US/China Trade: Red Letter Day?

Xi Jinping's personal touch may be the key to China and the US striking a deal on trade.

It was a smart move by Xi Jinping to write a personal letter to Donald Trump as trade talks reconvene in Washington following the latter's Twitter outburst against China last weekend.

China's President has been subjected to some (behind the scenes) criticism in Beijing for allegedly 'mishandling' his relationship with his US opposite number. Personally, I would contest this. With the exception of Saudi Arabia's Crown Prince Mohammad bin Salman, Xi Jinping has played Mr Trump on a personal level as well as anyone, and better than most, right from the outset. This is very important indeed as was underlined on the BBC World TV news last night focusing for some ten minutes or so on how the Trump Administration (facing four foreign relations "crises", ie China trade, North Korean missile tests, Iran and Venezuela — albeit, arguably in part of its own making) is overly reliant on the President's personal engagement on the international stage.

Furthermore, Xi Jinping is operating in a particularly difficult context in the form of bilateral trade (which isn't an issue with which MBS has to grapple at all other than by promising to buy large quantities of US weapons systems!), given Mr Trump's protectionist 'core' instincts and deep-rooted obsession with bilateral trade deficits.

This being said, Xi Jinping's total abandonment of Deng Xiaoping's "hide and bide" approach to China's rise has not helped his cause; indeed, quite the contrary. But, in mitigation, there was almost certainly an inevitability about Washington's waking up to the 'strategic threat' which China poses to the US's global primacy even without Xi Jinping's particular brand of braggadocio coming very much to the fore at and in the wake of the November 2017 CPC Congress. Almost certainly a presentational misjudgement on his part, and not just as far as the US is concerned.

It is just ironic — if, perhaps, not coincidental given the nature of Mr Trump — that Xi Jinping chose a moment when he has in the White House an opposite number who can out-braggadocio him any day of the week without even, seemingly, getting out of bed and away from Fox News in the morning!

The bottom line? Mr Trump's threatened tariff hikes have now come into effect (but, note, delayed in implementation in that any hike will NOT apply to goods already on the high seas). However, I still think a deal is in the offing — and that Xi Jinping's letter, helping Mr Trump to take personal credit, stands to be a significant contributory factor.

Alastair Newton

Footnote: A 'red letter day' is defined by Wikipedia as "any day of special significance or opportunity".