China and US keen to reach trade deal, say experts
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.