A Historic Moment: The US-China Geneva Joint Statement

 Today, many friends have left messages in the backend, asking me to discuss the US-China Geneva Joint Statement and what it means. Let’s get straight to the conclusion: with the announcement of this statement, today has become a historic moment. But why do I say that? Let’s first look at the main content of the statement.

The US has committed to canceling the 91% tariffs that were imposed on April 8th and 9th. The 34% and 24% tariffs imposed on April 2nd will be suspended for 90 days, with only 10% retained. We are doing the same: canceling the 91% retaliatory tariffs, suspending the 34% and 24% tariffs imposed on April 2nd for 90 days, and retaining 10%. In simple terms, both sides are returning to the status quo before Trump announced the “reciprocal tariffs” on April 2nd, and then each adding an additional 10%.

How should we view this outcome? Let’s first look at what Bercow said before heading to Geneva. He stated that he didn’t expect to reach any agreement with the Chinese side. The key point was that the US and China should not “decouple,” meaning that the tariff war should not escalate further. On our side, the initial tone was also one of not having high expectations. Both sides were lowering internal expectations for the talks. Why was that the case?

From the US perspective, although Trump and some US officials repeatedly talked tough even before the talks, the situation was clearly very unfavorable for them. As we previously mentioned, many of the goods currently on the US market were ordered in a rush by US importers in early April, sensing trouble ahead. This led to a sudden surge in exports in March, with a remarkable year-on-year increase of 12.4%. But when will this batch of goods be exhausted? The general consensus is around June or July of this year. So for Trump, the situation is quite unfavorable. But can he easily back down? The answer is no. This is because the rosy prospects he painted for the MAGA crowd were too dazzling: by implementing “reciprocal tariffs,” manufacturing would flow back to the US, the US economy would improve, and everyone’s lives would get better... The “golden age” of the US was just around the corner! Would he dare to tell the MAGAs that what he previously said was just empty talk? He wouldn’t dare.

Now, looking at our side, due to past experiences, we were able to anticipate Trump’s tactics from the very beginning and made preparations accordingly. Trump intended to start with “maximum pressure,” to launch a surprise attack and catch us off guard. However, we were well-prepared and responded in kind, standing firm and making Trump very uncomfortable. To what extent? On May 9th, a piece of news sent a chill down the spines of many Americans: officials from the US West Coast ports reported that in the past 12 hours, the number of commercial ships departing from China to their locations had dropped to zero! This was the first time such a situation had occurred since the outbreak of the COVID-19 pandemic! What does this mean? It means that the US’s “reciprocal tariffs” had inadvertently led to a self-imposed embargo, turning the US into an economic island! Because of Trump’s misjudgment, he found himself in a difficult position, having to seek negotiations with us. At this point, could we play the game of “taking advantage of your weakness to finish you off”? The answer is no. The US is still the world’s dominant power, with considerable strength and depth. Not to mention now, even if it were on its last legs, a dying blow from it would still be incredibly powerful. For us, there is no need for such a strategy. A balance of tension and relaxation is the true art of statecraft.

Moreover, the timing of reaching this agreement is just right for us, minimizing potential losses. I just asked a friend involved in US-China trade, and he said that for him, the agreement came just in time, as the disruption had only lasted a few days and caused virtually no losses. What are the benefits of not going all-out against the Americans? Look at one country to understand: Japan. Many countries, in fact, see through the trade war initiated by Trump. For example, Japanese Prime Minister Ishihara is very clear: as long as the US and China are locked in a hard-fought battle, the US will find it difficult to effectively pressure Japan, and this situation won’t last long for the US. A while ago, some people in Japan were worried that the US’s “reciprocal tariffs” would cause significant damage to their economy and proposed that the Japanese government quickly step in to support its enterprises. But when it reached Ishihara, he disagreed and decided to put the plan on hold, signaling that Trump’s “reciprocal tariffs” wouldn’t last long.

At the same time, the Japanese were very cunning. They had previously stated that the representative they sent to negotiate with the US was the virtually powerless Minister of Economy, Trade, and Industry, Akira Amari. Moreover, two days before his first departure, they set the tone for him: to stall! Subsequently, they played both tough and soft, sometimes threatening to sell US Treasury bonds and other times sending Amari back to the US for more negotiations.

Other countries, such as Canada and South Korea, which had previously been obedient to the US, have also become more assertive and refused to compromise. The EU has gone even further, adopting a strategy of forming alliances with us to counterbalance the US. How should we evaluate this situation? Regardless of how they treated us before, after April 2nd, everyone realized that to economically confront the US, they could only hide behind us. To some extent, this actually acknowledges our status as an economic peer to the US! The Americans previously did not acknowledge this, but the Geneva Joint Statement alone, with its respective tariff cancellation measures, shows that we have an equal economic status with the US, which they have finally recognized! This is the greatest achievement.

But that’s not all. Since the entire situation was initiated by the US, by Trump, who wanted to launch a surprise attack and deal us a fatal blow, the result after just over a month is a draw. It means that if you dare to mess with us, we can mess with you too! How can the US continue to set the rules for global trade and enforce them in the future?

Moreover, the concessions the US has made will likely leave at least two countries feeling uneasy. You might recall that not long ago, Trump, with an air of superiority as if he had granted a huge favor, announced an agreement with the UK, where the US would impose a 10% tariff on UK exports while the UK would maintain its original rates. The UK has always had a trade deficit with the US! We have a surplus with the US, and yet it’s also a 10% increase! Just imagine how the British must feel after hearing this news today!

Another country is Israel, the US’s closest ally! Trump had also imposed a 17% tariff on it! Isn’t the US’s current approach essentially repeating what Kissinger once said: “It is dangerous to be an enemy of the US, but it is fatal to be a friend”? If that’s the case, then why continue to be a subordinate? When viewed in the context of other recent events, this situation becomes even more meaningful.

The India-Pakistan conflict a few days ago proved that our military strength is superior to that of Europe, making us a superpower in the military realm. The trade war has demonstrated our status as an economic superpower, showing that China can fully confront the US in this regard. Coupled with our political status as permanent members of the UN Security Council, like the US, we have now achieved complete parity with the US in politics, military, and economy. This accomplishment has far surpassed that of the Soviet Union, which, even during its brief 10-plus-year heyday, was only on par with the US in politics and military but far behind in the economy. The Soviet Union was once called a superpower!

Who could have imagined that two out of the three aspects mentioned above would be proven in just over two weeks? Who could have imagined that before the US-China talks, India would suddenly step forward and essentially offer itself as a sacrifice? It’s truly astonishing and inevitably brings to mind the verse: “When fortune smiles, all forces work together; when fortune wanes, even heroes are powerless.” The great wheel of change is spinning at a speed far beyond many people’s imagination!