CHINA Trump has positive first meeting with Xi Jinping on trade deficit and North Korea, but achieving solid progress will be more difficult


Trump has positive first meeting with Xi Jinping on trade deficit and North Korea, but achieving solid progress will be more difficult

Chinese President Xi Jinping on 6-7 April made his first visit to the US since the inauguration of President Trump in January. This informal summit between the two presidents is likely to shape future US-China relations in a number of ways, though the visit was overshadowed by Trump’s decision to launch air strikes on 6 April on an airfield in Syria in response to the recent use of chemical weapons in that country.

The tone of the discussions was friendly and constructive. The fact that the meeting took place before Trump's team is fully in place is also a positive sign, given that Trump had been highly critical of China on the campaign trail. The meetings also suggest a willingness on both sides to manage issues through dialogue, though a positive tone does not mean a shared view on a strategic way forward. The two leaders however agreed to restructure the Strategic and Economic Dialogue into a “US-China Comprehensive Dialogue” with four pillars: diplomatic and security, economic, law enforcement and cybersecurity, and social and cultural (people-to-people).

The lack of a clear US strategy towards China does not seem to have prevented Trump from putting pressure on Beijing on issues which he considers important. The trade deficit and North Korea appear to be Trump’s main priorities with respect to China. Ahead of the visit, Trump had tweeted that the meeting would be “a very difficult one” on trade (Chinese exports to the US are about three times its imports from the US, though this partly reflects China’s position in transnational value chains). He also criticized China for not doing enough to rein in North Korea’s nuclear programme.

On trade, the two presidents agreed a 100-day schedule for discussions to reduce the US’s trade deficit with China, a tighter timeline than has been agreed in previous high-level discussions. Subsequent reports suggest that China might liberalise imports of US beef, relax ownership restrictions in the financial services sector, or purchase more oil and natural gas from the US, though any related impact on the trade balance would be gradual. Trump also subsequently told a US newspaper that China was not a currency manipulator, publicly reversing a key campaign position.

On North Korea, Trump’s rhetoric has increased pressure on Xi, including through his comments that the US would solve the problem unilaterally if China could not. Followed by the rapid shift in policy on Syria, this creates a greater element of uncertainty for Beijing over whether the US might launch strikes against North Korea (a US carrier strike group was deployed near the Korean peninsula, though the risks of military action would be high, given South Korea’s vulnerability to any retaliation from the North). Xi spoke to Trump again to reaffirm that he wanted a peaceful resolution on 12 April; Trump had tweeted the previous day that a trade deal would be “far better” if China resolved the North Korea problem.

However Beijing has limited options for containing North Korea. China assesses that cutting economic ties completely will risk provoking retaliation from Pyongyang, and so far sanctions have only hardened Kim Jong-un’s determination to develop a nuclear capability. The China-North Korea relationship is also in a bad state, with limited channels of communication, and minimal high-level contacts since Kim took over from his father in 2012. In addition, Beijing will be unwilling to turn its back on Pyongyang, given the countries’ historical relationship, and North Korea’s role as a buffer between China and US forces in South Korea. Assertive diplomacy against Seoul following the decision to deploy the Terminal High Altitude Area Defense (THAAD) missile system has also damaged relations between China and South Korea (see our last Report), though Chinese rhetoric on the issue has since softened. Following his meeting with Xi, Trump acknowledged Beijing’s relatively limited leverage over North Korea, which suggests a greater potential to co-ordinate their approaches to Pyongyang.

In spite of the cordial Xi-Trump meeting, and some initial positive signs from Trump, the Chinese leadership will continue to find dealing with the US challenging. Even in the area of global economic governance – where it looked as through the lack of leadership from the US could offer more space for Chinese influence – the Chinese approach will remain cautious, and the leadership does not want to increase tensions with the US. In other areas, there has been less focus from the Trump administration, such as in the South China Sea, where it is unclear whether the US will continue freedom of navigation operations. There have been some reports of Chinese surveying activity at a land feature in the Philippines' maritime economic zone, though subsequent indications suggest that overall the two countries are continuing to manage relations amicably. Tensions over the area, which were not addressed in the Trump-Xi meeting, also therefore have

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