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      • Australia
      • Azerbaijan
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      • Brunei

      • Cambodia

      • Central Asia
      • China
      • Cook Islands

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      • East Asia
      • East Timor
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      • Indonesia
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      • Israel
      • Japan
      • Jordan
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      • Kuwait

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      • Laos
      • Lebanon
      • Macau
      • Malaysia
      • Maldives
      • Marshall Islands
      • Micronesia

      • Mongolia

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      • Nauru

      • Nepal

      • New Caledonia

      • New Zealand

      • Niue
      • North Korea

      • Northern Marianas
      • Oceania
      • Oman

      • Pakistan

      • Palau
      • Palestine

      • Papua New Guinea
      • Philippines
      • Qatar

      • Samoa
      • Saudi Arabia
      • Singapore

      • Solomon Islands

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      • South Asia
      • Southeast Asia
      • South Korea
      • Sri Lanka
      • Syria
      • Taiwan
      • Tajikistan
      • Thailand
      • Tibet
      • Tokelau
      • Tonga
      • Turkey

      • Turkmenistan

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      • United Arab Emirates
      • Uzbekistan
      • Vanuatu
      • Vietnam
      • Wallis and Futuna
      • West Asia
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Experts: What Outcome Can We Expect From the U.S.-China Trade Negotiations?

February 28th, 2019

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On March 4, Wendy Cutler and Arthur Kroeber will discuss the U.S.-China economic relationship at Asia Society. The program will be available via free live webcast at 8:30 a.m. New York time. Learn more

"A very good weekend for the U.S. and China!"

So tweeted President Donald Trump on Sunday. And he had reason to be ebullient: Citing "substantial progress" in trade talks, Trump announced that he would delay his self-imposed deadline of March 2 for the U.S. and China to avert American tariffs of 25 percent on $200 billion of Chinese goods. Should talks continue to make progress, Trump said, he expects to finalize a deal with Chinese counterpart Xi Jinping at a forthcoming meeting to be held at Trump’s Florida estate.

Both leaders have significant incentives to reach a deal. "The tariff increases to date have hurt individual companies, workers, and sectors and have also introduced an element of uncertainty into both countries’ economies that have affected their markets," said Wendy Cutler, vice president of the Asia Society Policy Institute and a veteran U.S. trade negotiator. External factors have played a part as well. President Trump is facing political difficulties at home, where the Robert Mueller investigation and a Democratic-controlled House of Representatives have placed his administration under constant scrutiny. The Chinese economy, meanwhile, has endured a rocky stretch: Consumer and business confidence has fallen and car sales have slowed.

A trade deal signed in the coming weeks would reduce tensions between the U.S. and China. Even still, any agreement is unlikely to fully resolve the fundamental differences that shape the bilateral economic relationship.

The American trade deficit with China — which exceeds $300 billion — has received the lion’s share of media attention in recent years, in part due to Trump’s frequent invocations against it. But the deficit is far from the only issue concerning U.S. negotiators. Chinese government subsidies of state-owned enterprises have distorted international markets, preventing fair competition against Chinese firms. Forced technology transfers and corporate cyber espionage have further tilted the playing field toward Beijing. American companies lack access to the Chinese market in line with what Chinese firms are able to have overseas.

American negotiators would very much like to halt and discipline these practices — but China sees them as intrinsic to the structure of its economy. Reforms have stalled in eight of the 10 categories tracked by Rhodium Group and the Asia Society Policy Institute in the China Dashboard, an indication that Beijing has moved in a more statist direction under Xi Jinping.

"For China, it’s much easier to agree to buy more U.S. soybeans than it is to dismantle its subsidization policies," said Cutler. "That’s one of the reasons issues of purchases have made a lot more progress in these negotiations than structural issues."

In addition to participating in trade talks, the Trump administration has restricted investment by Chinese companies in the United States and tightened export rules, steps that make a grand bargain between the two countries more remote in the short term.

“From the Chinese perspective, it looks like the U.S. is asking them to abandon a basic method of running their economy as well as implementing a containment strategy,” said Arthur Kroeber, an expert on the Chinese economy at Gavekal. “I think that even if we get a deal on trade in the next 30 to 60 days, it’ll be narrowly constructed and there will still be a lot of sources of friction.”

For Trump, a president known to boast about his negotiating prowess, even a limited deal with China may be enough to suit his needs. But the fundamental differences between the world’s two largest economies seem likely to remain an issue throughout the rest of his administration — and beyond.

“This is not just a trade dispute,” said Orville Schell, the Arthur Ross director of the Center on U.S.-China Relations at Asia Society. “It is a dispute that has a growing number of points of contention that grow out of the fact that China and the U.S., as well as other liberal democracies, have systems of governments and values that are antithetical to each other.”

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About the Author

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Matt Schiavenza is the Assistant Director of Content at Asia Society and Senior Editor of Asia Society Magazine. His work has appeared at The Atlantic, The Daily Beast, The New Republic, The Wire China, and strategy + business among other publications.

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