Home News Trump and Xi Plan to Meet Amid Trade Tension

Trump and Xi Plan to Meet Amid Trade Tension

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Chinese President Xi Jinping and President Trump met in Beijing last November.


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ARTYOM IVANOV/TASS/ZUMA PRESS

The White House is moving ahead with plans for President Trump to meet with Chinese leader Xi Jinping at a multilateral summit in late November, according to officials in both nations, to devise a way out of the trade battle shaking markets and poisoning relations between the world’s two largest economies.

The Trump administration has informed Beijing of its decision to go ahead with the summit meeting in recent days, while China has been hoping the encounter could provide an opportunity for both sides to ease the escalating trade tensions. The meeting is scheduled to take place at the Group of 20 leaders’ summit in Buenos Aires at the end of November.

On the U.S. side, the meeting is being pushed by Treasury Secretary Stephen Mnuchin and National Economic Council Director Larry Kudlow. The two men, who have worried about market reaction to the trade fight, have been trying to get negotiations on track for months, with little success. During this time, the U.S. has imposed tariffs on $250 billion of Chinese imports, about half of what China sends to the U.S.

Mr. Trump has dedicated a team to plan for his summit meeting with Mr. Xi, the officials said. One of the people involved in the planning is Christopher Nixon Cox, grandson of former President Richard Nixon, whose trip to China in 1972 eventually led to diplomatic relations between the two nations. Meantime, the planning team on the Chinese side includes Liu He, Mr. Xi’s economic envoy.

Chinese and U.S. negotiators in August had sought to map out talks to pave the way for the leaders’ summit, but the recent standoff cast doubt over whether the meeting would still move ahead as originally envisioned. The Chinese leadership scotched trade talks with Washington late last month after the White House announced new tariffs on $200 billion in Chinese products and Beijing retaliated with levies on $60 billion in U.S. goods.

The more hard-line faction in the White House, represented by U.S. Trade Representative Robert Lighthizer and trade adviser Peter Navarro, have been trying to use the tariffs as leverage to get China to make fundamental changes in Chinese industrial policies.

The planned meeting between Mr. Trump and Mr. Xi is being pushed by National Economic Council Director Larry Kudlow, above, and Treasury Secretary Stephen Mnuchin.

The planned meeting between Mr. Trump and Mr. Xi is being pushed by National Economic Council Director Larry Kudlow, above, and Treasury Secretary Stephen Mnuchin.


Photo:

Evan Vucci/Associated Press

They worry that the U.S. will declare an end to the trade battle too early, eliminating pressure on Beijing. “The plan is to get Trump in a room with Xi, get a small win and declare an end to the whole thing,” said a U.S. source familiar with the negotiations, who views the talks skeptically.

U.S. business executives, on the other hand, are hoping that a summit could bring some relief from tariffs, which they say hurt their business. In particular, they want Mr. Trump to suspend plans to increase the level of tariffs on the $200 billion in goods to 25%, from 10%, on January 1, as currently planned.

“In the meetings our board of directors had in Beijing this week, we encouraged senior Chinese officials to share a detailed action plan with their counterparts in the U.S. to lay the groundwork for a successful meeting at the G-20,” said Jacob Parker, vice president of China operations at the U.S.-China Business Council, a group that represents some 200 American companies that do business with China.

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The planning for the summit represents an effort on both sides to keep a deepening trade dispute from torpedoing the U.S.-China relationship and further shaking global markets. On Wednesday, the U.S. stock market suffered its biggest selloff since February, partly because investors grew more worried about the U.S.-China trade conflict. Chinese shares and the yuan also tumbled on Thursday.

The bilateral relationship is also deteriorating in other ways. In addition to stalled trade negotiations, military talks between the two nations have halted and both sides have blamed each other for a recent close encounter between their warships in the South China Sea.

Early this week, Secretary of State Mike Pompeo exchanged testy words with China’s Foreign Minister Wang Yi in Beijing, which risked complicating an anticipated summit meeting between Mr. Trump and North Korean leader Kim Jong Un. That exchange followed a major speech last week in which Vice President Mike Pence outlined a shift in U.S. strategy from engagement to confrontation with China, accusing Beijing of undermining American interests on several fronts, including meddling in U.S. elections. Beijing has vehemently denied those accusations.

The latest exchange of tariffs, which took effect on Sept. 24, is bringing China and the U.S. closer to a full-blown trade war. Mr. Trump has vowed to further ratchet up pressure on China by imposing tariffs on another $257 billion of Chinese products, making all Chinese imports subject to such penalty taxes.

While Chinese officials have repeatedly said they wouldn’t bend to pressure tactics, Beijing is leaving open the possibility of engaging in fresh negotiations with Washington. “President Xi believes there are many reasons to have a stable relationship with the U.S.,” said a Chinese official.

The Yangshan Deep Water Port in Shanghai in July.

The Yangshan Deep Water Port in Shanghai in July.


Photo:

Qilai Shen/Bloomberg News

Previous trade negotiations between the two sides ended without any breakthroughs. Trump officials perceived the offers from Beijing—largely involving more Chinese purchases of U.S. agricultural and other products—as inadequate in addressing the White House’s demand for a fairer playing field for American businesses in China.

With the threat of more tariffs coming, Chinese officials in recent weeks have questioned whether now is the time to negotiate. Many in China’s policy circles believe that Beijing should wait to negotiate until after the U.S.’s November midterm elections. They say Mr. Trump isn’t ready to cut a deal and is bashing China now to appeal to his political base, and may be more amenable after the elections.

So far, Beijing’s strategy has been to respond forcefully to the Trump administration’s trade offensive. But because China imports less from the U.S. than vice versa—just under $130 billion last year—Beijing is running out of products to penalize. If Beijing moves to retaliate by targeting American businesses operating in China, as some officials have proposed, the country’s leadership risks souring the foreign-investment environment and causing foreign capital to flee at a time the Chinese economy is slowing.

That is why Mr. Xi has also ordered his officials to keep engaging with Washington and U.S. businesses, according to Chinese officials and government advisers. For instance, senior Chinese officials in recent weeks have gone out of their way to reassure U.S. companies that there won’t be retribution against them.

Write to Lingling Wei at lingling.wei@wsj.com and Bob Davis at bob.davis@wsj.com

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