Commentary: US, China postpone trade deal deadline but cannot avoid eventual day of reckoning


BEIJING: The US and China have opted for a convenient if short-term fix for their tough trade talks, pushing back the March 1 deadline in the absence of a deal.

Hitting the deadline without a mutually acceptable agreement would have led to unpleasant consequences for both sides.

Donald Trump tweeted on Sunday evening that he would delay bumping up to 25 per cent the tariffs on US$200 billion of Chinese goods, citing progress in negotiations and a plan to meet Xi Jinping at the US president’s Mar-a-Lago resort at an unspecified date.

READ: From Xi to Trump, solving the US-China trade war with a phonecall, a commentary


The extension suits both leaders. For Mr Trump, the ability to dial up or dial down pressure on China is useful, both politically at home and in Washington’s dealings with its biggest economic rival.

The US president also said his negotiators have made “substantial progress” on the structural issues that he has consistently demanded.

Yet few of the leaked concessions from the Chinese side indicate any progress on these deeper questions. Beijing has offered to buy set quantities of US goods and maintain currency stability, implying greater top-down control of its economy rather than a weakening of its iron handed approach.

Talks that have touched on specific issues, such as a dispute between semiconductor companies or how many tonnes of soyabeans China might buy, indicate little focus on basic principles that would frame two countries’ interactions far into the future.


Many in China and on Wall Street believe stock market woes have made Mr Trump desperate to declare a win and call it a day. But an exchange between the president and his trade representative, Robert Lighthizer, on Thursday, does not support that view.

In front of reporters and the visiting Chinese delegation led by Liu He, the country’s top trade official, Mr Trump argued that he wanted a “contract”. Mr Lighthizer insisted that a memorandum of understanding, which the two sides have been working on, would be binding.

READ: US policy in Asia heads from bad to worse, a commentary

Journalists who have witnessed any number of empty, face-saving MOUs get signed in China might be inclined to side with Mr Trump on this one.

“I think a memorandum of understanding is not a contract, to the extent that we want … the final contract is really the thing that means something,” he said. Sitting at Mr Lighthizer’s side, Mr Liu laughed.


For Mr Xi, the extension resolves an awkward predicament. It puts off an ugly reckoning just days before the March 5 session of the National People’s Congress. China’s legislature only meets once a year for ten days, during which delegates take turns saying how much they agree with the leadership.

Despite all the nodding and agreeing, however, delegates usually find a way to make it clear when they are not happy.

This year, many in the Chinese elite are worried about the country’s direction. Mr Xi’s team is eager to show that they are handling the trade tensions positively.

READ: Careful not to humiliate China in trade negotiations, a commentary

Moving the deadline means the White House has given up some immediate leverage. But it also avoids putting Mr Xi’s back to the wall, a situation that would almost certainly force an aggressive counter-move by China on some other front.

Both sides are happy to delay that reckoning.

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