Two books written by President Trump in 2000 and 2015 help to explain why he has been remarkably secretive about the instructions that he gave to two Cabinet members and his three closest White House economic advisors for two days of talks in Beijing. The secrecy has succeeded and may have resulted in an initial Trump victory Friday, without provoking a widely dreaded 鈥渢rade war.鈥�
The two biggest reasons for the secrecy are not so secret: Clearly, President Trump does not want his Chinese counterpart, President Xi, to lose face because he needs Xi鈥檚 help now more than ever as the final phases of the North Korean summit are negotiated. China can help close the deal on the date, the place and the initial terms to which North Korea's chairman, Kim Jong-un, must agree. So, this is the worst time for an open split between the U.S. and China over trade friction. The president wisely calculated that a joint, seamless China-America approach now will add to the impact of his "maximum pressure" sanctions on North Korea that are approaching a near-total blockade in effectiveness.
The other reason for secrecy 鈥� a much bigger one 鈥� is to tactfully play down the boldness of President Trump鈥檚 demands for dramatic Chinese concessions that will painfully challenge all the core elements of China鈥檚 economic system and its links to the constitution of the Communist Party. If you consider the reverse image, it鈥檚 like a Chinese delegation of cabinet secretaries arriving in Washington and giving the U.S. two years to amend our Constitution and to give up our free-market economy.
This is not a new idea that his advisers recently pushed on him; President Trump鈥檚 ideas about China date back nearly two decades.
Trump鈥檚 concern with China dates back to a book he published in 2000 that stated, 鈥渋n the long term China is our biggest challenge.鈥� He returned to this theme in another book he published in 2015 called 鈥淐rippled America,鈥� where he argued that, 鈥淎s a matter of global American global policy, we want to take away China鈥檚 advantages.鈥� He then laid out how to persuade China to do that: 鈥淲hen dealing with China, we need to tell them its bad business to take advantage of your best customer.鈥�
Unfortunately, someone in the president鈥檚 delegation or the Chinese side has revealed to American reporters in Beijing what some of the president鈥檚 negotiating demands were. Still, the leak may have ensured in the long run that the talks have succeeded by educating the Chinese about exactly what President Trump wants.
China confined its public view to one restrained, curt comment that 鈥渂ig differences鈥� remained as the U.S. government delegation headed out of town a few hours later.
The leaked American demands included fundamental revisions in how the Chinese leadership manages foreign trade and its economy, including purchasing vastly more American exports in order to reduce at least $200 billion from the total U.S. trade deficit with China by 2020.
Some of the Chinese negotiators鈥� demands were also leaked 鈥� namely, a demand that, at the World Trade Organization in Geneva, the U.S. drop its legal complaint over China鈥檚 licensing terms for foreign patent holders and immediately designate China a market economy, among a total of 鈥渆ight points.鈥�
The U.S. team publicly relied on a White House statement today that called the talks 鈥渇rank.鈥�
The White House deliberately referred to a 鈥渃onsensus鈥� among the Americans, which contradicts many Chinese articles in the past week that mocked the friction among Peter Navarro, Larry Kudlow, Treasury Secretary Steven Mnuchin, Commerce Secretary Wilbur Ross and U.S. Trade Representative Robert Lighthizer. Shrewdly, the White House added: 鈥淭here is consensus within the administration that immediate action is needed to bring changes to the United States-China trade and investment relationship.鈥�
One Chinese joked with me today that this statement obfuscates fierce divisions that China knows exist within the U.S. team, between hard-liners and free-trade advocates. 鈥淭hey fight more with themselves than with China,鈥� he laughed.
The U.S. briefing paper that at first leaked on the social-media site Weibo was deleted by Chinese government censors.
The U.S. side apparently demanded that China:
1.) drop its tariffs to match lower U.S. levels;
2.) eliminate limits on U.S. investment in specific industries;
3.) end cyberattacks on U.S. targets;
4.) strengthen intellectual property safeguards, and
5.) halt subsidies for advanced technology industries.
Sticking to President Trump鈥檚 script, Treasury Secretary Steven Mnuchin correctly accentuated the positive when he told reporters that the two sides were having 鈥渧ery good conversations,鈥� according to Reuters.
President Trump鈥檚 two books, in 2000 and 2015, warned that China is a tough negotiator, so it presumably was no surprise for the president to learn today that the talks had ended without any deal.
鈥淭he two sides fully exchanged views on expanding U.S. exports to China, bilateral trade in services, two-way investment, protection of intellectual property rights, resolution of tariffs and non-tariff measures, and reached consensus in some areas,鈥� the Chinese government news agency Xinhua reported. 鈥淭he two sides recognized that there are still big differences on some issues and that they need to continue to step up their work and make more progress.鈥�
Xinhua reported that both sides agreed to establish a 鈥渨orking mechanism鈥� to maintain close communication on the issues discussed in the talks.
The document supplied by the American delegation to the Chinese side ahead of the talks, which leaked to Weibo, demanded that Beijing cut the $375 billion U.S. trade deficit by $100 billion over the next 12 months and by another $100 billion by the end of 2020, by buying large, new imports from the United States.
The document demanded that China immediately 鈥渃ease providing market-distorting subsidies and other types of government support that can contribute to the creation or maintenance of excess capacity in the industries targeted by the Made in China 2025 industrial plan.鈥�
And the leaked document asked China to ensure that American investors are 鈥渁fforded fair, effective and nondiscriminatory market access and treatment,鈥� adding that China must reduce 鈥渢ariffs on all products in noncritical sectors to levels that are no higher than the levels of the United States鈥� corresponding tariffs.鈥