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CWA # 143, 8 July 2019

G-20 Summit
For China, it was trade and a temporary truce

  Harini Madhusudan

Part of the truce between the US and China was the easing of tariffs on Huawei. This meant that Huawei would be allowed to use US-made products in their gadgets again.

The uncertainty relating to the global economy in the past two years was the primary focus in the Osaka Summit; the Trade War and Climate Action were contentious issues during the summit. The highlight of the Osaka Summit was undoubtedly the second truce between the US and China regarding the trade dispute with their agreement to start the negotiations again. China's role in the Osaka summit can be seen from three angles, the trade negotiations, the deal for Huawei and Xi Jinping's interactions with other leaders. 

Temporary Truce

President Donald Trump stated that the US would hold off raising tariffs on the proposed $300bn worth of Chinese goods while the negotiations to end the trade war between the two countries continue. "We will be continuing to negotiate. And I promised that for at least the time being, we are not going to be lifting tariffs on China, and we won't be adding an additional, I guess we have $350bn left which could be taxed, or could be tariffed. And we're not doing that. We're going to work with China on where we left off to see if we can make a deal," Trump is said to have mentioned at a news conference at the end of the two-day G20 Summit.

However, something similar to a truce was the most likely expected outcome from Trump and Xi's meeting on the sidelines of the summit. Trump is entering the 2020 election campaign. Naturally, there is pressure to stabilize the economy. Business confidence has also taken a blow due to the effects of the trade war; analysts have been issuing warnings that this has the potential to tip the global economy into recession if it escalates further. On the other hand, Xi cannot agree to a deal that is seen as unfair domestically. A truce was the only visible option, and if the negotiators try to patch things together without addressing the underlying long term structural differences in the complex and competitive relationship, it may remain the only option. 

Huawei Breakthrough

Part of the truce between the US and China was the easing of tariffs on Huawei. This meant that Huawei would be allowed to use US-made products in their gadgets again. Trump stated that companies could continue selling goods to Huawei despite the rule by the commerce department, which had asked for a license to sell to Huawei. A recent Reuters report informs that the US Commerce Department is still advising companies to continue to treat Huawei as blacklisted.

Weeks ago, Huawei became the focal point of the entire trade war between the two powers. It was banned on the grounds of national security concerns, which saw many other countries follow the US in banning the tech company. Some observers saw Trump's apparent softening stance on the Chinese tech giant as a significant concession that the US has granted China. Both the US and China governments appeared to tread Trump's Huawei announcement with caution. There was a lack of clarity on the statement by Trump and the response by the Commerce Department. Can this be negotiated too?
On the Sidelines

This year's summit was all about the interactions between leaders on the sidelines. Xi and Trump, Abe and Xi, Xi and Modi, the informal BRICS meeting, and various sub-regional meetings were held during the two-day summit.  On the day before his formal meeting with President Donald Trump, Chinese President Xi Jinping accused the developed countries of engaging in protectionist behaviour that was "destroying" the global trade system. Ahead of his meeting with Trump, Xi made a sudden visit to North Korea, the first by a Chinese president in 14 years - amid speculation that the trip was aimed at demonstrating China's clout over North Korean dictator Kim Jong-un to the US leader. After the summit, Trump visited North Korea as well. It seems like North Korea is a significant linking point between the two leaders.  

All the outcomes from the G20 summit point to the truce that was announced between the US and China; however, the document of outcomes include various pressing global economic issues that the leaders have addressed. This includes displacement and migration, the environment and reassurance by all the leaders except the US on the Paris deal. Global growth appears to be stabilizing and is generally projected to pick up moderately later this year and into 2020. The nations promised to continue to address the possible risks, and stand ready to take further action. The summit managed to address the various issues of Global concern; it failed to gain the attention of the popular media.  
 

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