Trade, it seems, is getting friendlier between the U.S. and China.
After the meeting between U.S. president Donald Trump and Chinese President Xi Jinping in April, both sides agreed to set a 100-day clock ticking for China to take action to amend the countries’ unbalanced trade relations, and the first progress report came out last week.
In it, the U.S. outlined 10 initial actions taken as part of the effort to advance U.S.-China economic cooperation.
Apart from China again allowing for imports of U.S. beef and the U.S. taking in cooked poultry from China, a few things look slated to change that could impact business relations.
For one, the U.S. Commerce Department said Thursday that by July 16, China will allow foreign-owned financial services firms in China to provide credit ratings. Also by July 16, China will allow U.S.-owned suppliers of electronic payment services to start the licensing process. The U.S. said it would apply the same regulatory standards to Chinese banking institutions as to other foreign banks, and the Commerce Department said the U.S. also recognizes the importance of China’s One Belt, One Road initiative, despite the fact that the apparently open global trade project seems to run counter to the greater protectionism that’s been present on the U.S. side.
Though nothing pinpoints things that will directly affect textiles and apparel, what’s been agreed so far may still miss on equal treatment of U.S. companies.
Progress on trade benchmarks aside, China expert Gordon G. Chang said in an opinion piece for Forbes, China is mostly promising not to do things it shouldn’t have been doing to begin with, and that the shifts skew more to benefiting China than the U.S.
“It is telling that, on these two important promises of access for Chinese poultry and Chinese banks, Beijing did not agree to reciprocal promises of access for American competitors in China,” Chang said.
Secretary of Commerce Wilbur Ross said the deals made last week—which he called the “first real breakthrough we’ve had with China in decades” in an interview with Fox Business Network’s Neil Cavuto—will help cut away at the trade deficit with China. Just the fact that U.S. beef will soon be able to be exported to China, for one, lets the U.S. in on a $2.5 billion market, Ross said.
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On the contrary, however, Chang said the deals might serve to increase the U.S. trade deficit because they don’t address “what is fundamentally wrong with the U.S.-China trade relationship,” which is, that opening markets in mercantilist countries like China can’t be done with conventional trade practices.
Washington, D.C.-based trade expert Alan Tonelson told Chang, “Their [mercantilist countries’] governments have created economy-wide systems of protection, and they operate these systems through powerful, secretive bureaucracies that curb imports with informal decisions that are difficult for outsiders even to identify, much less litigate against.”
In short, it could be more of the same with China and trade—though Ross argued otherwise.
This time will be different, he told Fox.
“What has definitely changed is now they’re pinned down to very specific actions on very specific near-term dates,” Ross said. “We’ve never had trade agreements before…with them or with anybody that had this level of precision to solving long-standing problems.”
He added, “There will be a huge blow up if they don’t comply with the July 16 date.”