Summary: I have strong memories of Voice of America from my days living in West Berlin in 1968 when VOA played an important role in getting the US message through the Iron Curtain. So, when they called today with questions, I gave them a quick answer, which you can see below.
VOA Question 1: What are the fundamental reasons that cause the current stalemate/escalation of US-China trade talk?
JR Answer: There are reasons on both sides why the agreement that was almost signed failed to be signed. I have met privately with and advised the US team. I was surprised how little experience or knowledge our team had regarding China, its history, culture, economy, and politics. Their approach is strictly controlled by President Trump. Competing groups of advisors vie for Pres. Trump’s ear. One group, led by Mnuchin, Ross, and Kudlow, is focused on a trade solution and market access; they could achieve an agreement if allowed to do so. The other group, led by Navarro, is focused on limiting China’s global influence overall; they were the drivers for the currency manipulation charge.
Finally, the American public is largely uneducated about China. This makes it easy for political leaders from both parties to score points with voters by being anti-China. Because of this, the trade war is going to continue to be an issue through the next election.
On the China side, Xi Jinping is under pressure from other leaders, especially the group led by Zhang Zemin, to present a strong front in negotiating with the US and not be seen as kowtowing to the US. I advised the US team that a solution must allow Xi Jinping to present it as a victory inside China. Any agreement must be consistent with China’s sovereignty and growing influence in the global economy.
VOA Question 2: Is there still opportunity for US and China to ease off the situation? Which side is more likely to back off first? What are the motivations?
JR Answer: I don’t think that an agreement will be reached until after the next election.
An agreement must reflect the following. It must not encroach on China’s sovereignty in respect to verification of agreed changes. It must not force China to change it’s fundamental strategy of moving from low-margin assembly work to high-tech products. That makes Huawei center stage in any possible agreement.
JR
