Limited Cooperation to Dominate US-China Trade
Dec 23-2019
Major headways were made in the US-China trade talks as the two sides agreed on the first-phase negotiation texts on December 13th. Two days later, Prof. Yu Miaojie of the NSD spoke on the issue and its prospect during the 4th National Development Forum held by the NSD. He’s also the CPC Chief and Deputy Dean of the NSD.
The timing of the agreements made for an optimal choice for Trump, given that any duty hikes as previously planned would disrupt the upcoming Christmas consumption peak in the US and dampen his re-election bid. The US president was hand-tied also because of the dearth of excuses to escalate trade wars and his possible impeachment. In fact, Prof. Yu had predicted during another event on December 1st that an agreement was all likely by December 15th.
Results of the first-phase agreements showed that China had demonstrated the utmost sincerity by implementing various measures such as the efforts to promote nation-wide reform and the holding of the second China International Import Expo. The US, on the other hand, hadn’t made sufficient concessions, evidenced by the relatively limited drop of duty from 15% to 7.5% on USD120 billion of Chinese goods.
The agreements do not forebode a smooth sail forward. Bilateral relations will continue to be characterized by limited cooperation, long-term competition, and mutual dependence. But a de-coupling is out of the picture.
Prof. Yu believed that appreciation of the Chinese currency is inevitable and the target value is 6.0, for the Chinese economy will outgrow the US in the long term. By year-end, it might rise from 6.9 to 6.8 thanks to the injection of confidence by the first-phase agreements. No matter how the US-China trade relations fluctuate, China should be bent on deepening reform and implementing across-the-board opening up, argued Prof. Yu.
