Xi-Trump summit: North Korea, trade and other key topics on the agenda for first in-person talks

Ahead of the meeting between Donald Trump and Xi Jinping, US businesses are managing expectations over what will come from the talks.
A magazine featuring a front page photo of US President Donald Trump is seen at a news stand in Beijing on April 4, 2017.
A magazine featuring a front page photo of US President Donald Trump is seen at a news stand in Beijing on April 4, 2017.PHOTO: AFP

US President Donald Trump and his Chinese counterpart Xi Jinping will hold their first summit meeting on Thursday (April 6).

By choosing the Mar-a-Lago resort as the venue, both sides seek to play down the pomp and circumstance of a full state visit, before they get to know each other better.

Mr Xi will be the second world leader to visit Mr Trump's resort in Palm Beach, Florida. Japanese Prime Minister Shinzo Abe travelled there in February.

The Chinese and US leaders are likely to discuss issues which have huge implications for not just the two sides, but also for the Asia-Pacific region.

Mr Trump said over the weekend that he expects the meeting "will be a very difficult one", and observers are expecting tough language from him on some issues.

1. NORTH KOREA

This issue is expected to be high on the agenda. North Korea fired an extended-range Scud missile into the Sea of Japan on Wednesday (April 5), just ahead of the Xi-Trump meeting.

Pyongyang is on a quest to develop an intercontinental ballistic missile capable of hitting the US mainland with a nuclear warhead, and has so far staged five nuclear tests, two of them last year.

In February, the North simultaneously fired four ballistic missiles off its east coast, three of which fell close to Japan, in what it said was a drill for an attack on US bases in Japan. North Korea is barred under United Nations resolutions from any use of ballistic missile technology.

China is North Korea's last-remaining major ally and a key provider of food and fuel supplies. It accounts for more than 90 per cent of the North's total trade.


People in Pyongyang watch a public broadcast about the launch of a surface-to-surface medium long-range ballistic missile. PHOTO: AFP

What the US wants: Washington wants China to do more to rein in the North's nuclear and missile programmes.

Mr Trump increased the pressure on Sunday (April 2), holding out the possibility of using trade as a lever to secure Chinese cooperation.

He has even said the United States can "totally" address North Korea's nuclear threat unilaterally, if China does not cooperate to raise pressure on that nation, Financial Times reported.

What China wants: Beijing has said it does not have that kind of influence to rein in the North.

It has taken steps to increase economic pressure on Pyongyang, but has long been unwilling to do anything that may destabilise the North's regime and send millions of refugees across their border.

The slowdown in the economic relationship between China and the North became marked after the latter's fourth nuclear test in January 2016 and a series of missile launches since then.

China is also steadfastly opposed to the US deployment of Thaad (Terminal High Altitude Area Defense) advanced anti-missile system to be put up south of Seoul, as the defences said to be intended to intercept North Korean missiles, are capable of tracking and countering Beijing's own nuclear programme.

2. TRADE

Mr Trump said last week that he and Mr Xi were "going to get down to some serious business" and vowed that "the theft of American prosperity" by foreign countries would end.

China tops the list of countries that have chronic goods trade surpluses with the US, with a US$347 billion (S$485 billion) surplus last year, followed by Japan, with a US$69 billion surplus.


Chinese employees working on micro and special motors for mobile phones at a factory in Huaibei, east China's Anhui province. PHOTO: AFP

What the US wants: Mr Trump has been pushing his crusade for fair trade and more manufacturing jobs. He ordered on Friday (March 31) a study into the causes of US trade deficits and a clampdown on import duty evasion.

Prior to his election, he had threatened to slap tariffs, as high as 45 per cent, on Chinese imports. Trump administration officials have also said they plan tougher enforcement of US trade remedy laws and will initiate more unilateral trade deals.

Mr Trump, during his 2016 White House bid, campaigned heavily against free-trade deals and accused China of draining jobs from US factories with cheap exports.

But he indicated in an interview with the Financial Times published on Sunday that he would postpone a discussion with Mr Xi on tariffs until "perhaps the next time we meet".

What China wants: Chinese Vice-Foreign Minister Zheng Zeguang said on Friday (March 31) that the US-China trade imbalance was mostly the result of differences in the two countries' economic structures, noting that China had a trade deficit in services.

Chinese State State Councillor Yang Jiechi had said in December that China wants Mr Trump to endorse Mr Xi's "One Belt, One Road" initiative to enhance its international status and economic strength.

The Chinese are prepared to offer investment proposals to help advance Mr Trump's agenda of creating jobs.

3. CURRENCY

Mr Trump has frequently accused China of keeping its yuan currency artificially low against the dollar to make Chinese exports cheaper, and to "steal" US manufacturing jobs.

The yuan fell 6.5 per cent in 2016 in its biggest annual loss against the dollar since 1994, affected by pressure from sluggish economic growth and a broadly strong US currency.

But so far, Mr Trump has resisted declaring China a currency manipulator.


A woman checks a Chinese 100 Yuan banknote as she sells tickets for a job fair in Beijing, China, Feb 11, 2017. PHOTO: REUTERS

What the US wants: "When you talk about currency manipulation, when you talk about devaluations, they are world champions, " Mr Trump told the Financial Times in an interview, referring to China.

