On January 22-25 the World Economic Forum will hold its annual meeting in Davos, Switzerland.
After attending the gathering of the world business elites last year, President Trump canceled his second visit to focus on domestic issues, such as the government shutdown.
Last year, President Trump affirmed that America is open for business, outlining U.S. competitiveness to attract foreign investments. This year, the trade war between the United States and China will loom over the meeting of the World Economic Forum.
A delegation from China, led by Chinese Vice President Wang Quishan, will attend the Forum, which will be characterized by tense relations between China and Canada over the arrest of Huawei executive Meng Wanzhou in Canada and the subsequent arrest of two former Canadian diplomats in China. The United States asked Canada to extradite Ms. Wanzhou, who's accused of Iran sanctions violations.
The Canadian delegation, which include Foreign Affairs Minister Chrystia Freeland, is expected to address the detention of the Canadian citizens to gather support from the business community. Lu Shaye, Chinese Ambassador to Canada, warned Canada not to use the Forum to press for support against China.
Early this year, President Trump imposed tariffs on Chinese goods, declaring that bilateral trade is unfairly favorable to China, and asking for a reduction of U.S. trade deficit, an increase of intellectual property protection, and the liberalization of China’s financial sector. China responded with a 10 percent tariff on several American goods, including liquefied natural gas, and slashing U.S. corn and soybean imports.
However, since the trade war started, China has made several important steps to meet Trump’s demands. This year, for first time since Mao Zedong took power in 1949, the Chinese government opened its market to foreign financial institutions, allowing foreign banks and funds to own majority stakes in Chinese financial companies.
Last November, during the G20 meeting, Chinese President Xi Jinping announced that his country would restart imports of some American goods, such as liquefied natural gas (which is an essential commodity for China). In response, President Trump froze any tariff increase until March 1, 2019, to give the parties more time to reach a trade deal. If no deal is reached, after such deadline the U.S. Administration would increase tariffs from 10 percent to 25 percent on $200-billion worth of Chinese goods.
It is unlikely that a trade deal will be reached before the end of February, because the U.S. economy is still strong and the Trump Administration is not in a hurry to end the standoff. However, China is making significant progress towards the liberalization of its domestic market, and the end of the trade war, if a fair deal is reached, would bring long-term benefits to both countries.
Last September, during the World Economic Forum meeting in Tianjin, Chinese Premier Li Keqiang reaffirmed his country’s commitment to financial opening, outlining that foreign banks would improve the quality and diversity of financial instruments in the domestic market.
During the latest round of talks in Beijing, the two countries got closer on energy trade and market access, but are still working on other issues, such as intellectual property protection and technology transfer.
While the trade war will cast a shadow over Davos this year, negotiations between the Trump Administration and the Chinese Government are quickly moving forward, and the world’s two largest economies might reach a deal in the coming months.
Francesco Stipo is the President of the Houston Energy Club, a member of the National Press Club in Washington D.C., a Fellow of the World Academy of Art and Science, and recently joined the Bretton Woods Committee. Born in Italy in 1973, Dr. Stipo is a naturalized United States citizen. He holds a Ph.D. in International Law and a Master Degree in Comparative Law from the University of Miami. To read more of his reports, Click Here Now.
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