Healthy China-US ties conducive to world economy

After months of tariff friction, China and the United States have seen positive changes in their economic relationship following a meeting between the presidents of the two countries.

Chinese President Xi Jinping and US President Donald Trump reached important consensus during their meeting on Saturday, Chinese Foreign Minister Wang Yi said. Both heads of state agreed to “have further exchange of visits at an appropriate time,” continue the trade talks between the two countries and stop imposing new tariffs, he said.

As the world economy is facing downward pressure and becoming more uneven, analysts said that the consensus was conducive to easing market fears over the escalation of new trade restrictive measures between the world’s two biggest economies. 

In his speech at G20 summit, Xi said the number of new trade restrictive measures applied on a monthly basis among G20 members had doubled compared with six months ago. In 2018, the growth of trade in goods may decline by 0.3 percent globally.

“We should stay committed to openness and cooperation, and uphold the multilateral trading system,” Xi said, stressing win-win cooperation to promote inclusive global development.

China is taking solid steps to advance opening-up in the service sector, expand financial opening-up and accelerate the opening-up process of sectors including telecommunications, education, medical treatment and culture.

Last month, the first China International Import Expo was successfully held, which was warmly received by the international community. The CIIE will be held annually as a way to further open China’s market. China’s imported goods and services are estimated to exceed US$30 trillion and US$10 trillion respectively in the next 15 years. 

China has also taken efforts to foster a world-class business environment, and promote international cooperation at multilateral and bilateral levels. In the latest World Bank Doing Business report, China moved up 32 places in the ease of doing business ranking from last year. 

According to Xi, China hopes that all countries will work together for a free, open, inclusive and orderly international economic environment.

Liang Ming, a researcher with the Chinese Academy of International Trade and Economic Cooperation, said Saturday was “an important day” for China and the US, as the two countries made “the first step” in the past few months toward a healthy relationship.

“China and the United States share huge potential in trade. Currently, China is the United States’ third-largest export market. It could become United States’ largest export market if trade potential in farm produce and energy are fully released,” Liang said.

He said the important consensus reached by the two heads of state could help stabilize the global financial market, which had been rattled by the past disputes. If upcoming talks could yield positive results, that would help reverse the slowing trend of world economic growth and global trade.

IMF chief Christine Lagarde said there was “an urgent need” to de-escalate trade tensions, reverse recent tariff increases and modernize the rules-based multilateral trade system. In a statement issued at the G20 Summit, Lagarde reiterated her staunch opposition to trade barriers. “Pressures on emerging markets have been rising and trade tensions have begun to have a negative impact, increasing downside risks.”

The IMF estimated that, if recently raised and threatened tariffs were to remain in place and announced tariffs were implemented, about 0.75 percent of global gross domestic product could be lost by 2020. If, instead, trade restrictions in services were reduced by 15 percent, global GDP could be 0.5 percent higher.

“We are all living at an important historical moment; an historical moment in which decisions by leaders of the world’s two largest economies will determine the trajectory of the 21st century,” said AmCham China Chairman William Zarit. 

According to Wang, the two presidents agreed that the two countries “can and should” ensure success of China-US relations and that coordination, cooperation and stability should be the defining features of bilateral relations.

Liang said the negotiation leaves room for the two countries to put an end to the trade frictions by agreeing not to impose additional tariffs and annulling tariffs already imposed.

“The December 1 meeting is not the end of the story. It is a new start,” he said.