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China 'under pressure' to resolve trade dispute with US

William Yang Interview
February 1, 2019

Both the US and China say they've made "tremendous" progress when it comes to resolving their trade disagreements. DW spoke to Chinese analyst He Jiangbing about the trade tensions and impact on the Chinese economy.

Präsident Donald Trump bei einem Treffen mit einer chinesischen Handelsdelegation
Image: Getty Images/M. Wilson

DW: How would you evaluate the outcome of this week's trade talks between the US and China?    

He Jiangbing: I think Beijing and Washington have managed to make tremendous progress during this week's trade negotiations. They decided on the way forward to resolve several of their major disagreements. All they need to do now is wait for the two countries' presidents to sign off on the deal.

Read more: US-China trade poker enters new round

Did China promise to comply with all of Washington's demands?

To meet Washington's demands, China is preparing to soon make changes to its laws. 

Regarding the issue of protecting intellectual property and foreign investment, China is planning to pass a foreign investment law during the session of the National People's Congress in March. The law will specifically ask local governments not to force foreign companies to transfer core technologies to their Chinese counterparts.

Additionally, China also plans to penalize IP theft in the near future. As for reducing trade deficits, Beijing has promised to import large amounts of soybeans from the US, and the White House has also emphasized that this demand will be strictly enforced.

Trump said that if all goes well in the trade talks, he will meet with Chinese President Xi Jinping. What's your take on this?

Trump wants to hold off on signing the final deal with China because he is waiting to see the outcome of his summit with North Korean leader Kim Jong Un later this month. This strategy reflects his concern about China's potential role in meddling with the Trump-Kim summit.

Trump is now waiting to see how China would influence North Korea before deciding on whether or not he should sign the final trade deal with Beijing.

China has just reported its slowest annual economic growth in almost three decades  so pressure is now on Beijing rather than on Washington.

If the Trump-Kim summit doesn't go well, Trump might not sign the final trade deal with China. Instead, Washington could raise the tariffs on imports from China to 25 percent.

But once a final deal is signed, I don't think the US will raise the tariffs to 25 percent. Still, the original 10 percent tariff would likely remain in place. Trump wouldn't abruptly raise the tariffs to 25 percent because such a move could potentially also damage the US economy.

Read more: China sneezes, but will Germany catch a cold?

How are the trade tensions impacting the Chinese economy?

I have heard about factories in Zhejiang, Jiangsu and Guangdong provinces suspending operations as they try to figure out the impact of the trade conflict on their businesses. Additionally, China's unemployment rate has usually hovered around 4.1 percent but the latest figure, released in January, stood at 4.9 percent.

It indicates that the real situation is much worse than that. If the US and China can't find a way to end the trade war, China's economy would start to fall apart.

He Jiangbing is an independent economic expert. He previously worked as the chief financial editor at The China Times, a business daily in the People's Republic of China.

The interview was conducted by William Yang.