Trade Experts Will Be Reading Tea Leaves After G-20 Xi-Trump Meeting
Even if a deal is struck with China, things won't return to how they were before, a trade consultant and the National Foreign Trade Council CEO agreed while on a panel. Rufus Yerxa, CEO of the National Foreign Trade Council, told the American Association of Exporters and Importers Annual Conference June 28: "I fear we get to a situation where we can’t go back, and we can’t go forward, either."
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Yerxa and Douglas Grob, a senior vice president at Albright Stonebridge Group, were speaking on a panel about the current administration's trade policy at the conference. Grob said that while the U.S. is "no longer seen as the reliable partner that it once was," China's argument that it's the reliable trading partner isn't wholly believable, either. Because local officials are frequently at odds with central government initiatives that are pro-foreign investment, "It’s not always credible for China to offer more predictability and certainty," he said.
Grob said China's President Xi Jinping is under pressure to get the export ban on Huawei telecommunications equipment lifted, and not be humiliated in this trade war. "They don’t want to project weakness by accepting a deal under duress," he said.
An announcement that trade talks will resume could come out of the meeting between Xi and President Donald Trump late on June 28 at the G-20 summit in Japan, Grob said. If it does, he said he will be looking to see if it's a joint statement. He'll also be looking to see if purchases will be announced, knowing that the size of those purchases is linked to the time to complete them -- in other words, if the numbers are large, China has more years to fulfill the promise. But perhaps most of all, Grob said he'd like to see what he calls "costless compromise." For instance, the U.S. and China could both pledge to live up to intellectual property protection standards. For the U.S., which already does a good job in IP, this will be no problem, he said. But by saying both parties are subject to the same standards, it allows China to look like it's not being punished.
Yerxa is concerned that Trump doesn't have as much leverage as he thinks he does. While companies are trying to move production out of China to escape tariffs, exports to the U.S. are only 18 percent of Chinese exports -- and 60 percent of manufacturing is for domestic consumption. "It’s so far not clear how much impact this is going to have in forcing China to accept things we think they ought to accept," he said.