Written by Frank Li
The G20 Osaka summit will be held on June 28-29, during which the most important event will be the Trump-Xi meeting: deal or no deal to end the trade war between the two largest economies in the world?
Here is my guess: there will be no deal per se, but a realistic framework to further the negotiation, with China having an upper hand for the first time. A final deal will be reached in the coming months, which will reassemble more to China’s position than to America’s.
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To come up with this intelligent guess, I had to read extensively on both sides, the U.S. and China, with my own analysis. Hear me out …
1. What is China’s position?
China’s position, which has remained basically unchanged over time, is as follows:
- Once the trade deal is done, all the “new” tariffs must be cancelled, because they were initiated by the U.S. as the “bargain chips” in trade talks.
- China has increasingly committed to buying more from the U.S.
- There must not be any degrading and detrimental languages in the agreement, such as IP theft, which has been totally over-rated by the U.S. side. For example, is it possible for a company like Huawei to become the world leader in 5G without significant innovation at home?
Note: Although the U.S. is by far the biggest exporter for China (~19%), its share has been steadily decreasing over the past decade, largely because China has been selling more and more to the rest of the world. For more, read: China’s Top Trading Partners.
Bottom line: Nothing the U.S. has done, or can possibly do in the future, is a matter of life-or-death for China – China is strong enough to withstand Trump’s bullying!
2. What is America’s position?
America’s position, which has radically changed over time, depending on who (i.e. a moderate or a hawk) was driving and/or the President’s mood at a particular point of time, has finally become so bullying and absurd that it demanded structural changes in China, as if the CPC (Communist Party of China) must remove “Communist” from its name!
To illustrate how absurd it is, here is an analogy: China demands that the U.S. stop practicing capitalism at home!
3. Trump’s two big shenanigans on Xi
- During the first Trump-Xi summit at Mar a Lago in 2017, President Trump ordered a missile strike on Syria and bragged about it. It was hugely consequential, negatively, to the trade talks between two countries. For more, read: Dinner-time missile strike leaves China having to reassess Trump.
- During the Trump-Xi meeting in Argentina in 2018, Canada did a bidding for the U.S. by arresting Huawei’s CFO (Huawei CFO Meng Wanzhou arrested in Canada, faces extradition to United States), which turned out to be an American weapon used in its trade talks with China (Trump says he could intervene in the case against Huawei CFO if it helps US-China deal)! This one was so serious that China realized that America was no longer in trade walks, but foolishly seeking a possible regime change in China!
The trade talk was practically over after the second shenanigan!
However, to continue to win the sympathy from the rest of the world, China kept playing the game of fool-on-fool, while American representatives kept demanding more and more, taking China’s no-vocal objection as consent – President Trump was impressed, but the Chinese were “LMAO” (Laughing My Ass Off) among themselves …
4. Who walked away from the last talk?
China, actually, with a gentle smile, as always!
No, not the U.S., as President Trump claimed!
Do not you already know that President Trump lies all the time? For more, read: President Trump Is a Contagious Liar!
5. Who wanted to talk in Japan?
President Trump, desperately!
One prominent example: Trump Says He’ll Raise China Tariffs If Xi Won’t Meet at G-20.
What does it really mean? After China indicated that there was nothing to talk about, President Trump publicly doubled down, again, with his staff working hard behind the scene to make the meeting happen …
6. Why has Xi agreed to meet Trump in Japan?
Chinese diplomacy!
President Xi, always gracious outwardly, has agreed to the meeting, knowing that he now has an upper hand for the first time. Two main reasons:
- President Trump is obviously desperate, with no more real tricks left in his bag. For example, the next round of tariffs will directly hurt American consumers, big time (CEOs Are Hedging Against the Chaos of a Full-On Trade War)!
- Time is on China’s side – The more the trade talk is dragged toward the 2020 election, the weaker President Trump’s negotiation position will be. For more, read: President Trump: Getting Re-elected Ad Nauseam?
Bottom line: They will meet in Japan, with an outcome more predictable than ever: China will ultimately win the trade war, while President Trump will somehow claim at home to be victorious, to his base, at least.
7. Discussion
Here are three key differences between the U.S. and China:
- The Chinese think ahead, several decades at least, while Americans can hardly think beyond the next election. For more, read: America: It’s Democracy, Stupid!
- China’s system (i.e. capitalism + autocracy) is actually slightly better than America’s (capitalism + democracy). For more, read: The U.S. vs. China: A Great Experiment vs. A Great Civilization!
- Chinese leaders are far more competent than American leaders. For more, read: Governance in America.
Now, let’s focus on President Trump:
- President Trump is a 1-trick pony!
- The trick does not work well outside of America!
Let me elaborate on each …
7.1 President Trump is a 1-trick pony!
The image below is worth more than 1,000 words.
Generally speaking, it is a simple and good strategy when it works. Unfortunately for Donald Trump, it has not worked at all outside of America (e.g. North Korea, Venezuela, Iran, and China).
7.2 The trick does not work well outside of America!
Two main reasons:
- The American Presidency is not an entry-level position for public service. For more, read: Trump vs. Putin and Xi.
- Our political system is deeply flawed, with “getting re-elected ad nauseam” being the worst problem.
For more, read: China Is Paying for the Tariffs like Mexico Is Paying for the Wall!
8. More discussion
Three big subjects:
- America is deeply in trouble.
- China is back.
- Saving America, Chinese Style!
Let me elaborate on each …
8.1 America is deeply in trouble
America is deeply in trouble. “We the People” simply do not know what to do, other than periodically casting our vote of “no confidence” to elect someone, anyone, very different to be the President – First Barack Obama, then Donald Trump. Unfortunately, neither has worked out.
8.2 China is back
China is arguably the greatest country in human history. Two facts:
- China has the longest continuous civilization in human history.
- Throughout human history, great civilizations have come and gone, with one major exception: China – come, almost gone, and come again.
For the significance of China’s comeback, read: History 2.0.
8.3 Saving America, Chinese Style!
As a Chinese-American, I am caught between a rock and a hard place. On one hand, I wish China, my native country, well – She suffered severely over the past 200 years. On the other hand, I wish America, my adopted country, well – She must stop her precipitous decline, if she ever hopes to restore her status as the shining city upon the hill. Most importantly, there must be no war, a trade war or otherwise, between the two largest economies in the world!
America, reform our failing political system, as I have suggested (American Democracy – Why is it failing & how to fix it?), or become a fiddle, second to China!
9. Closing
Out of the scheduled Trump-Xi meeting in Japan, there will be no deal per se, but a realistic framework to further the negotiation, with China having an upper hand for the first time. A final deal will be reached in the coming months, which will reassemble more to China’s position than to America’s.
Now, please sit back and enjoy the long video below.
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