Xi Jinping's defiance against Donald Trump paid off for China: Report
The US and China announced their decision to lower tariffs on each other's products for a period of 90 days, proving that Xi Jinping's firm stance against Donald Trump turned out to be beneficial for the former's country. Following two days of high-level talks in Switzerland's Geneva, a joint statement said that the combined US levies of 145 per cent on most Chinese imports will be reduced by 30 per cent while China's duties on American goods will drop to 10 per cent.
During the discussions, the United States ended up meeting all of China's core demands. The elevated "reciprocal" tariff, which Trump set up for China at 34 per cent on April 2, has been suspended, leaving Beijing with the same 10 per cent levy that applies to the UK, reported Bloomberg.
The deal provided some much-needed relief for American markets as well as for Trump as the dollar and stocks went soaring, while Chinese equities also saw an uptick.
At the talks in Geneva, the two sides agreed to take "aggressive actions" to curb the flow of fentanyl, which could subsequently result in the elimination of the extra 20 per cent tariff.
Chinese President Xi Jinping maintained his stance against the US despite Trump raising their tariffs to the highest level in any country. He refused to get on a call with Trump in contrast to other world leaders and stood his ground.
Beijing reportedly instead opted to cut key interest rates and other measures to protect China's economy, while also sending out diplomats around the world to lock in fresh markets for Chinese products and slam America's "bullying".
While economic difficulties did indeed strike China amid the rising US tariffs, nationalist spirit back home encouraged Xi to not give in to American coercion. Trump, on the other hand, faced immense pressure from market players and business lobbies.
Trey McArver, co-founder of research firm Trivium China, said, "This is arguably the best outcome that China could have hoped for; the US backed down."
"Going forward, this will make the Chinese side confident that they have leverage over the US in any negotiations," McArver was quoted as saying by Bloomberg.
Meanwhile, Gerard DiPippo, associate director of the RAND China Research Centre, said the lesson out of this trade talk is that "economic power matters".
"For Beijing, it's a strategic vindication, and one that makes Xi's focus on manufacturing and self-reliance harder to argue against, at least from an economic security perspective," DiPippo added.
The Trump administration's retreat from sky-high tariffs wouldn't have occurred if China hadn't responded so forcefully, not only with retaliatory duties but also export controls and other steps, according to Scott Kennedy, a China expert at the Washington-based Center for Strategic and International Studies.
'This will strengthen Xi's political standing at home and his diplomatic standing internationally,' Kennedy said. 'He's the big winner from this round of the conflict.'
On Monday, the US President said that he could speak to Xi as soon as the end of this week, touting a "total reset" in Washington's relations with China. However, he said that the trade deal does not include the sectoral tariffs on cars, steel, aluminium, and possibly pharmaceuticals.
At a briefing, Trump said that the "relationship is very good" with China, adding that America is not looking to hurt Beijing. "China was being hurt badly. They were closing up factories. They were having a lot of unrest, and they were very happy to be able to do something with us," the US President added.
With the tariff war between the US and China on a halt for 90 days, Beijing now has a three-month time to strike a wider deal with Washington to rebalance trade and safeguard its own interests as well.
China's white paper on national security, as cited by the state-run Xinhua news agency, said that it is committed to the stable development of relations with the US. However, it added that imposing pressure and threats is not the right way to deal with China.
With Bloomberg inputs
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