Opinion | How Trump and Xi saved the world from economic pain and turned the trade war into a win-win situation

Zhang Baohui says the US has dropped a key contentious issue, the ambitious ‘Made in China 2025’ plan, from the bilateral trade agenda, which is a win for Beijing. But China is also making concessions in two major areas to the US

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Published: 1:00am, 5 Dec 2018Updated: 6:11am, 5 Dec 2018

To the relief of the world, the much-anticipated Trump-Xi summit at the G20 meeting in Argentina did result in a temporary agreement between the United States and China to halt their trade war. This achievement, though tentative and fragile, serves the interests of the global community. Indeed, this meeting was closely watched by everyone, given the significance of its outcome, which could either avert or push the two countries towards a new cold war, a scenario that would force other nations to choose sides. A win-win outcome

According to the White House, President Donald Trump agreed to leave the tariffs on US$200 billion worth of Chinese goods at 10 per cent, and not to raise the rate to 25 per cent as planned on January 1, 2019. China in return will “purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries”. Also, China will start to purchase agricultural goods from the US immediately.

Moreover, the two presidents have agreed to “immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both parties agree that they will endeavour to have this transaction completed within the next 90 days”, according to the White House.

Chinese and US presidents Xi Jinping and Donald Trump called a truce in the trade war at a working dinner in Buenos Aires, Argentina, on December 1. Photo: Xinhua

The issues notably absent from the above list are China’s industrial policies and reform of its state-owned enterprises. Indeed, in the lead-up to the summit, the greatest obstacle to trade negotiations was Washington’s insistence that Beijing scrap “Made in China 2025”, a plan that uses state subsidies to promote industrial and technological upgrading.