Why they’re not telling you about the US-China trade deal

Summary

President Trump recently revealed that the U.S. and China signed a deal aimed at 'opening up China,' but the details remain largely secret. The deal includes key Chinese concessions: reciprocal market access for U.S. companies, leveling the playing field for state-owned enterprises, and an agreement to stop using rare earths as geopolitical leverage. In return, the U.S. would reduce tariffs. This agreement could reshape China’s economy and political system, but secrecy persists due to internal Chinese resistance, especially from President Xi Jinping’s camp. The deal hints at significant changes in China’s economy and global power dynamics.

Takeaways

• 😀 Trump announced a deal with China that promises to 'open up' the country in ways previously unimaginable.
• 😀 The details of the deal were kept vague, with both the U.S. and Chinese sides being secretive about the terms.
• 😀 U.S. officials mentioned the deal addressed issues like rare earths, but avoided discussing specifics like tariff reductions.
• 😀 The Chinese side stayed silent and provided only brief, vague statements about the deal’s framework.
• 😀 The Trump administration deliberately kept details vague to avoid revealing sensitive information that could destabilize China politically.
• 😀 The agreement includes four major points: three concessions from China and one from the U.S.
• 😀 China’s three major concessions include reciprocal market access, leveling the playing field for state-owned enterprises (SOEs), and stopping the use of rare earths as geopolitical leverage.
• 😀 The U.S. concession involved reducing tariffs on Chinese goods from 55% to 20%, which is still above the base rate of 10%.
• 😀 The agreement allows U.S. companies to gain equal access to Chinese markets, including the ability for U.S. social media platforms like YouTube and Facebook to operate in China.
• 😀 The deal marks a significant shift in China’s economic system by limiting the preferential treatment of SOEs and encouraging fair competition for foreign companies.
• 😀 The deal is secret for now because it would expose internal political tensions within China, including Xi Jinping's opposition to the agreement and his concerns about the loss of national sovereignty.

Q & A

What is the significance of President Trump's statement about 'opening up China'?

President Trump's statement about 'opening up China' suggests a major shift in US-China relations, where the US would gain more access to Chinese markets, something that had been previously restricted or controlled by China. The focus on this phrase implies that the deal goes beyond simple trade agreements and could affect China's internal economic structures.

Why did the media focus on rare earth minerals after Trump's announcement?

The media focused on rare earth minerals because they are critical resources used in various industries, and there were reports that the deal involved addressing rare earth bottlenecks. However, the lack of details in the public announcement left many speculating about the deal's terms, with rare earth minerals becoming a central talking point.

What is the Chinese government’s stance on the deal, and why is it kept vague?

The Chinese government has been deliberately vague about the details of the deal, citing internal political sensitivities. The secrecy is believed to stem from concerns within China's leadership, particularly Xi Jinping's faction, which may view the concessions made to the US as politically damaging and potentially destabilizing.

What are the key concessions China made in the deal?

China made three major concessions: granting reciprocal market access, allowing US companies to operate on the same terms as Chinese firms; leveling the playing field for state-owned enterprises (SOEs) by reducing preferential treatment; and agreeing to stop using rare earth minerals as geopolitical leverage by ensuring open exports.

What was the US concession in the deal?

The US concession in the deal was agreeing to reduce tariffs on Chinese goods to 20%, which was a significant decrease from the previous 55%, though still higher than the base rate of 10%.

How could the deal affect the Chinese economy and market access for American companies?

The deal could potentially shift the balance of power in China's economy by forcing state-owned enterprises (SOEs) to compete fairly with private and foreign companies. American companies would gain more access to Chinese markets, creating a more transparent and competitive environment in industries such as banking, telecom, and energy.

What is the significance of allowing American social media platforms like Facebook and YouTube into China?

Allowing American social media platforms into China could break down the Great Firewall, which has historically restricted access to information in China. It would expose Chinese citizens to platforms like Facebook and YouTube, providing greater freedom of information and potentially challenging government censorship practices.

Why did Xi Jinping reportedly oppose the deal?

Xi Jinping opposed the deal because he viewed it as an 'unequal treaty' that surrendered China's national sovereignty. He reportedly saw the concessions made to the US as compromising China's control over its economy and society, which would conflict with his vision of a state-run, centralized system.

Why is the deal being kept secret, and how is it politically sensitive?

The deal is being kept secret because it involves significant changes to China's economy, particularly in relation to market access and the role of state-owned enterprises. The secrecy is driven by the internal political dynamics within China, where the leadership factions loyal to Xi Jinping would likely oppose such concessions, leading to the deal's temporary confidentiality.

How might the deal reshape the Chinese financial system?

The deal could reshape the Chinese financial system by encouraging greater transparency and market-based competition, shifting power away from the Chinese Communist Party (CCP) and towards the market. It could also encourage Chinese firms to clean up corruption and innovate, as they would have to compete with American companies that follow stricter regulatory and operational standards.