Trump and Xi Need to Create a Stronger Framework for US-China Relations

By John Frisbie

Leaders of the world’s two most powerful economies will sit down together for the first time tomorrow. The list of topics to cover could be long. But this meeting is more about the relationship that will be established between President Donald J. Trump and his Chinese counterpart, Xi Jinping.

The US-China Business Council’s board of directors released last month a list of priorities that outline how both governments can strengthen our bilateral commercial relationship. A top recommendation is to establish an annual presidential summit as the anchor of results-oriented engagement throughout the year. This first, early meeting may be more about tone than substance, but Trump and Xi must find enough common ground to want to put the relationship on a better path.

Both presidents are going into the Mar-a-Lago meeting wary of the other. The US presidential campaign featured harsh rhetoric on trade and China. North Korea’s nuclear program is bringing security concerns to the fore. On the trade front, we hear more about retaliatory actions than finding a better way to get the results companies need.

The stakes are too high to play into protectionist fears. China is at least a $400 billion market for the American economy, the second largest overseas market after Canada. Oxford Economics estimates that trade with China supports 2.6 million American jobs. China contributes one-third of global growth every year now – more than the United States – so market access is a vital American economic interest.

The Trump administration must realize how our trade relationship with China benefits the US economy, even as it presents challenges. Trump must find a way to address the most pressing issues, such as market access and a level playing field, without blowing up the relationship through unilateral actions that may feel good initially but will quickly damage the US economy and kill jobs rather than create them. Viewing our trade relationship as zero sum harms American interests.

Xi, on the other hand, must realize that though the China market is important to the United States and American companies, China should not over play this card. China’s economic reforms are entering their fourth year, but the slow pace and mixed signals of reforms so far are leaving the American business community uncertain about policy direction and undermining confidence.

China is fond of saying that the commercial relationship is the ballast of the overall relationship. If so, this would be a good time to firm up support by taking actions to address longstanding issues of concern — creating the kind of results American companies are looking for, not just rhetoric.

It would be easy for the two presidents to dig in their heels, point the finger at the other, and let the relationship be defined by punitive actions. A better approach would be to identify positive steps to address the issues and create a stronger framework for an enduring relationship.

This first meeting will set the tone, but setting in motion the steps to achieve that longer term objective would be a welcome outcome.

About the Author:  John Frisbie is the president of the US-China Business Council (USCBC), a private, nonpartisan, nonprofit organization of more than 200 American companies that do business with China. Founded in 1973, USCBC has provided unmatched information, advisory, advocacy, and program services to its membership for more than four decades. Through its offices in Washington, DC, Beijing, and Shanghai, USCBC is uniquely positioned to serve its members’ interests in the United States and China. For more information or to contact representatives at the DC office, visit www.uschina.org, or call 202-429-0340.