Will US-China trade tension ease after Xi's phone conversation with Trump?

Despite US President Donald Trump’s occasionally tough rhetoric, he took the world by surprise last night by tweeting about his conversation with Chinese President Xi Jinping on trade and other issues.

The gesture somewhat calmed the fears over earlier threats to impose tariffs on all remaining US$267 billion worth of Chinese goods imported into the US if the meeting between the two leaders at the G20 summit does not go as desired.

No details were provided in Trump’s tweet on how the conversation will change the trade relations and what consensus, if any, the two reached. The adjectives used by Trump in the tweet, such as “long” and “very good” seem to justify a regained confidence in the market, with the Dow rallying by about 120 points. No one knows the impact on US voters who have suffered as a result of the tariffs.

Trump’s description of the discussions as “moving along nicely with meetings being scheduled at the G20 in Argentina” could raise expectations that tensions might ease.

What Chinese media have reported about the phone call provides another, more detailed, side of the coin. The key points include:

1. He (Trump) attaches importance to his good relationship with Xi.

2. It is important for the two leaders to communicate directly and they should be in more frequent contact.

3. US-China trade relations are important and the US wishes to expand exports to China

4. Economic teams from both sides should increase contact.

6. He supports the participation of American companies in the China International Import Expo (CIIE).

On the Chinese side, the position and attitude of Xi is entirely predictable, reiterating China’s position regarding China-US relations, saying that both sides should strive for healthy and stable development of relations based on consensuses between the two leaders. Xi said he also attached importance to a good relationship with Trump and he was looking forward to meeting with Trump again at the G20. He also said that he and Trump are committed to healthy and stable China-US relations and expansion of economic and trade cooperation and should translate this commitment into reality.

For some time, there have been trade disagreements between the two sides and, as a consequence, industries in both countries and global trade have suffered, which is what China does not want to see, Xi continued.

On the CIIE, Xi said the expo was a demonstration of China’s positive attitude and willingness to increase imports and he was happy to see so many American companies involved.

On trade tensions, Xi said there were successful precedents on both sides in resolving difficult issues through coordination and cooperation. He suggested that the economic teams from both sides strengthen consultation.

China does not want to fight a trade war. Win-win cooperation is the best way out.