If United States President Donald Trump and Chinese President Xi Jinping are headed for a grand bargain over their bilateral trade dispute, there was little sign of it on the first day of the G20 Summit in Osaka, Japan on Friday.
When the working lunch on “Growth, Investment and Trade” was held behind closed doors, the short briefing that an unnamed White House official gave to reporters suggested that the two sides remain far apart.
“The tone was largely positive from the various world leaders, [and] China was less positive,” the official said. “Just a more negative tone [from China].”
Trump and Xi are expected to meet on the sidelines of the summit on Saturday in what is likely to be the most keenly watched bilateral session of the two-day event.
“At a minimum, it will be productive,” Trump said of the meeting with Xi.
“We’ll see what happens tomorrow. It’ll be a very exciting day, I’m sure. It’s going to come out hopefully well for both countries,” Trump said.
The stakes are high. Trump more than doubled import tariffs on $200bn worth of Chinese goods to 25 percent in May. He has also threatened to impose tariffs on another $325bn of goods, covering nearly all the remaining Chinese imports into the US, including consumer products such as mobile phones, computers and clothing.
Beijing retaliated with increased tariffs on $60bn worth of US goods, and state media have raised the possibility that China could start holding back exports of so-called rare earth elements, which are crucial for a variety of electronic components.
Slowing world economy
Economists, including International Monetary Fund (IMF) Managing Director Christine Lagarde, have warned that global economic growth could suffer if the trade war is not resolved soon. Earlier this month, the IMF said current and threatened US-China tariffs could cut 2020 global gross domestic product (GDP) by 0.5 percent, or about $455bn – a loss larger than G20 member South Africa’s annual economic output.
Recent manufacturing data from China suggests the world’s second-biggest economy may already be slowing down.
The G20 is an international leaders’ forum consisting of 19 countries and the European Union. Collectively, this grouping represents more than 80 percent of the world’s economic output and two-thirds of its people. Its primary aim is to promote international financial stability.
Another thorn in the side of the US-China relationship is technology. The US wants China to stop forcing foreign companies to transfer technology in key areas such as artificial intelligence and telecommunications. It also wants it to curb subsidies to state-owned firms and grant foreign companies better access to Chinese markets.