averted by Thursday’s phone call, with both leaders expressing hope for a positive outcome in November’s meeting.
“Both of us have good wishes for the healthy and stable development of Sino-US relations and the expansion of the economic and trade cooperation. We must work hard to turn the visions into reality,” Xi said, according to a news release reported by China Daily.
Both sides will likely be pushing for a ceasefire at the G20 talks. The International Monetary Fund (IMF) has warned the dispute could cost the global economy US$430 billion and have reduced their growth forecast as a result.
US farmers received a US12 billion bailout after China retaliated with tariffs of its own on American soy beans. Price uncertainty is harming US small businesses, and price hikes are starting to be shouldered by consumers.
China has openly admitted it wants an end to the dispute, but the effects of the war are yet to show up in the economy. China is rapidly expanding into Europe and Southeast Asia markets, with extra efforts in place to expand into Africa and Russia.
Any drop in US exports could potentially be offset by this expansion. China’s trade surplus with the US also reached record highs in August and September, passing the US$30 billion mark for both months.
But Xi’s handling of the situation has raised some eyebrows back home and has reportedly caused a rift in the Communist Party leadership and lead to an unusual surge in criticism for the president’s economic policy.
Plus, a war between the two biggest traders in the world is not good for business for anyone and has already shaken investor confidence.
At the talks in November, both sides will need to be prepared to compromise. The Chinese are reliable in their preparation for such meetings, coming with a full understanding of what they want, their position, and what they are willing to compromise on.
Trump, however, tends to take a more freestyle approach to such meetings, relying more on gut-feeling than any prepared standpoints. His method on the day could be the determinant in whether a truce is reached.