A reflection on Trump-Xi much awaited encounter: A show-off meeting without immediate action

·        Trump-Xi meeting last week has probably been one of the most awaited encounters of heads of state in the world. Not only did it constitute the first bilateral between the leaders of the two largest powers in the world, but it also followed Trump’s threats of a much harsher stance against China.

The meeting evolved in a surprising way. From the political angle, it became the world stage for Trump to ventilate his personal wealth and, more importantly, the US military power. As for the former, the meeting was held at Trump’s sumptuous Mar-a-Lago estate in Florida and the whole family was there to welcome the important guests. Second, the US airstrikes in Syria right before the summit offered Xi a very clear sense of how the Trump administration may be different from that of Obama as regards unilateral military action. This is, obviously, a very important warning as concerns the situation in North Korea.

Beyond politics, there was no clear announcement in terms of economic co-operation although it did open the door to a more fluid dialogue, which is obviously welcome.

According to the White House, there will be a 100-day plan on trade discussion aiming to increase US exports to China and reduce the trade deficit between the two countries. China, in turn, has offered signs of readiness to lift the ban on beef and import more agricultural products from the US.

In terms of the stalled Bilateral Investment Treaty (BIT) between China and the US, the threat of protectionist seems to be working in terms of inducing China to reduce its very large negative list of foreign investment (i.e. list of restricted sectors), including financial services. The way ahead would be to conclude a BIT favorable to the US, which could give the US a clear advantage versus other competitors, notably European. In fact, the European Commission has long been negotiating a BIT with China but the US may come first, getting a better deal.

Beyond this, there are a number of key issues, which do not seem to have moved forward, during the much-awaited summit. There are particularly relevant, namely the prospects for a US border adjustment tax imposed by the US, the recognition of market economy status and geopolitical situation in the South China Sea. While this first meeting is a good starting point, it seems clear that it was more of a show than an action-prone meeting.