Xi and Trump should seek distension to avoid new commercial war

“ There will be a tariff reduction in certain sectors, trade facilities (...) and some kind of artificial intelligence agreement [IA], which will probably be ‘talk about this later’,” anticipated the partner of the consultant DGA-Albright Stonebridge, in a meeting with journalists organised in Shanghai by the European Union (EU) Chamber of Commerce in China.

Wuttke, with almost three decades of business experience in China and who presided over that chamber in three distinct periods, said that the United States will look for more purchases of so-called “three B” – beef (“beef”), legumes (“beans”) and Boeing planes – and more investment.

In this latter area, however, he sees “very little appetite” on the part of Beijing, in the face of a “lack of confidence”.

The analyst considered it certain that the two parties will prolong the trade truce agreed last year and end on November 10th, only knowing for how long.

“China wants it by the end [of Trump’s mandate] and the United States wants six months,” he said.

In any case, neither Beijing nor Washington “have an interest in blowing this up in their faces,” he added.

Wuttke considered that the summit could lead to a kind of exchange of concessions.

“Xi appreciates that Trump is blocking negative legislation for China (...) and [the Chinese] know that Trump needs something concrete, especially before the mid-term elections,” he said.

Questioned whether Beijing will try to press Washington regarding the war with Iran, due to its impact on energy markets, Wuttke cited a high-level source in the Persian Gulf region, which summed up the Chinese position as follows: “They want stability, but not responsibility”.

“China does not like war, of course. ... But it is one of the least affected countries,” he added.

The analyst pointed out the Chinese oil reserves, sufficient for more than 200 days, the fact that consumption reached a peak two or three years ago due to the bet on electric vehicles and renewable energy, and the security of oil and gas supply through links to Russia and Central Asia.

On the AI, one of the most recent focuses of tension between the two powers, Wuttke considered that Beijing will focus on access to advanced semiconductors, given the restrictions imposed by Washington.

As for US arms sales to Taiwan, one of the traditional points of disagreement between Beijing and Washington, Wuttke considered that “Trump has no intention of breaking existing agreements.”.

“ Beijing will make noise and then move on”, anticipated.

According to Wuttke, the main problem will not be the signing of arms sales agreements to Taipei, but possible supply limitations due to the high consumption of ammunition in the war with Iran.