The long awaited Dinner in Buenos Aires finally happened. It appears that more than a truce has resulted. Tariffs have been stalled at their present levels and China has agreed to make significant new purchases from the USA of agricultural and energy and other products. This suggests that China’s initial offers to do this have been effective.
Over the next 90 days the two sides will discuss how to resolve the issues that have confronted them. This will not be easy but the fact that a halt in a deterioration has occurred suggests a better direction has occurred.
It would have been hard to set a positive course had this outcome not been achieved.
Whilst media briefings might try to claim victories, the reality is that a progress has been made and the atmosphere has improved. While the big issues have yet to be agreed, it is clear that the Chinese offer to substantially increase purchases from the USA has been a critical factor in gaining a temporary solution.
It would hurt if that was a one off outcome and a floor for a new trade relationship may have been established.
It would be counter-productive to start making claims of victory. The USA has said that it is uneasy about the scale of the deficit and China has accepted to make changes., which appear to be significant.
Other big issues have yet to be solved. The two big ones are characterised as the rules of technology transfer , and subsidies by the two states to their companies.
The wording of the communique of G20 hinted at a resolution of the WTO impasse. Reform of that organisation is an agreed target, but again the actual reforms have yet to be agreed.
We can expect a year ahead of dramas and, one hopes, of progress.
The USA had become rather isolated and a big drop in trade with China seemed a heavy price. The midterms results and the effect on the 2020 Presidential race meant Trump had to consider his course. The USA flirted with isolation and found it wanting. At the same time China has also had reason to not maintain a hard face and help its economy and global calm. It is adjusting to being in the world after over three thousand years of being in China. China has to consider its global impact now in setting policy.
This is the first time I have seen a President of China lead negotiations. For both the Presidents this was not a simple brief to manage and to lead. While much would have been handled in advance by their teams, the fact is they faced each other across the table and resolved this progress.
It is a way the USA feels comfortable with. China adjusted its approach and President Xi clearly was very successful at this front line work. It is hard to remember any other time China has negotiated like this in public. We can see the new way of Chinese diplomacy.
We should hope that the USA is realistic in considering Chinese concessions in the 90 day period ahead, as they obviously have been here. In this 90 day period difficult issues still need resolving and it appears that President Trump has to personally manage his teams different approaches. It appears he is motivated to find outcomes. President Xi has shown that already.
The world will benefit from China and the USA finding common ground and moving towards reform of the global economic system.
We are going through change. The USA is finding its new world position, still leading but establishing corridors for change. China is growing into a world leader with a new form of role in working with the USA and the West. It will further open its economy and provide more stable roads for foreign business as part of this new dawn.
But this next five to ten years will be a transition from the crude emergence of globalisation, to a world regulatory framework that will enable more fairness in sharing the benefits of globalisation between nations and within nations.
We are entering a period of the world of nations, perhaps more regional in emphasis, adjusting their way of working together to ensure a more stable world. This USA/China moment may herald a more global, and regional, approach to solving problems affecting nations on their own.
If the USA and China can solve their problems of such scale, in public, then a new way for the world is emerging.
Both the USA and China need to adjust their world roles to lead change. They cannot impose the changes. Behind the scenes some nations – Japan, India, France, Germany, Russia, the EU – have had a subtle impact. Through steps they have taken, or not taken, they have impacted the negotiating position of China and the USA.
That quiet role is, perhaps, the most significant outcome. There is an emerging global compact that suggests different systems and routes to sustainable growth, can coexist, talk to each other, and find fair outcomes.
A world of negotiated outcomes, that are not restraining in essence, is a significant outcome from this. And if that happens all will have adjusted, but all companies will feel the effect of global norms emerging. Globalisation will need to show a concern for people. That will be the most significant outcome.
Xi and Trump will be the leaders who can help the world become fairer to its peoples. And that would be a great achievement.
So less a halt to battles, and more the start of a new global way. The two biggest nations have just shown the way.
Let us hope so. Hold on as it will still be a roller coaster for some time yet. For me I hope the UK can restore its focus on this fast changing world. We have had too little impact on this moment. We should be architects of global progress, helping globalisation be effective for people across the world. We have missed an opportunity. But we can recover.