US-China: On the Verge of a Deal?

US-China: On the Verge of a Deal?

This week's negotiations between US and Chinese officials—and yesterday's White House meeting of President Donald Trump and China's Vice-Premier Liu He—have added to rising expectations that the two governments will soon sign a deal to end their trade conflict.

There seem to be two main sticking points holding up completion of the deal. One, China wants the Trump administration to immediately lift tariffs on Chinese-made products, while the Trump team wants to see China taking steps to demonstrate good faith before it relieves the pressure. Two, the two sides can't agree on a mechanism by which US officials can verify that China is keeping its new promises over time.

Raising the stakes, this conflict is creating headaches in dozens of other countries, and there are many interested observers who hope this impasse can be resolved as soon as possible. Malaysia's trade minister was speaking for many other governments when he urged the US and China to accept a "global responsibility" to resolve their differences and to "stop thinking only of themselves."

Three important reports issued this week detail the collateral damage the US-China trade war is inflicting on other economies.

The Asian Development Bank warned on Wednesday that the US-China conflict poses the biggest current risk to the economy of Asia as its chief economist sharply lowered the region's growth forecasts for this year and next. "Prolonged negotiations," he wrote, "is the biggest risk."

The International Monetary Fund reported on Wednesday that the creation in recent years of complex global supply chains leaves South Korea, Germany, Japan, Italy, the UK, and France especially vulnerable to an economic slowdown triggered by tariffs.

The World Trade Organization this week blamed the conflict for a sharp fall in global trade growth and downgraded trade forecasts for 2019 and 2020. It's "increasingly urgent that we resolve tensions," warned the WTO's director general. Weakening the rules-based trading system, he said, "would be an historic mistake with repercussions for jobs, growth and stability around the world."

The larger problem: Donald Trump and Xi Jinping will probably sign a deal, maybe later this month, but that agreement won't entirely end the uncertainty facing these other governments and the global economy. In part, that's because it's highly unlikely Beijing will accept an enforcement mechanism that creates lasting confidence in Washington that China will keep the promises it makes on paper. This trade war has further eroded the already limited trust between China and the United States.

The bottom line: The market-shaking, confidence-undermining threat of new tariffs will remain one Trump tweet away, and the US president will probably use that power to keep pressure on China and to beat back any criticism that he's made a bad deal.

And by the way: There are many problems more complicated and important than trade tariffs dividing the US and Chinese governments. In particular, competition over intellectual property and next-generation advances in technology will deepen mistrust between the US and Chinese governments. Both sides will claim that problem matters for national security as well as commerce. As with trade, these areas of US-China conflict will also create problems for everybody else.

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Even if the US, Europe, China, and India reduce carbon emissions at the rate they've promised, much climate damage has already been done. That shouldn't stop these and other countries from doing all they can to meet their net-zero emissions targets, but they also better start preparing for a world of people on the move.

Climate change will displace an unprecedented number of people in coming years, creating not just a series of humanitarian crises in many parts of the world, but lasting political, economic, and social upheaval as those of us who live on higher ground try to find a sustainable place for these climate refugees to live.

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Watch the episode: Vaccine nationalism could prolong the pandemic

Over the past half century, climate change has had an immense impact on the farmers who produce the food we eat. A new study by Cornell University shows that global warming has knocked 21 percent off of global agriculture productivity growth since 1965, equivalent to seven years of normal growth if humans had not polluted the planet. But not all countries have been affected in the same say. Farmers in warmer parts of the world have been hit hard as conditions grow more arid, but sub-polar regions in Canada or Siberia are now actually better for agriculture because they are not as cold as they used to be. Here we take a look at how climate has affected farming productivity growth around the world.

On Tuesday, a major US intelligence report said the top threat to America right now is China. A day later, John Kerry, the Biden administration's "climate czar," got on a plane to... China.

Such is the drama of ties between the world's two largest economies these days.

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A Castro-less Cuba: Raúl Castro, younger brother of the late Fidel, is expected to retire on Friday as secretary-general of Cuba's ruling communist party. When he does, it'll mark the first time since the 1959 revolution that none of Cuba's leaders is named Castro. The development is largely symbolic since Castro, 89, handed over day-to-day affairs to President Miguel Díaz-Canel in 2018. It's worth noting that US sanctions laws do specify that one of the conditions for normalizing ties with Cuba is that any transitional government there cannot include either of the Castro brothers. So that's one less box to tick in case there is a future rapprochement across the Straits of Florida. But more immediately, we're watching to see whether a new generation of leaders headed by Díaz-Canel will bring any serious reforms to Cuba. COVID has killed the tourism industry, plunging the island into an economic crisis that's brought back food shortages and dollar stores reminiscent of the early 1990s.

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Should the Biden administration "reverse course on China" in the hope of establishing a friendlier relationship, as diplomat Kishore Mahbubani argues in a recent Financial Times op-ed? Ian Bremmer and Eurasia Group analyst Michael Hirson take out the Red Pen to explain why it's not that simple.

And today, we are talking about the United States and China. The relationship between the two most powerful nations in the world is the worst it's been since the Tiananmen Square massacre in 1989. Pundits and policymakers alike all around the world are trying to figure out how Washington and Beijing can at least stop the bleeding because a reset is nowhere in the cards.

That's the topic of the op-ed that we are looking at today. It's from the Financial Times, written by Singaporean diplomat Kishore Mahbubani, and the title summarizes the key argument: "Biden should summon the courage to reverse course on China." Meaning, he should throw out the Trump era approach and open the door to more cooperation and kinder, gentler relations.

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