Analysis & Opinions - The National Interest

Xi Jinping Will Give Donald Trump a Victory on Trade

| Jan. 11, 2019

With the conclusion of the first round of negotiations yesterday in Beijing, the way ahead for the United States and China to avoid a full-scale tariff war has become clear. With fifty days remaining before the March 1 end of the truce Trump and Xi announced to prevent U.S. tariffs increasing from 10 to 25 percent on $200 billion of Chinese imports, negotiations are likely to continue until the deadline. But before March 1, Trump will declare “victory” in this phase of the trade war—extending the truce for another six months in which a second phase of negotiations will address even more contentious issues.

My assessment is based on my analysis of the economic and political challenges that Trump and Xi are currently confronting. It is also informed by conversations with key members of Chinese president Xi Jinping’s team during a recent visit to Beijing.

In watching Beijing, it’s more instructive to think of it as a corporation than a government. Each December the CEO and his team set objectives for the year to come. Like the leadership of Apple or Amazon, they assess the “headwinds,” including signs of slowdown in the Chinese economy, projections of flagging global economic growth, and uncertainties about the trade war. On that basis they make decisions about how they are going to deliver the growth they have promised shareholders—in China’s case: 6.5 percent.

In a series of closed-door meetings in December, Xi explained to key members of his team that sustaining current levels of economic growth will require “painful choices” and offered them clues about what those were likely to be. On December 18, celebrating the fortieth anniversary of China’s opening to the world, Xi reminded his 1.4 billion fellow citizens—shareholders—that over those four decades, their Party-led government has delivered economic growth of 10 percent a year.

But his speech also struck an odd note when he declared boldly that “there is no great master who can dictate to the Chinese people.” My response was: say what? But as knowledgeable Chinese colleagues explained, this is how he is framing the deal he knows critics will say concedes too much to the Americans—insisting that as master of its own destiny, China is making these changes for the benefit of China.

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For Academic Citation: Allison, Graham.“Xi Jinping Will Give Donald Trump a Victory on Trade.” The National Interest, January 11, 2019.