With the proviso that no one is inside the head of Chinese President Xi Jinping (except Xi himself) and that this is all speculative analysis which carries it’s own bias, I think it’s worth taking seriously reports that Xi may have a Trump problem that makes it almost certain that the U.S.-China trade war will drag on until at least the November 2020 Presidential election in the United States.
Here’s the problem, according to these reports.
The last few days of confusing signals from President Trump–branding former “good friend” Xi an “enemy” before praising him, claims of two positive phone calls from Chinese trade officials to U.S. negotiators that China has yet to confirm, and Trump’s claims that China is eager for a deal–have so shredded President Trump’s credibility with Chinese leaders that there’s too much risk in agreeing to anything in the negotiations that no deal is possible with Trump ahead of the election.
According to this way of thinking, it is dangerous for President Xi to offer any concession in these talks because Trump could immediately characterize a concession as a Chinese surrender or break any promise that he had made.
Xi clearly faces significant internal opposition–from the People’s Liberation Army and other sources–to any compromise with the United States. If such any offered compromise was then trashed by the U.S. President, Xi would suffer a huge loss of prestige. He is China’s ultimate leader but his position is subject to challenge from other members of China’s collective leadership.
This analysis suggests the issue of when the U.S. would withdraw the recent higher tariffs is a huge and probably insurmountable obstacle in talks. The Chinese are demanding that the tariffs be withdrawn before the signing of any pact–or maybe at signing. The U.S. position is that the tariffs should stay in place even after any deal is signed in order to assure Chinese compliance with its terms.
In other words, neither side trusts the other to actually carry out any terms that might be negotiated.
The idea that an end to the trade war can be negotiated before November 2020 isn’t yet ludicrous but it’s sure headed in that direction.
