China starts the new decade with good and bad news. The signing of the new trade deal with Donald Trump is good news and defuses a nearly two-year trade war. The phase-one deal will give a much-needed boost to a slowing economy, surging debt and new challenges in Hong Kong and Taiwan.
The deal will reportedly commit China to buying some $200 billion of US goods, as well as respecting intellectual property rights and not manipulating its currency. The agreement puts off more sensitive discussions such as the state subsidies and market protections that China has relied upon.
America will consider additional cuts on tariffs affecting $360bn of imports based on China’s compliance with the phase-one deal. Tensions over technology are likely to remain as the Trump administration considers steps to further limit the ability of American companies to supply Chinese telecom equipment giant Huawei.
The Chinese leadership have other reasons to smile as 2020 begins. The economic slowdown is showing signs of stabilising and economists have upgraded their 2020 growth forecasts to 5.9 per cent. Additionally, the one-year old pro-democracy protests in Hong Kong have decreased in both frequency and violence. The impact of the protests has severely impacted the economy with for example tourism majorly affected with over nine million fewer visitors in 2019.
On the downside the year starts with Tsai Ing-wen’s resounding re-election as Taiwan’s president which is expected will only harden Xi Jinping’s uncompromising approach towards the island. Unfortunately for the Chinese president he has limited options when it comes to trying to impose Beijing’s control on the rebel independent island. With neither military force nor a political rapprochement feasible the Chinese leadership will continue its policy of refusing to engage with Ms Tsai’s government. Past efforts to influence opinion on the island through unofficial grassroots channels and overt displays of economic, diplomatic and military might are expected to continue.
Finally, the start of the new decade saw Xi Jinping arrive in Myanmar to nail down multi-billion-dollar infrastructure deals. This is a welcome visit for Myanmar’s de facto leader Aung San Suu Kyi who took to the stand at the International Court of Justice in the Hague at the end of 2019 trying to win approval from Western governments who are appalled at the “genocide” of Rohingya Muslims.
The presidential visit will seek to cement Beijing’s position as Myanmar’s largest investor and strategic partner. Key to discussions will be the China-Myanmar Economic Corridor that aims to connect the Middle Kingdom to the Indian Ocean. This is a key route in the Belt and Road Initiative that envisions Chinese infrastructure and influence spanning the globe.
In addition to offering tens of billions of dollars in investment, China shields its neighbour at the United Nations, where pressure is mounting for accountability over the Rohingya crisis. Yet the relationship between the countries is tangled. Ethnic conflicts sizzling in border zones and the impact of dams, pipelines and transport links risk awakening hostility over Chinese intentions.
With the Chinese New Year celebrations taking place on January 25, I am sure the president will be having a drink to perhaps celebrate his successes or to drown his sorrows.
Gordon is the former president and chief executive of BMMI. He can be reached at email@example.com