The rounds of talks between two of the world’s biggest economies, US and China, has almost reached the last stage, but resolution to their year-long trade war is still not in scene.US has accused China of unfair trade practices including barriers against foreign companies to access its market and providing subsidies to favour Chinese companies.
Trump administration said that such a biased approach has resulted in the loss of hundreds of thousands of US jobs over the past two decades. To put pressure on Beijing, Washington levied tariffs on Chinese imports. Beijing responded by putting duties on virtually every product it buys from the US.The trade war between the two roughly amounts to $360 billion worth of each others goods. Unfortunately, it is hampering not only these two economies but also global investment and trade markets.
Now, there is a change in the tone of negotiations, especially after surge in the China’s economic growth in the first quarter as compared to the last year, with the hike in Gross Domestic Product (6.4%), factory output (8.5%), retail sales (8.7%) and investment (6.3%). It has definitely given Beijing a upper hand in trade talks with US.
Initially, US had a stronger position and was stern on its demands for China to roll back government subsidies for state-owned enterprises and improve corporate governance. China has always been extremely sensitive about it. Let’s see how the recent change in the Chinese economy effect the deal.
Many economist believe that trade conflict between the two, is just the face of their rivalry, whereas the underneath issue is the geopolitical competition in different sectors.
Well, if we observe closely, after adopting the tit for tat tariff policy, two are contending each other in the crucial technology sector. The recent Huawei case, makes the above statement stand true. The Chinese technology giant has been accused of espionage and violating sanctions imposed on Iran by the US government. US has banned its services in its agencies from using Huawei equipments. Top educational institutions of US have already ended deals with the Chinese firm in order to avoid losing funding from the centre.
It is believed that US would use the Prague summit, which would happen next month, to convince allies to adopt telecoms security approaches that would effectively mean barring Chinese companies.
It is hard to say if the two would be able to put an end to their economic cold war. But things do look optimistic on the face of it as both the nations have put a timeline to it. The negotiators from both US and China are aiming for sealing a deal by late May or early June, for which they have planned two rounds of face-to-face meetings.