Sierens China: agreement with question mark

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The agreement in the trade dispute is no more than a Declaration of intent. Trump celebrates every small step as a success. Because home the skins to swim for him, writes Frank Sieren.

While Donald Trump on the results of the trade talks with China in superlatives reveled, the IMF lowered on Tuesday its global growth forecasts for 2019 to three per cent – as low as last during the financial crisis of 2008/2009. The IMF is of Trumps self-praise is not wrapping. The American President called the 13. American-Chinese trade talks round the “largest and greatest Deal in the history of our great Patriotic Farmer.” “Thank You, China!” Beijing is more cautious. There one speaks of “constructive discussions”, and “substantial progress”. And self-Trump, it is clear that since there is more to come. He called the agreement the “Phase 1”.

It is actually an agreement, which can only be provisionally called. Accordingly, Washington will be the planned increase in the tariffs of 25 to 30 per cent in the volume of $ 250 billion, and China, in return for U.S. agricultural products to the value of 40 to 50 billion dollars shopping. Trump speculates on Twitter already self-assured, whether or not “the American Farmer can produce as much as the Chinese want to lose weight”. The Overemphasis of American farmers, clearly shows where the Trump is currently the Shoe pinches: His voters in agriculture are dissatisfied. In the process, Trump had emphasized, as well as his trade representative Robert Lighthizer before the talks that a part of the agreement is in your best interests. They wanted a comprehensive agreement. But “comprehensive” is not so fast.

“Phase one” is still not completed

In the case of issues such as the protection of intellectual property, market access for U.S. financial service providers in China and the alleged Chinese currency manipulation was also on, so Trump. Details and specific Commitments, he could not have, however. Also in the case of sensitive issues, there was apparently no substantial progress, what is it about the U.S. denounced, financial support for Chinese state-owned companies. Beijing wants to of course, not from Trump to dictate how it supports its industry, especially as it issues also, such as, for example, in the aircraft industry to high-tech, the China international competitiveness.

As long as nothing is signed, is already open. This will only happen in mid-November on the sidelines of the Asia-Pacific economic summit of the APEC in Chile. Beijing has already said, we still have to hold further discussions before Trumps can be completed in so-called “Phase one”.

The balance of trade deficit is not in sight

The exchanges started with a Plus in the new trading week. For companies, the declarations of intent are, however, too little to start breathing again and invest again. Furthermore, the trade war will brake the global economy. Not only in China but also in Europe. Starting next Friday Trump punitive tariffs on EU wants to impose on imports. China, however, it is harder. In September, China’s exports to the USA broke through the existing duties in comparison to the previous year, to 21.9 percent. Imports fell by 15.2 percent. The global exports of China have fallen compared to September 2018, however, only 3.2 percent were 218.1 billion dollars, and imports by 8.5 percent to 178,5 billion. Both of these values are not dramatic. It is important to: China buys less than it is sold. A trade deficit is not in sight. However, the growth rate of China to 2019 drops to 6.1 percent from 6.6 percent in 2018.

DW-columnist Frank Sieren

In the meantime, the economy is strong enough, in particular the domestic economy, on the Beijing to be growth more and more. Prime Minister Li Keqiang stated on Monday that he would use anti-cyclical instruments to support economic growth. The industrial modernization may be take by the conflict with the United States now longer and more expensive, stop you can. On the contrary, The trade conflict has made Beijing realize that China will catch up faster and be independent of the United States must make.

Trump needs to deliver for the next election

That Trump celebrates the during the last trade talks, harvested “the low-hanging fruit” exuberant, is not surprising. He must provide for the election of 2020. The IMF predicts that it will reduce US economic growth, after a robust period in the election year 2020 to 2.1 percent. Xi can afford to be so rather to play for time as Trump.

One thing is clear: Regardless of whether or not Trump will be voted out of office or before the next election a comprehensive Deal gets – the two largest economies in the world will decouple from each other. The mistrust of China is anchored across party lines with Republicans and Democrats almost equally. Because China is the biggest Challenger to the United States.

Export controls, sanctions, and restrictions on Chinese investment remain instruments in dealing with Beijing. In the case of the technology shown already clear. In contrast to Germany, where Huawei was allowed to participate in the 5G network expansion, not to Washington. Also leading AI companies such as sense time and Megvii have recently been set with reference to the Monitoring in the Muslim Western province of Xinjiang to a black list. And Washington is pushing domestic Tech companies to move their plants from China to other countries, such as Vietnam or India. The harm the US more than China. The 5G Standard is in this price-performance ratio only by Huawei to. More and more Chinese Tech companies internationally so successful, such as Huawei, is heating up the anti-Chinese sentiment in the United States are more likely.

Our columnist Frank Sieren has lived for over twenty years in Beijing.