By William Reinsch

Well, the U.S.-China summit has come and gone without much more than a ripple in the news stream. True, it was overshadowed by the missiles launched against Syria and by Judge Gorsuch’s confirmation vote, but even without those crowding onto the news platform, it would have been hard to give it much ink, or many tweets.

This is partly because the administration has not put out much information about it. That may be because there is not a lot to say — you can’t have a fact sheet if there are no facts. But it is also possible journalists and commentators have been spoiled by the Obama administration, which rolled out voluminous documents at every opportunity. We expected a communique, fact sheet, FAQs, and so on, and it may turn out that this administration is simply not going to do that — ever. That’s actually fine with me — saves paper, if nothing else — but it does open the door to more speculation than would otherwise occur, driven in large part by the conviction of many people that if something had been accomplished we certainly would have seen a presidential tweet about it. That we did not suggests, simply put, that there was nothing to brag about.

However, while substance may have been lacking, process was not. The two sides agreed on a framework for high-level talks going forward. Instead of the previous S&ED structure, there will be four pieces: security and diplomacy, economics and trade, cybersecurity and law enforcement, and social/culture. It is not yet clear at what level all talks will be held, although it appears that the economics/trade track will be chaired on the U.S. side by Secretaries Mnuchin and Ross. In the past Treasury chaired the economic part of the S&ED talks, and Commerce co-chaired the JCCT, so it’s not clear that this represents much of a change for either department. It also implies the others will be chaired by cabinet members as well. There is no word yet on the Chinese counterparts.

 Subsequently, Secretary Ross told reporters the two sides agreed to work together to resolve a number of trade irritants, and that there is a 100-day action plan to do that with “way-stations of accomplishment” along the way.  Sean Spicer later indicated that the plan was under development. 

It appears from various statements made that the administration’s goal in the 100 days is to find ways to reduce the bilateral trade deficit. Most economists will say that is the wrong goal, and the business community will try to square the circle by arguing that the way to do that is to tackle the discrimination and limited market access they have long encountered in China. Others will argue for restricting Chinese imports. Both may do some good at the margin but are not central to the larger macroeconomic forces that influence the deficit, and thus they are a distraction from pressing the Chinese to undertake the internal economic reforms needed to boost domestic economic growth, rationalize inefficient plants, eliminate state-owned enterprises, and move away from export-led growth. Those changes, of course, would come at considerable political (and probably personal economic) cost to the party leadership, which explains why they haven’t happened. 

As a result, there is a real chance we will spend the next 100 days talking about the wrong things, in the process demanding from the Chinese concessions they are not prepared to make and ultimately putting the Trump administration in the position of either taking more aggressive trade action or settling for much less (and, of course, declaring it a great victory).

So, if that’s the way it is going to play out, who won the first round? The answer: nobody.

Trump looked presidential and made no obvious gaffes. The downside was apparently no substantive accomplishments, only a process for further talks, but that was obscured by the Syria news. For Xi, the benefits were appearing as an equal on the stage with the American president, no obvious gaffes, not having to talk publicly about human rights, North Korea or anything else messy, and, for back home consumption, he made no concessions on anything, demonstrating his ability to stand up to the Americans and reinforcing his image of strength.

Bottom line: it may not be much at this point, but by setting the stage for an actual negotiation, Trump accomplished his initial objective. Xi, in turn, came away with stature and trade deficit intact, effectively kicking the can at least 100 days down the road. Both parties live to fight again, so stay tuned.

_____
William Reinsch is a Distinguished Fellow with the Stimson Center, where he works principally with the Center’s Trade21 initiative. 

Photo credit: John Sonderman via Flickr