After the Biden-Xi summit, what’s next for the US-China trade war? | Business and Economics

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The virtual meeting between U.S. President Joe Biden and Chinese leader Xi Jinping helped alleviate growing tensions between the two countries, but did not move forward in resolving the U.S.-China trade war conflicts.

The 2018 US-China trade war, which began under the auspices of former US President Donald Trump, has resulted in the two nations paying higher taxes to bring goods from the opposing country.

Rising import tariffs have affected supply chain disruptions affecting companies and individuals around the world. But at the summit on Tuesday, economic issues were left behind in geopolitics.

Biden spoke briefly about China’s “unfair trade and economic policies” that are hurting U.S. workers, but especially about concerns about human rights violations in Xinjiang, Tibet, and Hong Kong, and U.S. support for Taiwan.

In his opening remarks, Biden told Xiri: “It seems our responsibility – as leaders of China and the United States – to ensure that competition between our countries does not enter into conflict, intentionally or unintentionally. Just a simple and straightforward competition.”

Shehzad Qazi, managing director of China Beige Book International, described the “direct competition” as “an elegant way to say that the U.S. administration does not want an unexpected war or military confrontation.”

“But for now, these terms have also become local landmarks because the administration has no real strategy in China,” Qazi said.

According to Chinese analyst Joe Mazur Trivium, the White House understands that Beijing will not move on to many basic issues that cause tension in the bilateral relationship.

So the US is looking for areas that support a limited level of bilateral cooperation with China, while supporting its relations with allies and partners around the world.

“This is a major departure from Donald Trump’s‘ America First ’foreign policy, which saw the US assume China on its own and make little effort to find areas of common interest with Beijing,” Mazur said.

“Under this new strategy, Washington will increasingly seek to address China’s economic impact by promoting its trade and infrastructure initiatives. it can serve the benefit of countries in a situation of choice. “

At the summit, Biden called on the Chinese side to release crude oil reserves to help stabilize the rise in global energy prices, the South China Morning Post reported on Wednesday, citing a person familiar with the issue. China was “open” to the idea, but did not commit to the request, the Hong Kong newspaper said.

In January 2020, Trump and Xi signed a first-phase trade agreement in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange that required structural reforms in China’s economy and trade practices.

The agreement specified that China should commit to increasing purchases of U.S. agricultural products, industrial products, natural resources, and services in the coming years.

National security

Last year, however, China fell short and bought about 60 percent of the goods agreed under the agreement. The Biden administration has said it will stick to the first phase agreement and hopes Beijing will meet its trade commitments.

“The White House has already announced that in terms of trade policy, it is looking at how China complies with the first phase agreement,” Qazi said. “We also know that there is an internal push from US National Security Adviser Jake Sullivan to start another 301 investigations into China, which could lead to even more tariffs along the way. show the next clear step ”.

Although Biden did not delve too deeply into economic issues, Xik raised the issue of trade, directly appealing to American businesses and urging the US to stop extending the concept of “national security” to oppress Chinese businesses.

Xik, who called Biden “my old friend,” compared the two countries to ships that must sail without colliding in the ocean and said the two countries “must respect each other, seek peaceful coexistence and win-win cooperation.”

Xik also commented on easing trade restrictions to help the two economies recover faster.

“There may be something to do with this; in particular, lowering or removing tariffs could help reduce short-term inflation, a lasting political thorn in the side of the Biden administration,” said Chinese analyst Trivium Taylor Loeb.

In January, a study commissioned by the U.S. and Chinese Business Council found that the trade war would cost the U.S. 245,000 jobs, and that tariff cuts on both sides would create 145,000 jobs by 2025. Countries ’economies would cut $ 1.6 trillion in U.S. gross domestic product (GDP) over the next five years.

Tariff increases by the US and China have led to higher prices [File: Tim Rue/Bloomberg]

Loeb said the tariff cuts would probably come sometime, but not at the same time.

“The U.S. will cut tariffs in areas that are considered economically most beneficial and least problematic from a national security perspective,” he said.

“The reality is that we are at the beginning of a significant rethink of global supply chains. Today’s disruptions have a lot to do with the pandemic, but even when Covid is in the past, the simultaneous global push for self-reliance and” secure “supply chains (US and China-led) in the established supply chains “.

No joint statement was made at the end of the three-and-a-half-hour meeting. Instead, each government made its own statement, emphasizing long-standing complaints, with no indication of commitment.

“Basically, the summit didn’t change much about the state of U.S.-China economic relations,” Loeb said. “The US is still looking at how to define an international trade policy that reduces confidence in China. Beijing is doing the same, but in the meantime it would like to return the trade relationship to Trump’s previous state. That will not happen.”

Although it is still too early to know whether the meeting will lead to direct economic results, Mazur believes it is certainly possible.

“It is still unclear how much Washington is willing to cut back on trade in Beijing, especially considering that China is far behind the pace of purchases promised in the first phase agreement,” he said.

“Overall, however, cooperation in economic and trade matters now seems more likely than it did a few months ago.”