The U.S. and China held talks in late January in an effort to break the deadlock in their trade war. They were unable, however, to resolve key issues, such as China's violations of intellectual property rights and its forced transfer of technology from foreign enterprises. On the plus side, they agreed to continue holding discussions.
Should the conflict between the world's two largest economies intensify, it could trigger a global economic slowdown and financial market turmoil. Both sides should therefore fast-track efforts to redress their trade imbalances so as to put an end to this abnormal situation marked by steep tit-for-tat import tariffs.
The U.S. administration of President Donald Trump has already implemented three rounds of punitive tariffs for reasons of protecting intellectual property, imposing hefty duties on $250 billion worth of Chinese imports. China responded with its own tariffs on $110 billion worth of U.S. imports.
In line with an agreement made between Trump and Chinese President Xi Jinping at their summit in Buenos Aires on Dec. 1, the two governments are refraining from imposing further tariffs for 90 days, during which they will continue talks on how to redress the trade imbalances. If they fail to resolve the matter by the March 1 deadline, the U.S. will raise the tariff rate to 25% from the current 10% on $200 billion worth of the total.
At cabinet-level talks on Jan. 30-31, the Chinese side suggested the possibility of increasing imports of American soybeans and other farm products -- a sign that some progress has been made on getting Beijing to open up the country's markets. However, the two sides have yet to bridge their differences on the issues that Washington deems most pressing: Chinese intellectual property theft, Beijing's practice of forcing foreign companies to transfer their technology when setting up local units, and the massive subsidies that China splashes out to nurture domestic industries.
Forming the backdrop of the U.S.-China trade war is their struggle for global economic and technological dominance. The standoff between the two superpowers is deep-rooted, with China seeking technological supremacy through its "Made in China 2025" program aimed at fostering high-tech industries, and the U.S. working hard to ensure that does not happen. Achieving a compromise quickly on such a sweeping issue is asking a lot.
But if the U.S. and China continue to bombard each other with steep tariffs, there will be no winners; there will simply be an economic war of attrition in which both sides exhaust themselves. The idea of either side seeking to inflict further pain on the other at this point is, quite frankly, unthinkable.
China's worse-than-expected slowdown has forced the Xi administration to take fiscal stimulus and monetary-easing measures. In the U.S., meanwhile, concerns are growing about a possible economic downturn at home. Stock prices have become increasingly unstable there, which has alarm bells ringing within the Trump administration.
Neither government can allow the trade war -- and the burden it places on companies and citizens alike -- to go on indefinitely. Both sides need to be acutely aware that if the No. 1 and 2 economies slump, the world economy will go down with them.
Trump and Xi are expected to meet again before the trade truce expires. For the sake of preventing the global economy from grinding to a halt, we hope they are able to reach a compromise. And there is more at stake here: If the trade war causes U.S.-China relations to sour even further, already heightened tensions over Taiwan and China's maritime advances in Asian waters could soar.
The world cannot afford these risks. It is time for the battle to end.