The United States and China issued a joint statement on bilateral economic and trade consultations in Washington on 19 May 2018. At the direction of Chinese President Xi Jinping and United States President Donald J. Trump, the Chinese and U.S. delegations engaged in constructive consultations regarding trade on 17-18 May 2018. There was a consensus on taking effective measures to substantially reduce the U.S. trade deficit in goods with China. To meet the growing consumption needs of the Chinese people and the need for high-quality economic development, China will significantly increase purchase of U.S. goods and service. This will help support growth and employment in the United States. Both sides agreed on meaningful increases in the U.S. agricultural and energy exports. The United States will send a team to China to work out the details. The delegations also discussed expanding trade in manufactured goods and services. There was consensus on the need to create favorable conditions to increase trade in these areas. Both sides attach paramount importance to intellectual property protections, and agreed to strengthen cooperation. China will advance relevant amendments to its laws and regulations in this area, including the Patent Law. Both sides agreed to encourage two-way investment and strive to create a fair, level playing field for competition. Bothe sides agreed to continue to engage at high levels on these issues and to seek to resolve their economic and trade concerns in a proactive manner.
What are the implications in the outcome? Anbound scholars said that the information disclosed is not merely about the increase or decrease in trade deficit. The statement not only has a great influence on the Chinese market, it would also make a huge change to the world's market structure.
In terms of the contents in this joint statement, the talks this time are fruitful. On the whole, the United States has gotten a lot of things that they wanted. China made sincere concessions on substantive actions on slashing trade surplus with the U.S., opening-up, and protection of intellectual property. As for the possible concessions by the United States, the statement appears principally neutral. The trade talks can be briefly described to be the United States gaining more substantially, and this should be able to satisfy the Trump administration. Yet, this is not China's unilateral concession to the United States. The outcome of the talks may represent China's pre-setting goal: originally did intend to make concessions to the United States to avoid a costly trade war. This second round of U.S.-China trade negotiation have fulfilled China's goal.
Summarizing various information, China basically persisted on its bottom line in the talks. There were rumors that the United States had demanded China to reduce the US$200 billion deficit during the meeting in early May. Neverthless, those sayings were not presented this joint statement. If that case happened, China would reject such excessive demand. Domestically, the Chinese Ministry of Foreign Affairs had denied the request for a US$200 billion cut, which was a good echo to the Chinese delegation who meet with Washington. It let the United States know what's criticism in China to accept that request.
As a matter of fact, more complicated in US$200 billion cut. China's annual import is about US$2 trillion, part of which will be given to the United States. This is actually a way for the United States to "rob" the market from other countries. As for China, it may not have losses too many. The US$200 billion imports could be of advantage to China. If other countries follow footsteps like the United States and set obstacles ahead, China would "allocate" the imports to selected countries. For China, this is an important bargaining card for the exchange of interests in the U.S.-China negotiations.
According to Anbound's chief researcher Chan Kung, the U.S.-China trade negotiation and changes in global situation have revealed a problem more important and deeper than trade issues merely. The newest evolution of the world's pattern appears under the background of anti-globalization. The latest signs in China-U.S. trade negotiations prove Chan Kung's previous judgement "Trump wanted to pause in the U.S.-China trade disputes". There are more wonderful things waiting for the President to address, like a historic talk between the leaders of the United States and North Korea. The U.S.-China trade issue could bring troubles more than a reward, e.g. unfavorable to the midterm elections of the Congress, thereby influencing the domestic politics system of the United States.
In this way, the world's situation will head for the direction Anbound forward looking, which is the "1+3 " Paradigm. The essence is a rivalry between the blocs to uphold globalization and anti-globalization, and a confrontation between multilateralism and unilateralism. The United States stands for opposing globalization and pursuing unilateralism. China, Japan, and Germany are against that. President Trump is one who has disrupted the rules of the world. He disordered an old political and economic pattern combined with "strategic union+ economic allies + free-market values", resulting in the separation of politics, military, economics, and values. An unprecedented chaotic situation is ahead. Under this circumstances, China, Japan, and Germany could make an alliance relationship, based on their supports to globalization, free trade and realistic economic interests, and confront the United States, unilateralist and anti-globalization. This is an origin of the "1+3" paradigm that would help China with more room to speak in the world.
There is a reason to believe that "1+3" paradigm the is at the heart of the world's future. Information souced from varied channels is backing this judgement, China, Japan, and Germany closer and closer. Immediately after Premier Li Keqiang returned from his visit to Japan, German Chancellor Angela Merkel is coming to visit China. Whether this is accidental coincidence or strategic arrangement, not yet to be known. But in view of actual effects, the "1+3" paradigm is taking shape. Supposing China to make Japan and Germany as partners, it would significantly change the environment where China gets along wiht the world. At least, China would no longer be alone to face the West as a whole.
Final Analysis Conclusion:
The game of U.S.-China trade talks reveals an emerging "1+3" new global situation in the future. In a world where the international alliance, interests and values are reconstructed, the essence of "1+3" is to take use of multilateralism against unilateralism. China's future policies shall downplay ideology; instead, promote and utilize this new paradigm.
