MNI INTERVIEW: China To Seek Long-Term US Deal -Senior Advisor

The meeting between Chinese leader Xi Jinping and U.S. President Donald Trump in South Korea on Thursday will reset the two nations’ volatile relationship, and Beijing will seek a longer-term agreement to guarantee stable conditions for trade, potentially opening the way to broader cooperation on major geopolitical issues, a senior Chinese advisor told MNI.

The U.S. has reassessed China’s strength after several rounds of tit-for-tat confrontations, said Chen Wenling, former chief economist at high-level government-backed thinktank the China Center for International Economic Exchanges.

“Both sides will continue with further negotiations with a broader scope,” said Chen, “with Beijing likely placing greater emphasis on fundamental, institutional, and long-term arrangements.”

Following the Xi-Trump summit, Washington cut the 20% fentanyl-related tariffs to 10%, extended its suspension of 24% reciprocal tariffs for another year, and suspended a 50% entity ownership rule on export controls. In return, Beijing pushed back its latest rare earth export restrictions for a year and will increase purchases of U.S. farm products. The two countries also halted measures targeting each other’s maritime, logistics, and shipbuilding sectors.

Beijing is likely to pursue a commitment from the U.S. to keeping tariffs stable, in order to create a predictable trade environment, Chen said, adding that the world economy should return to a path of liberalisation and facilitation of trade and investment. “All the additional U.S. tariffs should be removed.”

The new phase of relations could also lead to geopolitical cooperation, Chen said.

“China and the U.S. should work together, under the Charter of the United Nations, to help resolve the Russia-Ukraine, and the Israeli-Palestinian conflicts, and to prevent new hot wars from breaking out elsewhere,” she said.

Cooperation is also possible in global governance of areas ranging from artificial intelligence, space law, global warming and wealth inequality, Chen said. Above all, the steady development of the world’s two largest economies is key to the global economy which has for months been roiled as Beijing and Washington have vacillated between escalation and negotiation, she added.

"Cooperation is in the long-term interests of both countries, and by demonstrating their responsibilities as major powers, China and the U.S. will provide a synergy that will have a greater positive impact on the world,” Chen said.

FIVE-YEAR PLAN

However, Chen noted that the Chinese Communist Party’s proposal for its 15th Five-Year Plan released this week gave full consideration to external risks over the next five years, referencing “more complex and intense great power rivalry” and identifying “building a modern industrial system” and “boosting technological self-reliance” as the nation’s top two tasks.

“This indicates China is committed to negotiations, but not placing all the hopes on negotiations alone,” she said, adding that the U.S. continues to view China as a systemic competitor and that it could try again to contain the country’s development in some areas, especially in high-tech. (See MNI: More China-US Tensions Likely Despite Progress-Advisors)

Chen expects Beijing to potentially set a GDP target of “around 5%” for the next five years, which she said would be achievable with effort, as meeting the country’s goal of doubling its per capita income from 2020 levels by 2035 would require annual growth of at least 4.73%.

The proposed plan places emphasis on “new quality productive forces,” especially new and disruptive technologies, to create new demand, while reforms aimed at boosting income and social welfare as well as increasing the supply of high-quality goods and services could boost consumer spending, according to Chen.