China and US keen to reach trade deal, say ex­perts

The Phnom Penh Post - - BUSINESS - Goh Sui Noi

THE world’s two ma­jor pow­ers are will­ing to reach a deal on their trade dis­pute but re­la­tion­ship be­tween China and the US has be­come more con­tentious.

China and the US are more will­ing to reach a deal on their trade dis­pute as both their economies are hurt by its ef­fects and the global econ­omy slows, ex­perts told a fo­rum in Sin­ga­pore on Wed­nes­day.

But the re­la­tion­ship be­tween the world’s two ma­jor pow­ers has be­come more con­tentious, and how it de­vel­ops will have an im­pact on the South­east Asian re­gion.

Both the US and China have in­cen­tives to try and reach a trade deal, said Bon­nie Glaser, se­nior ad­viser for Asia and di­rec­tor of the China Power Project at the US think-tank Cen­tre for Strate­gic and In­ter­na­tional Stud­ies.

“The wors­en­ing of the global econ­omy and the volatil­ity in the stock mar­kets, cer­tainly in the United States, will have an im­pact on how Pres­i­dent [Don­ald] Trump thinks about ne­go­ti­a­tions with China,” she said in an­swer to a ques­tion a t t h e a n n u a l Re g i o n a l Out­look Fo­rum or­gan­ised by the Yusuf Ishak In­sti­tute of South­east Asian Stud­ies.

Also, the longer the cur­rent tar­iffs re­main in place in the US, the higher the po­ten­tial for them to in­crease fur­ther, which will af­fect the US econ­omy even more than they have so far.

“I be­lieve there is a grow­ing de­sire on the part of Pres­i­dent Trump for a deal. At the end of the day, Pres­i­dent Trump wants a win, he doesn’t want tar­iffs. Tar­iffs are not a win,” she noted.

As for China, its econ­omy is hurt­ing too, lead­ing the Chi­nese gov­ern­ment to take stim­u­la­tion mea­sures.

Pro­fes­sor Zha Dao­jiong of the In­sti­tute of South-South Co­op­er­a­tion and De­vel­op­ment of the School of In­ter­na­tional Stud­ies at Pek­ing Univer­sity, pointed to the re­in­stat­ing a few days ago of big-ticket projects that were put on hold last year and which are “not go­ing to pay off”.

An­swer­ing a ques­tion on whether the trade war would un­der­mine China’s de­vel­op­ment, he said many of the US de­mands “are in line with pol­icy di­rec­tions that we want to go”.

Giv­ing, as an ex­am­ple, the US’ call for an end to the re­quire­ment for joint ven­tures – through which US firms are forced to trans­fer tech­nol­ogy to their Chi­nese part­ners – he said this is “some­thing we need to get rid of our­selves”.

He added: “China has to adapt and ad­just to the forces of glob­al­i­sa­tion just like any other econ­omy.”

Glaser said t he ta rif f war is one of t he signs t hat t he re­la­tion­ship bet ween the US and China has be­come in­creas­ingly con­tentious, wit h strate­gic com­pe­ti­tion the dom­ina nt f e at u r e of t ie s a nd co­op­er­a­tion di­min­ished.

Not­ing that the re­la­tion­ship is at a st rateg ic cross­roads, she said the next three months are cru­cial to the fu­ture of the re­lat ion sh ip, a nd pa i nte d t hree sce­nar­ios.

The first is a suc­cess­ful trade deal and mod­er­a­tion of ten­sions in other ar­eas, with a trade deal pro­vid­ing the mo­men­tum to­wards the re­turn to the US pol­icy of strate­gic hedg­ing, in which there is a more even bal­ance be­tween com­pe­ti­tion and co­op­er­a­tion.

In such a sce­nario, there is some room for South­east Asian coun­tries to ma­noeu­vre and suc­cess­fully nav­i­gate be­tween the two pow­ers. Asean cen­tral­ity can be sus­tained, but a lot of work is needed by Asean to en­sure that it does re­main rel­e­vant, Glaser said.

The sec­ond is that of a 21stcen­tury ver­sion of the Cold War, with in­ten­si­fi­ca­tion of com­pe­ti­tion mil­i­tar­ily, eco­nom­i­cally and ide­o­log­i­cally. Coun­tries in the re­gion could be com­pelled to take sides.

T he t h i rd s c ena r io i s a g ra nd ba rga in bet ween t he US and China, the con­tents of which might not be favourable to t he re­gion.

How­ever, it could head off com­pe­ti­tion be­tween the two pow­ers, which would be in the in­ter­est of the re­gion.

The ex­perts agree that conta i nment of China is not a good pol­icy.

Univer­sity of Queens­land in Aus­tralia chan­cel­lor Peter Vargh­ese said China i s too en­meshed in the in­ter­na­tional sys­tem and too im­por­tant to the re­gion to be con­tained.

“China’s r ise needs to be man­aged, not f r ust rated. It needs to be ba la nced, not con­tained,” he said.

Zha noted that when Chi­nese lead­ers say the Pa­cific is wide enough for the two pow­ers, their mes­sage is that China and the US can co­ex­ist peace­fully while hav­ing dif­fer­ent po­lit­i­cal sys­tems, and that “there is space for both of us to de­velop along the path we choose for our­selves”.

On Asean’s role, he said it was time the re­gional group­ing tried to mit­i­gate the ef­fect of the in­stinct of China and the US to­wards ri­valry.

AFP

A fi­bre-op­tic ca­ble fac­tory in Nan­tong, China. The US and China have im­pe­tus to try and reach a trade deal, but their re­la­tion­ship has be­come more con­tentious.

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