Prospects for China-US Trade: Seeking a rational resolution via the “Argentina Consensus”

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This report builds on CCG report entitled “China-US Trade Relations: Past, Present, Future and Policy Options” which was released in Washington D.C. in September 2018. Drawing on analysis as well as first-hand interviews and seminar discussions gleaned during CCG’s recent “track-two” US trips, this report focuses on: the current gap in trade deficit accounting, negative impacts of the trade war, voices calling for a resolution, and China’s efforts to improve the foreign investment environment, to call for both sides to seize the opportunity of the Osaka Summit to revive the consensus reached in Argentina. Supporting a rational course of negotiations, the report also proposes ten recommendations to improve China-US trade talks and relations:

1. Advance dialogue and communication about China-US trade talks, calling for a return to the “Argentine Consensus” at the upcoming US-China summit at the G20.

2. Improve accounting methods for China-US trade to more accurately and fairly reflect the value gained by both countries, including trade in services, tourism, and study abroad.

3. Increase purchases of US imports while the US ease the export control and lift the ban on Huawei to jointly mitigate the impact of China-US trade frictions.

4. Improve implementation details for China’s Foreign Investment Law, boost actions to attract foreign investment, and address US concerns about Chinese legal issues.

5. Continue to uphold the multilateral trade system, use multilateral cooperation to promote WTO reform, and evaluate the opportunity for China to join the CPTPP.

6. Conduct an in-depth study of “zero tariffs, zero barriers, zero subsidies” to explore how to use a high-level of openness to promote economic globalization.

7. Strengthen further ties between Chinese and US businesses to prevent decoupling.

8. Strengthen measures to protect IP and increase efforts to crack down on IP infringement.

9. Enhance the role of “sub-national diplomacy” by actively strengthening cooperation with US state and municipal governments.

10. Strengthen China-US people-to-people relations and enhance non-governmental diplomacy.