• Chinese President Xi Jinping, Trump scheduled to hold call
• Two sides negotiating deal to balance trade amid US’ additional tariffs on Chinese imports
• Trade war hurts world’s 2 largest economies, both sides ‘recognize,’ it, experts tell Anadolu

ISTANBUL 

The world’s top two economies suffer from trade wars, and a call between the Chinese and US leaders scheduled for Friday is likely to address deals on social media app TikTok, tariffs as well as tech, experts told Anadolu.

Trump “needs a deal to stabilize the trading system,” said Shaun Rein, the founder of China Market Research Group. “High tariffs hurt China as well.”

Chinese President Xi Jinping and his US counterpart, Donald Trump, are set to hold discussions amid a flurry of diplomatic exchanges.

Trade negotiators held a fourth round of talks earlier this week in Spain, indicating they were close to a deal on TikTok, while Chinese and American top diplomats, as well as their defense chiefs, held separate calls last week.

It was the first call between Dong Jun and Pete Hegseth under Trump 2.0, when the US defense chief clarified that Washington “does not seek conflict with China nor is it pursuing regime change or strangulation" of the world's second-largest economy.

“Both sides recognize that the trade war is not good for their citizens. Americans are paying more for Chinese imports, adversely affecting US consumers and businesses, and the slowdown in trade is hurting the sale of Chinese exports, adversely affecting China’s economy,” Elizabeth Freund Larus, adjunct senior fellow at Pacific Forum, said in an email.

“I do not detect desperation (to talk) on either side.”

It will be the third call between Xi and Trump, since the Republican returned to the White House earlier this year, amid reports that China and the US were in “final negotiations” for a state visit to China by the US president.    

‘China willing to move’

The second White House under Trump saw an early hard start with China when the US raised tariffs to 245% on imports from the world’s second-largest economy.

Trump accused Beijing of abusing bilateral trade, which hovers around $582 billion but is highly in favor of China. He wants to cut the deficit and balance it, and has granted a truce on tariffs to Beijing until November but with 10% levies on imports.

Exports of high-tech, rare earths, as well as increased interactions between Washington and Taiwan, which China considers its “breakaway province,” and tensions in the disputed South China Sea are among issues that have plagued ties.

Beijing and Washington “recognize that the chill in US-China relations is becoming increasingly dangerous, and that it’s time to ‘pull out the big guns,’ of Xi and Trump, rather than lower-level officials, and get them talking to each other,” said Larus.

The high-stakes call comes two weeks after Xi inspected China’s largest parade in Beijing on Sept. 3 to mark the end of World War II, alongside Russian President Vladimir Putin as well as North Korean leader Kim Jong Un, who were among 26 foreign leaders.

Trump cast a shadow on the gathering in Beijing, claiming it was a conspiracy against Washington, triggering a quick rejection from Moscow and Beijing.

It also comes after Xi hosted a gathering of leaders and envoys of the Shanghai Cooperation Organization alongside representatives of international organizations in the northern Chinese city of Tianjin, where the bloc’s leaders expressed support for the multilateral trading system, in an oblique criticism of Trump’s tariffs.

While it “is very clear China is winning in trade war … that it has upper hand, (but) China is willing to move and give more license in tech and algorithms to US (firms),” said Rein, author of the international best-sellers, ‘The War for China's Wallet: Profiting from the New World Order’, ‘The End of Cheap China’ and ‘The End of Copycat China.’

Referring to the framing of the possible deal on TikTok by trade negotiators during talks in Spain, Rein said, “It is clear that China is ready to give up control of TikTok to (the) US but (it is) not going to sell the tech as it wants to control intellectual property.”

TikTok is facing a possible ban if it is not sold to the US and Trump postponed the penalty for a third time Wednesday.

Rein noted, however, that China “has been able to replace the US from its supply chain.”

Instead of the US, Beijing buys soyabeans from Brazil, beef from Australia, oil from Canada and is ramping up domestic chip production instead of buying from Nvidia, he said, pointing out that China’s 17% exports to the US had slowed to 14%.

But, he added, trade war hurts both economies and they need “accommodation, an agreement” toward free trade.

“It will help both sides” against the worry about inflation in the US, and a slowdown in the top two economies, said Rein. 

Likely scenarios

“It could be that a trade deal is coming,” said Larus, citing that Trump “is unpredictable and Xi is opaque.”

“Trade talks continue, but not at a high and robust level.”

The call “might resolve some significant but smaller issues in US-China relations, such as divestiture and ownership of the short-video TikTok app and some small trade deals, but will not resolve the big issues,” said the Pacific Forum fellow, referring to China’s support for Russia, amid its war in Ukraine, Taiwan, as well as Beijing’s tensions with the Philippines in the South China Sea.

Rein said the likely scenario in the Xi-Trump call would address at least three issues: lower tariffs, access to tech, as well as the US likely reaffirming its one-China policy vis-a-vis Taiwan.