US-China trade talks now a game of three-dimensional chess

US-China trade talks now a game of three-dimensional chess
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China’s chief economic minister Liu He and his team has arrived in Washington, D.C. to continue the ongoing trade negotiations between China and the United States. At stake is nothing less than the resetting of the world’s most important bilateral trade relation.

By all appearances, this seems like a debate between two of the world’s largest economies, but there is much more to this than meets the eye. The Trump administration is engaged in what some would describe as a game of three- dimensional chess.

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The multi-faceted discussions will not only encompass a laundry list of items that each side will present but will also involve elements that are not part of the discussion, such as the U.S.–North Korea security dialog. Over the past several weeks, what has unfolded is a Kabuki theater of sorts filled with all manner of twists and turns. 

 

Liu He and his team are set to continue negotiations with the Trump administration over a range of trade issues between the two nations. Threats and counter-threats have been made over the past months regarding the imposition of tariffs on a wide range of U.S.-made and China-made goods.

In entering the negotiations, “carrots” have been offered as well as “sticks.” Realizing the potential impact on the U.S. farm economy of increased tariffs, China has telegraphed that it would dial down its intent to impose such restrictions.

In response, President TrumpDonald John TrumpPompeo changes staff for Russia meeting after concerns raised about top negotiator's ties: report House unravels with rise of 'Les Enfants Terrible' Ben Carson: Trump is not a racist and his comments were not racist MORE tweeted that he would order the Commerce Department to revise the ban imposed on cellphone maker ZTE and allow it to once again source American parts critical to its mobile phone production. The change in posture on ZTE set off a firestorm of condemnation by members of both parties.

As the negotiations commence, one is reminded of the aphorism expressed by Sun Tzu in his work, "The Art of War." Quoting Sun Tzu, “All warfare is based on deception.” For the Chinese side, they will ask if the recent events signaled a change in posture on the part of the United States or are the events part of a grand deception?

For the United States, the same can be said: Are China’s latest moves a signal of cooperation or is China playing a sleight of hand? Add to this a veiled threat that Kim Jung Un will abandon the upcoming June summit in Singapore with Trump.

Should Kim Jung Un’s latest move be seen in isolation or is this move linked to the current trade negotiation between China and the U.S.? I’m not one who believes there are accidents in life. The two highly publicized meetings between Chinese President Xi Jinping and Kim Jung Un speak to the triangular nature of the challenge that is unfolding.

We can rest assured that when Xi and Kim get together, they’re not meeting to discuss the NBA finals. North Korea is the wild card that China is carefully playing, signaling to President Trump that his victory dance on Korean denuclearization talks may be premature.

On Wednesday, Bloomberg reported that National Trade Council Director Peter Navarro will not be attending the meetings Thursday with the China delegation. Following that report, the White House appears to have changed course, saying Navarro will be in attendance.

That President Trump initially decided that the trade “attack dog” should be chained sends a signal to China of the philosophical divide that exists within his administration on the China trade issue. Will the Chinese side see this course correction as a disappointing development now that the author of "Death by China" is back in the fold?

Will the initial plan to leave Navarro out encourage trade pragmatists to reassert themselves over the trade nationalists within the administration?

For a president mired in controversy and investigation, a victory on China and the DPRK would be a refreshing shot in the arm. President Trump needs a win and he needs one soon. All parties to this negotiation are well aware of that. 

To borrow a phrase from Donald Trump, “We’ll wait and see.”

Arthur Dong is a professor at Georgetown University's McDonough School of Business. He specializes in legal and business engagements between China and the United States.