Promising Start: Trump Gets Two Trade Concessions from China
Xi offers president minor market reforms in first visit, suggests larger future deals are possible
President Donald Trump reportedly secured two trade concessions from China during his dialogue with Xi Jinping last week — a small but promising start to tackling far more substantial economic differences between the two powers.
Chinese president Xi Jinping offered to significantly free up Chinese market access for foreign investors and also to drop a ban on U.S. beef imports, which was originally enacted in 2003, the Financial Times reported.
China’s two trade concessions, largely symbolic gestures of goodwill, leave uncertain the degree to which the administration can address China’s currency manipulation.
“It was a great honor to have President Xi Jinping and Madame Peng Liyuan of China as our guests in the United States. Tremendous…” Trump tweeted on Saturday, clearly satisfied with the summit’s success. “[G]oodwill and friendship was formed, but only time will tell on trade,” he added in a follow-up tweet.
The concessions mark a positive, although minor, first step in balancing the trade imbalance with China.
“The two concessions on finance and beef are relatively easy for Beijing to make,” the Financial Times noted. Indeed, not only are they easy concessions, they are in fact concessions to which, in theory, the Chinese have already technically agreed.
Currently, foreign investors are prohibited from owning majority stakes in Chinese securities and insurance companies, but China’s offer to change those laws is not some grand gesture to avert a trade war with Trump — it is the continuation of a process that began under the Obama administration during talks about creating a bilateral investment treaty.
“China was prepared to [raise the investment ceilings] in the BIT, but those negotiations were put on hold [after Trump’s election victory],” a Chinese official involved in the talks told the Financial Times. “Had Obama been in office for another six months we would have gotten there.”
And indeed, while it may seem significant for the Chinese to lift their restriction on U.S. beef imports, implemented after a 2003 Mad Cow disease scare, the Chinese government already lifted the ban in September of last year.
But despite the lifting of the ban, U.S. cattle farmers are still unable to import their livestock to China due to Chinese refusal to sign off on methods to track the source of U.S. cattle to ensure its safety. The new agreement should improve that process.
China's two trade concessions, largely symbolic gestures of goodwill, leave uncertain the degree to which the administration can address China's currency manipulation or protect U.S. industries from Chinese cheating in the marketplace.