BEIJING: The Chinese woke up on Wednesday morning (Nov 7) to a new reality where the chances of US President Donald J Trump and Chinese…
BEIJING: The Chinese woke up on Wednesday morning (Nov 7) to a new reality where the chances of US President Donald J Trump and Chinese President Xi Jinping coming to a compromise to end the trade war and signing an historic bilateral trade agreement have become slimmer, at least for the next two years.
After Tuesday’s midterm elections, and the Democrats winning the House, many have predicted that Trump is likely to focus on winning over US voters and championing an “America workers first” mantra to boost his re-election bid for the White House in 2020.
To do that, Trump can utilise executive powers to invoke measures through Section 301 of the Trade Act that allows him to raise tariffs on Chinese imports without requiring approval from Congress.
On the other hand, we must also expect President Trump and House Speaker-elect Nancy Pelosi to clash in the coming years. A new era of gridlock on legislative matters, including the passage of trade agreements, can be expected.
Accordingly, China must adjust its stance on global trade. Instead of shutting down trade, and retaliating with tariffs and other forms of trade control, it must do the opposite. It must encourage other countries to sign lucrative multilateral and bilateral trade and investment deals.
There are steps in this direction, as China hosts the China International Import Expo in Shanghai this week.
RECONNECTING WITH THE WORLD
The expo is a symbol of China’s shift away from a reliance on domestic manufacturing and exports as a key engine of growth, and a signal that the country understands its future success depends on welcoming more foreign imports and connecting with global supply chains.
China intends to open up further to foreign businesses, promote free trade and trade facilitation, while demonstrating to foreign partners they can all achieve successful outcomes with win-win deal-making in the Chinese market, said Zhang Yuqui, dean of the School of Economic and Finance at Shanghai International Studies Universities.
