MNI: China Advisors See Incremental Progress From Trump-Xi

Chinese policy advisors have limited expectations for the potential visit by U.S. President Donald Trump to Beijing next week, seeing a low likelihood of a comprehensive deal on thorny topics including Taiwan and trade, though they told MNI that more far-reaching agreements could be possible during the course of the year given multiple opportunities for further meetings.

China is seeking progress on three "T"s — Taiwan, tariffs and tech, said Zhao Hai, director of International Political Studies at National Institute for Global Strategy, contrasting this with the U.S. objective of securing further sales of Boeing, beef and soybeans.

While the Iran war will be a central topic when Trump meets President Xi Jinping, it has also been widely reported that the Chinese leader is likely to press once again for the U.S. to change its posture on Taiwan, from indicating a lack of support for the island’s independence to stating opposition to such a move.

However Zhao said China is realistic about the likelihood of any major concession on Taiwan, particularly given the hawkish tilt of many Trump administration officials, and so in the short term, Beijing is focusing on persuading Washington to cancel or postpone large-scale arms sales to Taipei. An optimistic scenario for China might be for the two leaders to agree a joint statement on the Taiwan issue, he said.

Both sides have downplayed expectations ahead of the planned May 14-15 summit, though Trump, with his eyes on November’s mid-term elections, is likely to seek an extension of the effective diplomatic truce reached with Xi at last year’s talks in Busan, Zhao said. Next week’s meetings may only be the first of several between the two leaders this year, Zhao added, leaving scope for gradual advances towards more significant accords. (See MNI: China Buying Time For 'Competitive Coexistence'- Advisors)

PURCHASES

If the two countries eventually reach a broad understanding, it could include USD200 billion in Chinese purchases of American goods by the end of Trump’s term, according to Zhao, pointing in particular to the enormous demand for memory chips and semiconductors by China’s AI industry.

A key aim for Beijing is reducing the 8-10 percentage points in additional tariffs on Chinese goods versus imports into the U.S. from other countries, Zhao said. The Chinese are also likely to insist on their strong disagreement with the alleged use of forced labour as a justification for U.S. trade actions.

Incremental progress next week could include a framework for the suspension of new punitive tariffs, and agreement to establish working groups on trade and investment, and to expand Chinese purchases of agricultural products, aviation and energy, said Wang Peng, research fellow at the Institute of State Governance at Huazhong University of Science and Technology. China would hope for agreement on relaxing some visa restrictions, and on maintaining high-level communication on Taiwan and the Middle East, he said. (See MNI INTERVIEW: Trump-Xi Meeting Likely Limited In Scope)

Trump and Xi could also usher in a phased introduction of tighter controls of Chinese exports of chemicals used to make fentanyl, said Wang Dong, professor at the School of International Studies at Peking University. China could also offer more investment in the U.S. in areas such as new energy, electric vehicles, and biomedicine, but only on condition the U.S. commits to lowering tariffs, eases technology controls, and respects China’s core interests, he added.

TARIFFS

While U.S. Supreme court rulings have weakened Trump's ability to raise tariffs as he sees fit, they will not end U.S. trade pressure on China, said Wang Peng, who anticipates more carefully crafted and industry-specific measures from Washington. Potential targets include steel, aluminium, cars, semiconductors, shipbuilding, clean energy and critical minerals, he said, adding that the best outcome from this visit for China would be a promise not to impose new barriers, together with reductions in some existing tariff rates and the introduction of a dispute management mechanism.

With Iranian Foreign Minister Abbas Araghchi holding talks in Beijing this week, China will also push the U.S. to advance towards a comprehensive cessation of hostilities and negotiations to restore safe passage through the Strait of Hormuz, advisors said.