With the latest round of trade talks between the U.S. and China ending in a predictable stalemate, trade agreement one thing has become clear: The Trump administration’s approach to these negotiations has made it all but impossible for Chinese President Xi Jinping to make a deal. Until that changes, there’s no end in sight for the tariff-for-tariff tussle between the two countries, and little chance of achieving Donald Trump’s stated goals.
The White House seems to misunderstand a crucial fact about modern China. As Xi has tightened his grip on power, China’s economic and diplomatic initiatives have become closely associated with him personally. In foreign policy, Xi has sold himself as the champion of China’s global interests and the man to stand up to the West and restore the country to its former glory. At home, Xi has promised the “Chinese Dream,” a prosperous future with boundless new opportunities.
But this carefully crafted image comes with two downsides. First, Xi must avoid any potentially humiliating setbacks on the world stage, especially any inflicted by a Western power. Second, he must keep China’s economy growing, generating jobs and raising incomes.
You might argue that this mix should encourage Xi to reach a trade agreement sooner rather than later. After all, U.S. tariffs on Chinese exports will pinch China’s economy (at least a bit) at a time when it is already slowing and heavily indebted.