American and Chinese officials proudly touted $250bn of deals yesterday, signed during President Donald Trump’s trip to Beijing, but analysts say the headline figures will not do much to rectify a very lopsided trade balance.
Trump’s insurgent presidential campaign was built in large measure on lashing out at global trading relationships, particularly that with China, whose annual $350bn deficit he said proved the US was being taken for a ride.
He pledged he would get a better deal, one where China bought more from the US in his drive to “Make America Great Again” and bring jobs back to the hollowed out industrial heartland that voted for him.
The agreements inked yesterday during Trump’s first state visit to Beijing ranged from billions of dollars worth of Chinese soybean and aircraft imports to major projects like the development and export of liquified natural gas from Alaska.
But many were little more than nonbinding memorandums of understanding, which can take years to materialise, or can simply fall apart.
“It’s old-style politics, where a leader comes in and you scoop a bunch of deals which were already under way, or you put out a big number to show the relationship is strong,” said James McGregor, China chairman of the consultancy APCO Worldwide.
Even as his administration was trumpeting the quarter of a tn dollar headline figure, Trump returned to his familiar refrain that trade relations were “very one-sided and unfair.”
“I don’t blame China,” Trump said to awkward applause and nervous laughter from executives gathered for the signing ceremony at the cavernous Great Hall of the People.
“After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens?” he added. Instead, Trump pointed the finger at past US administrations “for allowing this out-of-control trade deficit to take place and to grow”.
The Trump administration has aggressively pursued trade remedies in commercial relations with Beijing – investigating Chinese trade practices on intellectual property and in aluminium and steel.
Speaking after talks with Xi, Trump said China had to “immediately” take greater action on market access, forced technology transfers and theft of intellectual property.
“We have to fix this because it just doesn’t work for our great American companies, and it doesn’t work for our great American workers,” he said.
Xi admitted that “there has been some friction on bilateral trade”.
But he told Trump that opening China’s economy was the country’s long-term strategy.
“We will not narrow or close our doors. We will open wider and wider,” Xi said.
US Secretary of State Rex Tillerson told reporters in Beijing that “quite frankly, in the grand scheme... the things that have been achieved so far are pretty small” when it came to trade negotiations.
Analysts tend to agree with that assessment.
Even large deals will do little to shift the overall balance of trade, they say, unless the structural barriers preventing US businesses from competing fairly in China are changed.
Christopher Balding, economics professor at Peking University, said the agreements announced on Thursday were “standard operating procedure-type deals”.
“We haven’t seen any agreements on market access or market opening in either investment or trade.
Those are really the bigger issues American companies are concerned about, rather than one-off deals,” he told AFP. One of the most substantive agreements was a gas deal between the state of Alaska, Alaska Gasline Development Corp, China Petrochemical Corp (Sinopec), China Investment Corp (CIC) and the Bank of China, involving a total investment of up to $43bn.
Officials said the joint development agreement will create up to 12,000 American jobs and reduce the trade deficit between the United States and Asia by $10bn annually.
In another deal, China agreed to buy 300 airplanes at some $37bn from US aerospace giant Boeing, yet it remained unclear how many of the purchases would be new ones.
In September 2015, Boeing had already received a Chinese order for 300 aircraft valued at $38bn.
Former US ambassador to China Max Baucus told Bloomberg Television that Xi’s elaborate red carpet reception for Trump was a “classic Chinese” strategic move to prevent serious conversation.
“The more there is pomp and circumstance, the less there is time to talk,” he said.
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