Sun, Dec 02, 2018 - Page 1 News List

World waits to see if Trump, Xi reach ‘ceasefire’

AP, BUENOS AIRES

From left, Argentine President Mauricio Macri, Argentine first lady Juliana Awada, US first lady Melania Trump and US President Donald Trump pose for photographs at the Teatro Colon in Buenos Aires on Friday.

Photo: Reuters

US President Donald Trump and Chinese President Xi Jinping (習近平) were yesterday to sit down for dinner and their table talk will undoubtedly have a global impact.

What they agree on — or do not — will likely determine whether stock markets rise or fall and whether the world economy gets some relief from destabilizing trade tensions, as well as cast judgement on the wisdom of the US leader’s hard-nosed trade tactics.

Trump and Xi were to seek a way out of a trade war between the world’s two biggest economies, while also saving face for their domestic audiences.

Trump on Friday expressed optimism about a deal.

“There’s some good signs,” he said. “We’ll see what happens.”

The Trump-Xi meeting was set to be the marquee event of Trump’s whirlwind two-day trip to Argentina for the G20 summit after he canceled a sit-down with Russian President Vladimir Putin over mounting tensions between Russia and Ukraine.

Trade analysts and administration officials had acknowledged that it would not be easy.

The US and China have been locked in a dispute over their trade imbalance and Beijing’s push to challenge US technological dominance.

Washington has accused Beijing of deploying predatory tactics in its drive to develop its domestic technology industry, including stealing trade secrets and forcing US firms to hand over technology in exchange for access to the Chinese market.

Trump has imposed tariffs on US$250 billion in Chinese products.

If he cannot get a deal with Xi, he has vowed to more than double most of those tariffs on Jan. 1 and he has threatened to expand tariffs to virtually everything China ships to the US.

China, which has already slapped tariffs on US$110 billion in US goods, is likely to retaliate, ramping up a conflict that has already rattled financial markets and caused forecasters to downgrade the outlook for global economic growth.

US officials have insisted that the US economy is more resilient to the tumult than China’s, but they remain anxious of the economic effects of a prolonged showdown — as Trump has made economic growth the benchmark by which he wants his administration judged.

It was unlikely that the two countries would reach a full-blown resolution in Buenos Aires; the issues that divide them are just too difficult.

What was more likely is that they reach a truce, buying time for more substantive talks, analysts said.

Whether such a ceasefire would be enough to get Trump to delay higher or expanded tariffs was unclear.

Growing concerns that the trade war would increasingly hurt corporate earnings and the US economy are a key reason why US stock prices have been sinking this fall.

Joining other forecasters, economists at the Organisation for Economic Co-operation and Development last week downgraded their outlook for global economic growth next year to 3.5 percent from a previous 3.7 percent, citing the trade conflict, as well as political uncertainty.

Last spring, it looked like Beijing and Washington might have found a peaceful resolution.

In May, US Secretary of the Treasury Steven Mnuchin declared the trade war “on hold” after Beijing agreed to increase its purchases of US soybeans and liquefied natural gas — a move that could have put a dent in China’s massive trade surplus with the US.

However, that ceasefire did not last. Facing criticism that he had gone soft on China, Trump backed away from Mnuchin’s deal and decided to proceed with tariffs.

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