The United States and China will begin two days of trade talks early next week in Beijing. This round of discussions will be the first in-person meeting between representatives of the two nations since President Trump and Chinese president Xi Jinping’s discussions at the G20 Summit in Buenos Aires last month. Those discussions between the two leaders brought about a 90-day halt on further tariffs and the talks scheduled for 7-8 January, 2019 are officially being held to further the implementation of the agreements made between Trump and Xi. Unofficially, China’s rush to put together the upcoming talks could indicate growing unease in Beijing about the Chinese economy’s recent downward trend, and the effects that the US-China trade war is beginning to have on it. China’s stock market indices experienced rapid gains once the trade talks were confirmed, showing that anxiety about the state of China’s economy is not restricted to the government.
The massive, and destabilizing US-China trade war scenario prophesized by a number of prominent Western economists has failed to come about. Both nations are making a concerted effort to prevent the current level of tariff exchanges from escalating, while still protecting their respective positions and principles. So far Washington and Beijing have succeeded in this effort. Still, there is cause for concern on the horizon and it is directly connected to the performance of China’s economy in the coming months. This week’s warning from Apple about weak iPhone sales in the PRC is the latest in a litany of somber economic news emerging from the Asian giant. Auto, and new home sales have declined, and factory profits are dropping. GDP growth is also growing sluggish, and there is legitimate concern now among economists and investors that China’s economic slowdown will worsen before it improves.
If that turns out to be the case, the first victim could be the 90-day tariff ceasefire now in place. Next week’s talks should give the world fresh insight to the Chinese government’s own interpretation of its economic prognosis, as well as an unguarded glimpse at just how much pain the tariff exchange with the United States is causing for Beijing.