By Lee Seong-hyon
Some believe that the first phase of the U.S.-China deal to end the trade war is China's defeat. However, Vice Premier Liu He, China's chief delegate to the trade talks, said the deal "serves China's interests, the U.S.'s interests, and the world's interests." In other words, he characterized the deal as having a "win-win" outcome. Then, on what basis should we evaluate the deal?
The agreement calls for China to purchase $200 billion worth of U.S. products in two years, while the U.S. will suspend or ease its planned additional tariffs on Chinese goods. As much of the rest is about China's future commitments, it is difficult to assess which country will be hit harder in terms of gains and losses.
As an alternative, it can be approached from the perspective of how much the U.S. and China have each achieved their intended goals through their trade war negotiations. This is known as "goal setting theory." The gist of this theory, initiated by psychologist Edwin A. Locke in his 1968 paper, "Toward a theory of task motivation and incentives," places the goal as the most direct prerequisite for performance-related action and evaluation of performance. In the trade war context, the focus is on what the U.S. and China consciously wanted to achieve from the negotiations, and how much closer they've come toward that goal.
Trump called the agreement "righting the wrongs of the past" at a news conference held just before the signing ceremony. Then, this should be the goal of the U.S. side. The question is did the U.S. achieve that goal through this agreement? In many cases, this will depend on China's implementation of the deal. In other words, agreement is one thing; implementation is another.
Shifting to the other side, what was the goal on the Chinese side? It was to conduct a "delaying tactic" operation. That is yielding as little as possible at each step, spread over as long a period as possible. In the meantime, China is keen to see whether Trump will be impeached, or fail in re-election or if the recent Iran crisis will become a full-scale war between the United States and Iran, keeping Trump occupied with the Middle East, not China. All of this will help China buy more time and recalibrate.
In fact, China is well versed in this kind of delaying tactic and it has served China well since Sun Tzu's time of "The Art of the War" in 5th century BC. China has been taking its time by gradually making concessions to demands from the U.S., a country stronger than China in terms of national power. However, China strongly resisted and kept what it considers to be core interests. China rejected the earlier draft agreement in May 2019.
China also got its own way. The U.S. initially wanted one single big deal ― a grand bargain. But China employed "salami tactics" that cut the deal into numerous phases. China also seems to have had clear standards on where it can and cannot make concessions. For instance, Beijing was open in terms of a massive purchase of U.S. products. However, the agreement did not cover the forever controversial Chinese state-owned enterprise (SOE) reforms.
Judging from the "goal-setting theory," the winner of the first phase of the agreement is China, not the United States. China has achieved much of what it had set as its goal. When it comes to areas that it had the intention to make concessions in, it did so while resisting U.S. demands in other areas as much as possible, by tossing them over to future implementations. China also successfully kept its bottom line; it rejected the earlier draft when it felt it undermined the Chinese sovereignty. Rumor had it that the U.S. side became anxious as the new year approached, while the Chinese were dragging their feet.
It should be noted that Liu He, standing next to Trump, said that China would buy American products, but "based on market conditions." U.S. Trade Representative Robert Lighthizer also said "the agreement will work if China wants it to work," thus revealing why the agreement is fragile.
In essence, the deal is yet another temporary measure rather than a resolution. The future prospects are quite uncertain. Even though Washington and Beijing have a reconciliatory mood at the moment, the two are expected to confront one another again soon.
Lee Seong-hyon (sunnybbsfs@gmail.com), Ph.D., is director, the Center for Chinese Studies at the Sejong Institute.
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The agreement calls for China to purchase $200 billion worth of U.S. products in two years, while the U.S. will suspend or ease its planned additional tariffs on Chinese goods. As much of the rest is about China's future commitments, it is difficult to assess which country will be hit harder in terms of gains and losses.
As an alternative, it can be approached from the perspective of how much the U.S. and China have each achieved their intended goals through their trade war negotiations. This is known as "goal setting theory." The gist of this theory, initiated by psychologist Edwin A. Locke in his 1968 paper, "Toward a theory of task motivation and incentives," places the goal as the most direct prerequisite for performance-related action and evaluation of performance. In the trade war context, the focus is on what the U.S. and China consciously wanted to achieve from the negotiations, and how much closer they've come toward that goal.
Trump called the agreement "righting the wrongs of the past" at a news conference held just before the signing ceremony. Then, this should be the goal of the U.S. side. The question is did the U.S. achieve that goal through this agreement? In many cases, this will depend on China's implementation of the deal. In other words, agreement is one thing; implementation is another.
Shifting to the other side, what was the goal on the Chinese side? It was to conduct a "delaying tactic" operation. That is yielding as little as possible at each step, spread over as long a period as possible. In the meantime, China is keen to see whether Trump will be impeached, or fail in re-election or if the recent Iran crisis will become a full-scale war between the United States and Iran, keeping Trump occupied with the Middle East, not China. All of this will help China buy more time and recalibrate.
In fact, China is well versed in this kind of delaying tactic and it has served China well since Sun Tzu's time of "The Art of the War" in 5th century BC. China has been taking its time by gradually making concessions to demands from the U.S., a country stronger than China in terms of national power. However, China strongly resisted and kept what it considers to be core interests. China rejected the earlier draft agreement in May 2019.
China also got its own way. The U.S. initially wanted one single big deal ― a grand bargain. But China employed "salami tactics" that cut the deal into numerous phases. China also seems to have had clear standards on where it can and cannot make concessions. For instance, Beijing was open in terms of a massive purchase of U.S. products. However, the agreement did not cover the forever controversial Chinese state-owned enterprise (SOE) reforms.
Judging from the "goal-setting theory," the winner of the first phase of the agreement is China, not the United States. China has achieved much of what it had set as its goal. When it comes to areas that it had the intention to make concessions in, it did so while resisting U.S. demands in other areas as much as possible, by tossing them over to future implementations. China also successfully kept its bottom line; it rejected the earlier draft when it felt it undermined the Chinese sovereignty. Rumor had it that the U.S. side became anxious as the new year approached, while the Chinese were dragging their feet.
It should be noted that Liu He, standing next to Trump, said that China would buy American products, but "based on market conditions." U.S. Trade Representative Robert Lighthizer also said "the agreement will work if China wants it to work," thus revealing why the agreement is fragile.
In essence, the deal is yet another temporary measure rather than a resolution. The future prospects are quite uncertain. Even though Washington and Beijing have a reconciliatory mood at the moment, the two are expected to confront one another again soon.
Lee Seong-hyon (sunnybbsfs@gmail.com), Ph.D., is director, the Center for Chinese Studies at the Sejong Institute.
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