Easier for China to face tariffs than bend to U.S. pressure - trade experts' thoughts

Reuters says that many trade experts believe China will acknowledge concessions made in any trade deal with the U.S. sake of stabilizing shaky relations but is unlikely to yield to demands it alters its economic model even if faced with continued tariffs.  

Chinese concessions in any deal are likely to fall short of U.S. demands for deep change in the way the world’s second-largest economy works.

Revamping decades of state planning will not happen overnight, Chinese experts argue.

And President Xi Jinping faces political realities at home, where being seen as kowtowing to Trump would be less palatable than navigating the near-term impact continued trade tensions might have on China’s own slowing economy, they say.

One Chinese official told Reuters that China’s domestic reform was a long-term process.

“If the United States carries out overall restrictions or pressure based on its own interests, China will not accept it,” the official added.

Tu Xinquan, a trade expert at Beijing’s University of International Business and Economics, said it would be difficult for Xi to agree to U.S. demands that China revamp the role of state-owned enterprises and other core industrial policies.

Xi would likely be prepared to go as far as to give “visible, politically influential commitments” to Trump, such as to buy more American goods and improve protection of intellectual property rights.

Sources have suggested that the two sides are getting closer to a deal that could roll back some tariffs and set forth agreements on structural issues in China’s economic model, but that details of an enforcement mechanism to ensure Beijing follows through on policy pledges are still not set.

While no plans have been announced, there is widespread speculation in trade circles that Xi could travel to Trump’s Mar-a-Lago resort in Florida to hammer out a final deal in late March, on the tail end of a planned trip to Europe.

Some in U.S. diplomatic and business communities, concerned that Trump could rush into accepting weak Chinese commitments, have been for weeks referring, with mock grandiosity, to a possible deal as the “Mar-a-Lago Accord”.

Shi Yinhong, director of the Center for American Studies at Renmin University, said beyond those types of openings China had to attend to its "own basic dignity and authority".

"If China makes too big a concession to the United States, it might create domestic economic disorder. And also how would you explain it to Communist Party members and the Chinese people?" said Shi, who has advised the government on diplomatic matters.