US-China trade war truce, a win for Xi

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The result may be good for both: the ultimatum on the trade war has been postponed for two months. In this way, American president Donald Trump can give a positive signal to the markets and therefore gain some time.

For Chinese president Xi Jinping, it may be even better because he will not have to discuss the outcome with the plenary assembly of the Chinese parliament, the National People’s Congress (NPC) that will meet Beijing on March 5, bringing to the capital the 3,000 most important people in China.

The showdown, however, is only postponed because beyond the trade issue lie thousands of other issues, including the 5G technology, which will revolutionize communications and also military offense and defense.

From the Chinese point of view, Xi’s success is very clear. He took over the negotiation from the other bureaucratic levels: the foreign ministry, Prime Minister office, in this case Premier Li Keqiang, and Deputy Premier Wang Yang. These were the apparatuses that for decades have managed relations with America.

He put his trusted man, Vice Premier Liu He, at the helm of the thing and got an unexpected result: he avoided the war and also avoided surrender. He did this by looking at the reality that China was risking war and made two choices, both bad for the country.

Xi chose a strategy of centralization and exclusion of others that has brought actual results. The same strategy possibly had been used a few months earlier to conclude the agreement with the Vatican.

On the other hand, America has shown that it is not a priori hostile to Xi Jinping because it had him avoid the difficult situation of having to deal with the Chinese parliament.

America has therefore declared that it wants, at least for the time being, Xi as interlocutor, rejecting direct and indirect offers of the Chinese opposition to Xi. Xi is therefore in a good position today to further concentrate power and make the necessary reforms both to meet the American demands and the needs of today’s changes in China.

The challenges remain enormous and the chances of a real war have not diminished. However, Xi has more room to maneuver and this could be good for everyone.

Trump, who avoided a possible market slump following the ultimatum, has also a capital to spend at home. He also needs to make full preparations for what to do in two months, when many of the present problems will be still on the table.

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