Quick US-China trade deal unlikely, says former Chinese commerce minister Chen Deming

The trade tensions between the US and China escalated last month, with the nations now exchanging barbs over who wrecked negotiations.
The trade tensions between the US and China escalated last month, with the nations now exchanging barbs over who wrecked negotiations.PHOTO: AFP

BEIJING (BLOOMBERG) - Don't bet on a quick trade deal between the world's two largest economies, according to a former top trade official for China.

Presidents Donald Trump and Xi Jinping are scheduled to join other world leaders at the Group of 20 summit in Osaka in late June.

The world will be watching to see if the event paves the way for breaking the current trade talk deadlock.

Mr Chen Deming, China's commerce minister from 2007 to 2013, told Bloomberg Television in an interview on Thursday (June 6) that he sees the chances as being low.

"If the US doesn't want to go to the (World Trade Organisation) and they talk with China with the current attitude, things will drag on," said Mr Chen, now serving as the head of the China Association of Enterprises with Foreign Investment.

"In that case, we'll see who can take it on the chin. China will have to endure that, the US will have to endure that, and the whole world will have to endure that, and the global economy will go backwards."

The trade tensions between the US and China escalated last month, with the nations now exchanging barbs over who wrecked negotiations. The last time Mr Trump and Mr Xi met face-to-face was at the previous G-20 summit in Argentina. That meeting yielded a months-long truce.

 
 

Economists at Morgan Stanley and JPMorgan are among those who have warned that deteriorating US-China relations threaten to take the world into a recession. The World Bank also dialled back its global outlook this week, citing trade.

Chinese officials, meanwhile, have emphasised the resilience of their economy, with Mr Xi giving an upbeat assessment this week. Domestic consumption accounted for 76 per cent of Chinese growth last year as the country becomes less dependent on exports, according to Mr Xi's comments published in the People's Daily newspaper.

Mr Chen echoed that sentiment. The trade conflict with the US will have an adverse effect on China, but will be controllable, he said. And the country should hit its growth target of 6 to 6.5 per cent this year, according to him.

Aside from tariffs, the Trump administration has also moved to curb Huawei Technologies' ability to sell equipment in the US and buy parts from American suppliers, potentially crippling one of China's national technology champions. But that blockade won't stop China's technological advance, Mr Chen said. It will instead make China stronger.

Many Chinese students have gone overseas to study, and in a few years, they can help China close the technology gap, according to Mr Chen.

"If you go forward to that time, we will thank President Trump, because it was his policies that led us to be able to make for ourselves all the things we used to purchase from around the world."

In the long run, however, Mr Chen still believes that the US and China will find a way to reconcile their differences because their economies are complementary.

 
 

Estimates for how long that will take have varied. Mr Jack Ma, China's richest man, has said he thinks the trade war will last two decades. Mr Chen is more optimistic.

"So I think it will be shorter - three to five years," he said.

"Both sides will already be in a lot of pain by then and change course. It'll be time to wake up and sit down."