However, while he vowed during the presidential campaign to have China labelled a currency manipulator on his first day in office, that did not happen.

Treasury Secretary Steven Mnuchin, in a sign that the US was not in a hurry to act on the issue, said he wants to use a regular review of foreign exchange markets to determine if the US' largest trading partner is cheating.

What China wants: Chinese Vice-Foreign Minister Zheng Zeguang, speaking at a briefing on the Xi-Trump meeting, said: "China does not deliberately seek a trade surplus. We also have no intention of carrying out competitive currency devaluation to stimulate exports. This is not our policy."

The trade imbalance could be resolved by improved cooperation, he suggested.

China wants Washington to lift restrictions on civilian technology exports to China and create better conditions for Chinese investment in the US.

4. SOUTH CHINA SEA

The two leaders are expected to discuss Chinese ambitions in the resource-rich South China Sea.

China claims almost the entire waterway, through which about US$5 trillion (S$7 trillion) in sea-borne goods pass every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims over the waters.

The US, the Philippines and Vietnam have protested against China's militarisation of the Spratlys.


US Navy F18 fighter jets are pictured on the flight deck of aircraft carrier USS Carl Vinson during a routine exercise in South China Sea. PHOTO: REUTERS

What the US wants: Washington says it does not take sides in the territorial disputes, but has several times sent warships and planes to assert freedom of navigation close to Chinese-claimed islands and reefs.

The US Navy said last month that the USS Carl Vinson had engaged in "routine operations in the South China Sea" since February.

What China wants: China said it opposed action by other countries, under the pretext of freedom of navigation, that undermined its sovereignty, after the Nimitz-class aircraft carrier, the USS Carl Vinson, began "routine operations" in the South China Sea.

China has nearly finished building almost two dozen structures on artificial islands in the strategic waterway that seem designed to house long- range surface-to-air missiles.

Beijing has long said that China carrying out normal construction activities on its own territory, including deploying necessary and appropriate territorial defence facilities, is a normal right under international law for sovereign nations.

Meanwhile, China and South-east Asian countries have made progress in talks on a code of conduct for the South China Sea. Negotiators have met in the last two months to try to come up with a final draft, which could be approved ahead of the August meeting by Asean foreign ministers in Manila.

5. KNOWING ME, KNOWING YOU

One thing the two leaders have in common is their pledge to restore their countries to greatness.

China wants the Trump administration to adopt its concept of "a new model of great power relations", which is Mr Xi's proposal to avoid conflict and focus on cooperation. China also seeks US noninterference in issues that it considers core interests, including Taiwan and Tibet.

Ties got off to a rocky start when Mr Trump took a congratulatory phone call from Taiwan President Tsai Ing-wen, but eased after he reaffirmed the "one China" policy.

However, the differences between the two men in many aspects, including their political styles and diplomatic experience, are likely to add uncertainty to what many dub the world's most important bilateral relationship.


US President Donald Trump alongside White House senior adviser Jared Kushner (left), during a White House meeting with CEOs. PHOTO: AFP

What the US has done: A key channel for high-level interactions between the White House and Chinese leadership was established by Mr Trump's son-in-law Jared Kushner, soon after the election with the help of former secretary of state Henry Kissinger, Washington Post reported.

In mid-November 2016, Mr Kissinger was at at Trump Tower to meet Mr Kushner, national security adviser designate Michael Flynn and Mr Trump, when the president-elect asked Mr Kissinger to travel to Beijing and let Mr Xi know that everything was on the table in terms of bilateral cooperation.

Mr Kissinger met Mr Xi in Beijing on Dec 2, and the Chinese leader gave a private reply conveying his wish to set up an early meeting of the two presidents.

Chinese State Councillor Yang and Ambassador Cui Tiankai visited Trump Tower for two meetings with top Trump officials on Dec 9 and 10. The sessions were hosted in Mr Kushner's office.

If Mr Trump endorses, at this week's meeting with Mr Xi, China's model for the relationship and its regional expansion, that will signal a new era for bilateral ties. It will also mean that Mr Kushner has emerged as one of the most important figures in US-China relations.

US Secretary of State Rex Tillerson, who visited Beijing in March, has stressed Mr Trump's desire to enhance understanding.

What China has done: Beijing hopes to learn who to trust in Mr Trump's team, and who President Trump himself trusts, analysts told Hong Kong's South China Morning Post (SCMP).

China has learnt to adopt new ways of communication in dealing with the new US leader, mainly through his trusted son-in-law Kushner.

China is aware that Mr Trump has not formed his China and Asian policy team, and that officials such as Mr Tillerson and Mr Mnuchin are not part of Mr Trump's inner circle, the analysts told SCMP, adding that division among Mr Trump team on Beijing has hampered Washington's progress in coming up with a coherent China policy.

Beijing has also learned that some of Mr Trump's aides, including his chief strategist Steve Bannon and Commerce Secretary Wilbur Ross, prefer a more hardline approach towards China, especially on trade matters.

SOURCES: Reuters, Agence France-Presse, BBC, Washington Post, Bloomberg, South China Morning Post