After Trump’s pledge to ‘open up’ China, low expectations for summit deal | Business and Economy News
Trump and Xi Meet Amid Modest Expectations for Trade Summit
U.S. President Donald Trump arrived in China this week for a crucial summit with Chinese leader Xi Jinping, emphasizing high hopes for improved economic relations. Before the meetings, Trump called on Xi to “open up” China’s economy and announced a delegation of prominent business executives, including Tesla’s Elon Musk, Apple’s Tim Cook, and Nvidia’s Jensen Huang.
As the leaders wrap up two days of discussions, observers have tempered expectations regarding the summit’s outcomes. Trump and Xi are likely to extend the year-long truce in their ongoing trade war, which was initially agreed upon during their previous meeting in South Korea in October. However, analysts predict that the summit will result in stabilization rather than revitalization of the relationship between the world’s two largest economies, which are currently engaged in a rivalry extending across trade, artificial intelligence, and Taiwan’s status.
“It is important to be clear-eyed about the state of relations here,” said Claire E. Reade, a senior counsel at Arnold & Porter and former USTR official focused on China. “China does not trust the U.S., and it wants to prevail in what it views as long-term global competition, which limits the potential for agreement.”
While Trump and Xi have yet to finalize any trade proposals, discussions of various business agreements have surfaced. In an interview with Fox News, Trump mentioned that China would invest “hundreds of billions of dollars” in companies represented by his delegation, although he did not provide specific details.
Administration officials indicated that China is poised to increase its purchases of U.S. agricultural goods and energy, order a significant number of Boeing aircraft, and explore the establishment of a “Board of Investment” to manage bilateral investments.
Taiyi Sun, an associate professor of political science at Christopher Newport University, highlighted that a realistic approach to “opening up” the Chinese market would likely prioritize sectors with established economic synergies. “Agricultural products like soybeans and beef, along with high-value manufacturing products such as Boeing aircraft, align with existing Chinese demand and American export strengths,” Sun noted. He added that gradual openings in more sensitive sectors, such as financial services, could also be on the horizon, although progress may be slow.
Gabriel Wildau, a senior vice president at Teneo, pointed out that both nations are keen to address supply-chain vulnerabilities highlighted by their trade conflict. “The ongoing war in Iran has likely heightened the U.S.’s vulnerability to export controls on rare earths, especially concerning the need to replenish munitions,” Wildau stated. He suggested that Washington may be willing to offer tariff relief in exchange for Beijing’s commitment to ensure a steady flow of rare earth exports.
Despite previous agreements to lower trade barriers, U.S.-China business and trade relations remain severely strained after years of reciprocal economic measures. According to the Peterson Institute for International Economics, the average U.S. tariff on Chinese goods now stands at 47.5 percent, up from 3.1 percent prior to Trump’s first term. Meanwhile, China’s average tariff on U.S. goods increased to 31.9 percent from 8.4 percent in 2018.
Carsten Holz, an expert on China’s economy at the Hong Kong University of Science and Technology, noted that China has diminished incentives to concede to U.S. demands, owing to the growth of its domestic industries. “Chinese firms now hold leading or controlling positions across many industrial sectors. The economy has few gains from further opening up to the U.S. and is likely to respond with mostly symbolic gestures,” Holz said.
Deborah Elms, head of trade policy at the Hinrich Foundation in Singapore, echoed these sentiments regarding U.S. leverage. “Trump expects China to increase its purchases and allow greater American business operations, but what is he offering in return? Very little,” Elms remarked, reflecting the perception that the U.S. has maintained a fair approach while China has not.
Reade added that Xi is unlikely to agree to any measures harmful to Chinese interests. “Instead, China may offer no-cost ‘gifts,’ such as removing short-term trade barriers on beef or purchasing necessary U.S. goods, but such actions won’t undermine their strategic goal of reducing dependence on U.S. technology in the long term,” she explained.
