What does China and the USA want from the state visit?

Andrew Peach (0:00)

President Trump, President Xi, and a lot to talk about.

SPEAKER_2 (0:04)

A trade deal that was due to expire in November has been extended a little bit until January, but not much.

SPEAKER_3 (0:10)

China's support for Iran, its purchases of Russian oil, potential cyber attacks.

Andrew Peach (0:16)

It's World Business Report from the BBC World Service. This is Andrew Peach on the way after the pageantry and the warm words. What do both sides actually want from this state visit? Also today, we'll hear about efforts to crack down on scam centers where millions of workers are forced to scam people around the world and how nearly half a million people are investing in a Ponzi scheme in Turkey before the authorities got suspicious.

But let's start today in Washington.

Donald Trump (0:51)

President Xi, Madam Peng, and the members of the Chinese delegation, I'm delighted to welcome you to the beautiful White House. Such a great honor.

Andrew Peach (1:04)

The red carpet is definitely out, but can it smooth over the tensions between the two biggest economies in the world? China's President Xi has arrived in the US for his three-day state visit. Trade, technology, global security, all on the agenda during his talks with President Trump. So beyond the smiles and the handshakes, what does Beijing really want from all of this? And could it deliver for businesses in both countries? We're going to talk to Dr. Claire Reade first on this today, former US trade official specializing in US-China relations. Thank you very much indeed for being with us live on the programme, Claire.

Looking at this from the outside, it looks a bit like the best anyone can hope for is that nothing goes wrong. We all will sort of get out of this alive.

Claire Reade (1:51)

I think that's actually that would be a good thing.

I do think that having an outcome where things do not blow up and China and the United States both maintain a kind of status quo and don't escalate trade tensions is not insignificant. Although it certainly is not a remarkable or magnificent accomplishment.

Andrew Peach (2:23)

And you think no change could be accomplished without a summit, though, couldn't it?

Claire Reade (2:28)

Well, you know, when you don't communicate with each other, misunderstandings can pile up and signals can be misinterpreted. So I think the get together does have some value. But I admit it's not as if it's going to be a game changer in terms of a paradigm shift for either the United States policies or for China's.

Andrew Peach (2:52)

Let's look at some of the policy areas. That trade deal, such as is the truce, at least in the trade war, as my colleague, Ioni Wells, who's covering this for us, was saying at the start of the program there, it's been extended, but by a matter of weeks.

Claire Reade (3:07)

Right. Well, I think if you look at the trade truce, it's really one of the points of US leverage that's the most significant. And I think it's telling that the United States was only willing to extend it for two months as a kind of incentive dangling in front of China to try to make progress.

The United States has indicated that China's promises made back in May at the first summit have not all been fully realized in terms of China's compliance. And so I think the United States needs to have China demonstrate that it actually is sincere. So it's not a bad move by the United States to just push the deadline out a couple of months and keep the pressure on China to perform.

Andrew Peach (4:01)

OK, just stay there for a second or two. I just want to get a take on that from Professor Cary Leahey from Columbia University in New York. Do you think that's a reasonable assessment from Claire of where the US is and where the US thinks it's got some leverage in this?

Cary Leahey (4:16)

Oh, I agree. I think ultimately what China really wants out of all this is have America forgetting how to play the long game because the ace in the hole for the Chinese is the control globally speaking on rare earths. And until the US decides to have its own production of that product, which they could do, but there's probably a minimum of a five-year lag from pressing the button to start it and finally getting it down the road. I think China is still going to have the upper hand on negotiations for years until we have our own independence in that particular area.

Andrew Peach (4:48)

Well, they've also got the ace that Donald Trump has to worry about midterms in a few weeks and President Xi certainly doesn't.