March 14, 2017 / 6:06 AM / 4 months ago

Xi has weak pitch selling status quo to Trump

3 Min Read

A combination of file photos showing Chinese President Xi Jinping (L) at London's Heathrow Airport, October 19, 2015 and U.S. President Donald Trump posing for a photo in New York City, U.S., May 17, 2016.Toby Melville/Lucas Jackson

HONG KONG (Reuters Breakingviews) - China will struggle to sell Donald Trump on the status quo. The U.S. president has invited Xi Jinping to his Florida estate Mar-a-Lago, various media reported on Monday, in an apparent retreat from campaign-trail threats to give China's president a McDonald's hamburger instead of a state banquet. While the leaders of the world's two largest economies will dine splendidly, the dinner conversation will probably be strained.

China very much wants the United States to stay inside the tent when it comes to world trade and climate-change agreements, because the People's Republic can free-ride off the public goods they generate. But nothing about Xi's administration suggests it sees the need to offer much in return. Xi's team might reasonably suspect Trump is weaker than he sounds, and his bluster can thus be discounted.

Either way, expect commitments to market access and financial opening repackaged as new ideas, perhaps stronger words on North Korea, and maybe a read from the standard Trump-pleasing template about job-creating investments in the United States. But stalled negotiations on trade and investment are unlikely to get much of a jump-start.

The common ground has shrunk precisely because of dissatisfaction with the status quo on both sides. Xi is popular back home because he has abandoned the prior policy, advocated by reformist leader Deng Xiaoping, of appearing small and humble. Xi is throwing his weight around Asia, and his administration has unapologetically tightened the screws on U.S. firms. World Trade Organization commitments to open up in finance, media and technology remain unmet. Instead, the "Made in China 2025" plan explicitly proposes to upgrade local companies to compete more directly at a more sophisticated level. The state has thrown policy and financial support behind this goal.

Trump ran against the very U.S.-subsidized global trade and security order Beijing now wants to preserve. His base has no interest in seeing Trump throw this confrontational approach aside in exchange for infrastructure spending, nor does Xi have any credibility as an advocate for free trade and competition.

There is no way to paper over the zero-sum nature of the coming competition between the two states. Maybe better to skip dessert.

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