China-US trade deal coming soon, Huawei’s Meng to be released in weeks, Communist Party insider predicts
- Beijing will take steps to reduce trade imbalance but won’t bow to pressure to make major economic reforms, adviser Xie Maosong says
- Trade war means relations between two countries will never be the same again, according to the Communist Party adviser
Tensions between China and the United States will ease in the next few months as the two sides reach consensus on a series of trade issues, while Huawei executive Meng Wanzhou could be released as early as April, according to a senior adviser to the Communist Party.
But whatever the outcome, ties between the two countries would never be the same again, said Xie Maosong, assistant to the secretary general of the China Institute for Innovation and Development Strategy, a Beijing-based think tank.
Xie offered the assessment at the South China Morning Post’s annual China Conference, where various analysts predicted that China-US relations would be volatile and competitive in the long term – although businesses were finding ways to weather the storm.
Speakers also addressed the Greater Bay Area plan released on the weekend, highlighting Hong Kong’s uniqueness and the contribution that greater connectivity and pilot programmes in the area could benefit national growth.
In the opening remark, Chief Executive of Hong Kong SAR, Carrie Lam Cheng Yuet-ngor, said president Xi Jinping has highlighted the importance of Hong Kong’s role in China’s success story during their last meeting.
“Hong Kong is proud of the contribution to the country and our own progress in the past 40 years,” she said.
Xie, an adjunct professor at the Central Party School, which trains senior party cadres, said he expected Beijing and Washington to hold further trade talks within the next three months based on agreements reached in Washington this week.
Xie also said he was optimistic Meng would be released in the coming weeks.
“My personal assessment is that there should be some sort of deal in March and Meng Wanzhou will likely be released in April or May,” he said.
Speaking on the sidelines of the conference, Xie said that he was confident of such a result because of the countermeasures China had taken – specifically the detention of two Canadian citizens accused of endangering state security – to put pressure on Canada.
Meng, the 46-year-old daughter of Huawei’s founder, was detained on December 1 in Canada at the request of the US and is on bail in Vancouver.
In January, US law enforcement officials announced 23 criminal charges against Huawei and Meng – including money laundering, fraud, conspiracy and intellectual property theft.
Xie’s comments came as China’s Vice-Premier Liu He arrived in the United States for top-level trade talks on Thursday and Friday with a team led by US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer.
Liu, a special envoy to Chinese President Xi Jinping, will be discussing a possible memorandum of understanding to suspend the trade war between the two countries. Xie said he was confident the two sides would be able to resolve some of their differences but that it would not be all plain sailing.
“The US won’t remove all of its tariffs as it wants to leave some room for negotiation,” he said.
“There is likely to be another round of talks, and by June most of the tariffs on the US$250 billion worth of Chinese products will be lifted.”
Xie said that while China was willing to make concessions on trade – because of its huge trade surplus – it would be less flexible on structural changes.
“That is China’s bottom line,” he said. “The US will get some benefits in trade terms, but it will have to concede on the issue of economic structure.”
He said it was also important for China to “gain buffer time” for its economic growth.
US President Donald Trump was also likely to want to reach a deal by June to aid his re-election campaign later in the year, Xie said.
“Trump will say that it was because of him that the China-US trade problems were resolved.”
Xie said he also expected the US economy to enter a “recession cycle” this year after a decade of high growth and that the stock market rout late last year was a precursor to the downturn.
He said China should reconsider whether it should help the United States by buying US Treasuries as it did during the 2008 financial crisis.
“At that time then US treasury secretary Henry Paulson asked China to help buy US Treasury and mortgage-backed bonds. China’s vast market also saved US companies like General Electric and Apple, and that is why there was 10 years of prosperity in the American economy and stock market,” Xie said. “Is the US grateful for that?”
While its trade war with the US had exposed many problems in China, it also gave impetus for deeper reforms over the next 10 or 20 years, he said.
It also meant the relationship between the two countries had been irrevocably altered, he said.
Long-term competition was inevitable and cooperation would be limited, especially if the US was unwilling to relinquish some of its global dominance.
“China’s rise is a nightmare for the US,” Xie said. “It’s a nightmare not because China will become an unpredictable or uncertain factor as the US has claimed, but because the US will lose the hegemony it has enjoyed unreasonably in many areas.
“That is why it’s difficult to be optimistic about China-US relations.
“If the US wants to maintain the superpower status [it has enjoyed] since the second world war, there will be no win-win between the US and any other country.”
China-US relations had “been transformed” and “the US would use many ways to contain China”, he said.
Despite the scale of its conflict with the US, Beijing’s main concern was domestic, Xie said.
“If China can’t achieve high economic growth over the next 10 years it will face many problems, so it can’t let that happen.”
That is why the next 15-20 years will be very important, he said.
“China won’t be in direct competition with the US, but it also won’t back down. It will find a middle path,” he said.
