With some family gatherings, the best you can hope for is that no one gets drunk and starts a fistfight. Expectations when President Trump and China’s leader, Xi Jinping, met on Thursday and Friday were similarly low — and they were met.
Mr. Trump had some warm words about the duo’s “fantastic future” and how the Chinese would buy American goods, but the meeting ended without clear progress toward resolving the two sides’ trade disagreements. The result was like a host saying brightly, “It’s so nice when you all get along,” as his relatives sullenly slink away.
Since family feuds and trade discussions are almost always disappointing, one should ask: Could we have done better?
We think so. In our dream scenario, Mr. Trump would accept that his government could help to redress global economic imbalances by borrowing less. For its part, the Chinese government would strip away the incentives it provides that lead its companies to overproduce, while encouraging its citizens to spend and import more. The United States and China would agree that mutual dependence makes them both safer — and then exchange hugs.
For this to happen, however, Mr. Trump and Mr. Xi would need personality transplants. So more realistically, any future deal must reckon with three facts: First, the Chinese government is no more willing to transform its subsidy-soaked economic model than the U.S. government is keen to make veganism the national diet; second, both the U.S. and China have considerable leverage in any negotiation; and third, the bilateral U.S.-China trade relationship involves the rest of the world, too.
Trust between the two sides is going to remain low. A recent report commissioned by the U.S. Chamber of Commerce described how China was doubling down on entrenching its dominant position in global supply chains. After years of frustration on the part of U.S. negotiators, there’s no point in promising a level playing field through shared rules of engagement, only for Chinese bureaucrats to tilt it again behind closed doors. And if you think Mr. Trump is a man of his word, then I have a cryptocurrency to sell you.
