US and China: Eighth Try to End Trade War
NEW YORK – March 28, 2019
Another round of talks between China and the United States is beginning in Beijing, the eighth in a row. Perhaps the parties will be able to come closer to an agreement that will put an end to the trade war.
The seventh round of Sino-American consultations, held in late February, was one of the turning points.
According to its results, Trump decided to postpone the planned increase in duties on Chinese goods worth $200 billion planned for March 1. After that, the parties twice held telephone talks to discuss the text of the trade agreement, which, according to media reports, could be reached before the end of April.
However, last week Trump took a firm position again.
He stated that duties on Chinese goods could be maintained for a considerable amount of time. According to Trump, it’s to ensure that China complies with the terms of the deal, if it is achieved. The real situation remains a mystery. Conflicting information appears periodically in the media.
But most recently, the American president said that the US-China trade agreement was already “very close,” but he had previously spoken in this vein. Many experts agree that, in fact, negotiations are extremely difficult and the parties have enough reasons not to make concessions on a number of issues.
They are keeping the terms of the transaction secret, and information on each country’s requirements is rare.
Washington, according to media reports, insists that Beijing should increase purchases of American goods two to three times compared with Beijing’s previous proposal for additional imports of $1.2 trillion over six years. Thus, it would be possible to reduce the US trade deficit with China, which last year rose to a record $419.2 billion.
Beijing is also not retreating and actively making new demands. Again, according to sources from the Bloomberg agency, after the plane crash in Ethiopia, China is considering the possibility of complete exclusion or replacement of Boeing 737s, which appeared in the draft list of American goods that China plans to buy. Respective procedures could significantly slow down the transaction process. China’s contract with Airbus for the supply of 300 aircrafts signed recently in Paris was a certain confirmation of this assumption. Beijing has not officially confirmed any connection between the two events.
In addition, as it became known, Beijing also stepped back from its initial promises on the protection of pharmaceutical data, did not provide details on plans to improve patent communications, and refused concessions on data transfer issues.
The trade war has already had a negative impact on the world economy. China's GDP slowed sharply, signs of a slowdown appeared in the US, and the debt market indicated an imminent recession. Perhaps this is partly why Trump can no longer put pressure on China with new duties, as this will hit the economy even harder. But the new presidential elections are not far off, and now Trump has very good chances for re-election.
Meanwhile, recent data on US foreign trade inspires some optimism, at least for Donald Trump. For now he can be satisfied with his policy.
In January, the trade deficit unexpectedly dropped sharply from nearly $60 billion to $51.1 billion. The deficit reduction was a record since February 2009.
The deficit of goods decreased to $73.3 billion, and the surplus of services to $22.1 billion.
But most importantly, the trade deficit with China has decreased by almost $9 billion over the past three months, the maximum decline in 10 years.