China, US to cut phase one deal soon

By Wei Jianguo Source:Global Times Published: 2019/12/1 20:18:39

Illustration: Xia Qing/GT

China and the US can definitely reach a "phase one" trade deal. I'm confident and optimistic about this. If the bilateral trade talks make good headway and make progress quickly, the two sides can expect to reach a trade deal before the coming Chinese New Year at the end of January, 2020. 

The content of trade deal will focus on a few major issues including intellectual property protection, financial opening, and agricultural products purchasing. But the most essential problem is to lift the tariffs. Other divergences can be left to the second phase. The phase one agreement is unlikely to include too much substance, instead, it should solve the most pressing issues and march forward step by step.

Rolling back tariffs levied by the US is a must. The China-US trade war instigated by the US with tariffs, so the tariffs have to be cut first. China does not want a trade war, but it is not afraid of one. If the US continues the trade war, China will fight back. No matter if the tariffs are lifted all at once or at separate stages, the US must roll back all tariffs if it is going to show sincerity. 

Though US President Donald Trump has been shedding mixed signals, he does care and wants to cut a trade deal. The US has already felt the pain. If the government escalates the trade war, the American people, companies and groups wouldn't agree. The US needs an agreement to calm down the domestic disapproval. 

The two countries remain in communication, which reflects that the US has the will to reach a trade deal. Trump has more of an urgent need for a trade agreement for his re-election while the US economy shows signs of recession and conflict between the two parties. 

If the phase one deal is settled, it will be good for Chinese exports to the US, and China's next move to solve important issues. Also, if the trade deal is reached before the end of January, it can serve as a boost to the Chinese economy in 2020.

The US would actually like to achieve the goals of China's reform direction through the trade war in the next stage. Topics such as intellectual property rights, state-government reform, abolishing subsidies, shortening the negative list and financial opening are being put on the trade table by the US. However, those issues are being addressed by China, and are not because of following the US' request. There should not be contradictions for the two countries. 

China has driven power to reform and the country should prepare to continue reform and opening-up. The opening-up will have to be comprehensive, releasing advantages for Chinese governance system.

A good agreement has to be a compromise between both parties. The phase one agreement has to build up a solid foundation for the next few phases. China can afford to negotiate many problems except three bottom lines - Chinese sovereignty, national security and the country's development. 

Under these circumstances above, as long as China and the US have good faith and are willing to increase mutual trust, they will cut a deal. The two countries are nothing like what the Western media describes as decoupling. Instead, they have already formed a tie that intertwines with each other. 

China and the US will find a way to follow a stable development path and bilateral coordination. The relations between the two sides have resulted in a situation due to cold war mind-set. Despite the trade frictions, the two countries in the next five to 10 years can cooperate in regional affairs, the digital economy and new energy if they can better understand each other. 

The author is a former Chinese vice minister of commerce and executive deputy director of the China Center for International Economic Exchanges.

Posted in: INSIDER'S EYE

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