WHAT HAPPENS NEXT?
For trade talks to advance, Mr Trump and Mr Xi will need to be actively involved in defining the parameters of a final deal. Mr Trump has suggested he may soon speak with Mr Xi by phone, which could lend credence to the best-case scenario of both sides working towards a comprehensive trade agreement.
Questions arise about how China is prepared to open up to American businesses, as Mr Trump claimed, and how the US is prepared to reciprocate.
From China’s perspective, there are several steps it can take to reduce trade imbalances, a major source of tension between the two countries.
First, Beijing is ready to significantly increase purchases of American agricultural products and energy to reduce the trade deficit. Second, it can take measures to limit exports to the US, a trend already emerging as exporters diversify into other markets. Third, Beijing can continue to increase its holdings of US Treasury securities – China is the second-largest holder, with US$784 billion, after Japan. Fourth, Beijing can encourage more Chinese companies to invest in the US.
However, many questions remain. What concessions can the US offer China in return?
Can the US relax controls over high-tech products, including semiconductors? Even if Chinese companies wish to invest in the US, will they be welcomed at a time when even Chinese-produced garlic is deemed a national security threat?
Finding answers to these questions will not be easy.
Wang Xiangwei is a former Editor-In-Chief of South China Morning Post. He now teaches journalism at Hong Kong Baptist University.
Source: CNA
