Trade negotiations between the US and China in London mark a cautious step toward easing tensions, but not a new beginning. It is a short-term strategy to avoid further deterioration — a fragile truce that could be reversed at any moment.
At the core is a deeper issue: national security. Both sides now view trade through that lens, and handshakes would not fix it. Washington must recognize that Beijing seeks respect and would not accept a one-sided, long-term deal. China, for its part, needs to understand that it would not be business as usual — and that the US would expect more concessions and market access to the world’s second-largest economy. The alternative is continued hostility, which would make for a more chaotic global trade environment and a more dangerous world.
The London climbdown is positive, but precarious. Rapprochement has turned into recrimination before. After the initial euphoria of a trade-war ceasefire agreed in Geneva, Switzerland, last month, both sides accused the other of reneging on a deal to temporarily lower tariffs that had climbed well above 100 percent.
Now negotiators say they have reached an agreement in principle on a framework to de-escalate trade tensions, based on the consensus forged in Geneva. Delegations from both sides would take the proposal back to their respective leaders, following about 20 hours of talks over two days.
“Once the presidents approve it, we will then seek to implement it,” US Secretary of Commerce Howard Lutnick said.
The full details of the accord were not immediately available, but US officials said they “absolutely expect” that issues around shipments of rare earthss and magnets would be resolved.
There are no winners or losers coming out of this, APAC Advisors founder and chief executive officer Steve Okun said.
The fundamental questions are much larger than any round of talks.
“The [US President Donald] Trump administration needs to decide whether it views Beijing as a strategic competitor, or an existential threat,” he said. “Washington can take the economic hit from a trade war, but politically, [Chinese President] Xi Jinping (習近平) can suffer the hit for longer than Trump can. So, one side has economic leverage, and the other political leverage — that’s a standstill, for now.”
The Chinese president is biding his time, despite a sluggish economy. In the most recent sign of how the trade war is hurting, exports rose less than expected last month. The worst drop in US-bound shipments since February 2020 — the outbreak of the COVID-19 pandemic — counteracted strong demand from elsewhere. Still, sales to other markets are providing much-needed support for an economy stuck in deflation and struggling with weak domestic demand.
Beijing is sticking to its narrative that this trade war is Washington’s problem, and that China is being unfairly targeted. A recent Xinhua commentary said that the US’ security-focused view of economic issues risks undermining global cooperation.
There is a pathway to peaceful coexistence, but compromises are required, Brookings Institution analyst Ryan Hass said.
To break through with Xi, Trump would need to acknowledge that both countries are major powers. Neither can dictate terms to the other. Both would be hurt by high tariffs on each other’s goods — but on their own, they are not enough to force capitulation.
The US public has no appetite for a broader conflict with Beijing. Disapproval of China’s behavior might be high, but the top priority is still to avoid war. Americans are clear in their desire to manage competition without that escalating into open conflict.
For that to happen, Washington must recognize that Beijing craves respect. The US would be wise to pay heed to the Chinese concept of mianzi or “face” — Xi would only agree to a long-term deal that he can pitch at home and abroad as a win. Beijing has taken lessons from Trump’s first trade war, and judged that agreement to be one-sided in favor of Washington. It would not make that mistake again.
China does not always like reciprocating face, but officials would be wise to give some to Trump, too. His tariffs have been outlandish, but his supporters also demand that he show strength, not concession. Beijing should be able to understand what happens when politicians need to cater to public pressure.
Neither side has the upper hand to make the other come away an obvious loser. At the most, the London talks might have achieved just enough to help shape the future on a less-hostile basis. That is progress — but it would be a mistake to call this moment a reset.
Karishma Vaswani is a Bloomberg Opinion columnist covering Asia politics with a special focus on China. Previously, she was the BBC’s lead Asia presenter and worked for the BBC across Asia and South Asia for two decades. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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