05:24 GMT +315 November 2018
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    FILE - In this Nov. 9, 2017 file photo, an American flag is flown next to the Chinese national emblem during a welcome ceremony for visiting U.S. President Donald Trump outside the Great Hall of the People in Beijing

    Prof on US-China Trade Prospects: At This Moment it Does Not Look Very Good

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    According to a Bloomberg report, the US is ready to impose tariffs against remaining Chinese imports as early as December if talks between the two nations fail. Radio Sputnik discussed the likelihood of a trade agreement between the US and China with Dr. James Wang - professor of Department of Economics and Finance at the University of Hong Kong.

    Dr. James Wang: Well, there was always the hope and really with Donald Trump, it’s really difficult to make predictions but at this moment it doesn’t look very good. The prospect of some kind of a… let’s use the word ‘ceasefire’ in this trade war is not looking very good.

    Sputnik: Why do you say that? Why do you have doubts, I mean Donald Trump himself said that he hopes that they’re gonna come out with a full-fledged deal or are there certain sticking points that, do you think that two sides cannot resolve?

    Dr. James Wang: I think it’s like this. The US has a list of acts as… one of is, you know, the chief advisors put it very cardinal. I think about the further on the list was pretty much what China could give in on and about the further on the list; items on the list could be negotiated. However, there are, the remaining one-third of roughly of the list of the Chinese would not really back off whatsoever under no condition. Given a configuration as you like, you know, the US side really is eyeing, in particular, on the list of items that the Chinese would not back down on and that’s the reason why I was pessimistic about the outcome.

    Sputnik: If Washington does, in fact, impose those, that final batch of tariffs what will it mean for both the United States and for China and who is going to win or lose from this in the short, middle and long-term?

    Dr. James Wang: Well, I think both sides will lose and, in particular, the US consumers for the first time thinking this, you know, two nations trade war will fill the brunt of the effect. The reason is, up to this point, items like Nike shoes and Apple iPhones, those were not on the list that were being sanctioned so far. And once you punish all, the whole spectrum of Chinese import for the US, and everything was on the table and in particular these are consumer items that the Trump administration has been very carefully trying to step aside, would be on the table. And then there is the issue of inflation, import in inflation, there is the issue of consumer impact.

    Sputnik: On the other hand, Trump is very convinced that he is gonna secure this ‘great deal’ with China and if we look at some of the deals that he’s been very hard on like NAFTA in renegotiating with Mexico for instance and with Canada. Many have said that, you know what, there is not that much that has really changed. I mean, he comes in very hard and say ‘we’re not gonna even have a deal with, we’re gonna dissolve NAFTA, we’re not gonna have a deal with Canada if they can’t change their mind’ but in the end the impact of the actual changes in the new deals has been assessed by many as negligible. Would you agree with this? And if that’s the case, perhaps, Donald Trump will be able to compromise on those points that you mentioned the Chinese wouldn’t compromise on?

    Dr. James Wang: Well, to be honest, there are many observers who held up hope early in the year that you know that this author of the ‘Art of the Deal’. Donald Trump really is a master in, you know, pass ring and ultimately he is going to be flexible enough. I think that group of observers are doing there in numbers because there are every indication that the adviser that he is facing trade with these days, you know, Navarro, Lighthizer, even Kudlow used to be a bit of a moderate economist. They’re coming out very strong. Even the Treasure Secretary used to be more amenable to compromise. I think the whole shebang of the economic team in the White House today are very much set on basically squeezing China further. So I think that Donald Trump is really not in a mood to compromise.

    Sputnik: Meanwhile we have trade ministers of 13 countries that met in Ottawa over the last week. They were planning to move forward on transparency, dispute settlement and developing 21st century trade rules. What are your assessments of the importance of that meeting and especially on the background of the China-US trades back?

    Dr. James Wang: Well, I think it’s becoming increasingly obvious to the rest of the world that the virtual rules and the whole postwar central trade system and financial system are under attack and that they themselves, I mean the system and those participants, need also to adapt. And I think people are trying to find a way to improve the system and to see if the US can be persuaded, perhaps, to remain, you know, key players under the architecture that they themselves, of course their predecessors of the Trump administration that contributed to the making of this very structure. So, in other words, there are people who wanted to see if the current system could survive under some kind of renovation.

    Sputnik: Now, as the trade row continues India is actually looking to pay a yuan for some Chinese imports in the near future. Do you expect other countries or other trading partners of China to also follow suit and how profitable is that for both sides?

    Dr. James Wang: It’s going to be important as you know that the Japanese Prime Minister just left Beijing after a three-day visit. And during his visit there was some renew of existing agreement, well not existing but the suspended agreement between the two governments regarding exchange of currencies in times of emergency. And what you’ve just pointed out is another facet of this phenomenon which is the RMB currency is gaining although, you know, slowly but starting from a very low pace that it is gaining popularity as a medium meaning of exchange, and with all of the Middle East, or with Central Asia and in this case a very interesting way with its big neighbor India. However, I should point out that at this stage the trade war in between these two very large economies both in the top ten obviously in the world are still not, you know, reaching its potential, though we’ll see.

    The views expressed in this article are those of the speaker, and do not necessarily reflect those of Sputnik.

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