[The Editors' Verdict] Mutual Assistance Between President Trump and President Xi Jinping

The domestic and international situation is moving in a direction favorable to the re-election of U.S. President Donald Trump. Domestically, Senator Bernie Sanders, who calls himself a 'democratic socialist,' is rising as the Democratic presidential candidate, but even within the Democratic Party there are concerns about Sanders' rise, so the Trump camp is leisurely watching the Democratic primaries. On the 4th (local time), former Vice President Biden won 10 out of 14 states in the 'Super Tuesday' primaries, but Sanders could still win the remaining primary states and secure the presidential ticket.

Just a month ago, as many as 11 candidates were competing, but as the sentiment within the Democratic Party grew uneasy about Sanders' rise, some supporters gave up on the primaries to consolidate the anti-Sanders faction, leaving only four candidates currently.

Throughout last year, the 'strong versus strong' stance between the U.S. and China was maintained with tariff bombs and retaliatory tariffs, but earlier this year, the two countries signed a Phase One agreement. Looking at the details, it is simply China accepting the U.S.'s demands, with no sign of 'balance' between the two. The obligations China must bear are numerous. Since the whole country is paralyzed due to the spread of the novel coronavirus (COVID-19), China can use the pandemic as an excuse to delay fulfilling its promises. However, the Chinese leadership has repeatedly affirmed their commitment to fulfilling the agreement. What could be the reason?

When the Hong Kong Legislative Council (parliament) passed the 'Fugitive Offenders Ordinance,' large-scale anti-China protests were held in June last year. China stationed suppression troops near Hong Kong in Shenzhen and other areas, urging the disbandment of the protest movement, but the U.S. clearly opposed China's intervention. Since Hong Kong is a gateway for Western capital flowing into China, China found it difficult to deploy suppression troops. As the resolution of the Hong Kong situation was delayed, the environment for China-U.S. trade negotiations inevitably worsened. It was in this context that the Phase One agreement was signed.

Soon after the signing of the Phase One agreement, the COVID-19 outbreak occurred in Wuhan, China. China's approach of politically judging and handling scientific matters became a catalyst for the coronavirus spreading not only within China but worldwide, causing the international community's view of China to rapidly freeze. As the COVID-19 situation worsened and major Chinese cities were locked down, concerns arose in the U.S. about whether China could keep its promises.

The U.S. found a favorable opportunity to reshore its companies operating in China if it wished. This was a fatal blow to China. In this situation, China made a decision. Chinese President Xi Jinping confirmed the fulfillment of the Phase One agreement promises during a phone call with President Trump. To show its willingness to fulfill the promises, China proactively lowered tariffs on U.S. goods. If the U.S. had shaken China's economy as it did last year during the COVID-19 crisis, China could have reached a regime risk level, so it is interpreted that China took the initiative.

The Phase One agreement includes provisions to import U.S. goods considering natural disasters and domestic supply and demand in China. The national crisis caused by COVID-19 can serve as a reason to delay or reduce the burden of fulfilling promises, but China has completely alleviated U.S. concerns. President Trump must have been pleased with China's attitude. With his excellent business and political sense, he likely already reads that China is acting favorably for his election.

China's confirmation of promise fulfillment is because it read Trump's calculation to prevent additional U.S. measures and use the Phase One agreement implementation as an election campaign point. Trump also subtly scolded his aides who recommended a hardline policy against China and eased regulations on Huawei, reciprocating China's consideration. This is to give China, whose economy was severely damaged by the COVID-19 outbreak, some breathing room to recover. President Trump and President Xi Jinping are providing each other with what is needed through tacit understanding.

As long as China does not betray Trump's expectations, U.S.-China relations will be smooth until the November election, but the situation afterward is unpredictable. Above all, the Phase Two negotiations addressing China's non-market economy elements must be conducted. The important point is that even if U.S.-China relations remain quiet this year, it should be recognized as a temporary truce based on mutual needs, and international relations and business response strategies should be prepared accordingly.

Jin-Kyo Jung, Professor, Department of International Trade, Inha University