Why has China signed US$250 bn deals with the USA?

Question

Some days ago, US Secretary of State Rex Tillerson said :

"The United States seeks constructive relations with China, but we will not shrink from China’s challenges to the rules-based order and where China subverts the sovereignty of neighboring countries and disadvantages the U.S. and our friends,"

Now, China has signed a US$250bn trade deal with USA.

My questions:

1. What was Chinese reaction to T-Rex's comment on China (both have options to fight verbally and then sign a deal. Apparently, China didn't pass any counter-comment)?
2. If either China or the USA feels " ... that doesn't matter ... we need to do business ...", then why would Rex-T need to say that in the 1st place?

Answer 1

The USA and other Western countries have been conducting a balancing act in relation to China for at least 30 years:

• China has a poor record on human rights, a tendency to act aggressively towards its neighbours, and an unresolved conflict with Taiwan. Western governments feel obliged to express their disapproval of these factors.

• China is undergoing rapid economic development, and becoming one of the largest and richest markets in the world. Western businesses cannot afford to ignore economic opportunity in China; and it can be argued that prosperity and economic liberalisation will, in the long run, have a beneficial effect on human rights there. So, Western governments are unwilling to cut off economic cooperation with China.

This article provides some of the background of US-China relations in a human rights context, from 1989-98. Impact of Western criticism on China's human rights record has been minor at best, and China feels little need to respond to such criticism.

To sum up, the government of China has long been accustomed to American disapproval of its foreign policy and record on human rights; and both parties are willing to conduct business in spite of their political differences.

Answer 2

Well, mostly because it's in their interest to do so, like with just about any deal that nations sign..

Let's be clear, the numbers on this "trade deal" are mostly imaginary. A lot of the parts were already in the works, so they were going to get done anyway, a lot of others are "memorandums of understanding" with no binding authority of any kind - basically, empty promises that are easily disregarded.

If I sign a series of deals that result in $125 B dollars of import business and $125 B of export business, I've just signed a $250 B dollar deal with zero net effect on any existing trade deficit, so just putting a dollar number onto a trade deal really doesn't say anything about what, if any, impact it might have on trade balances between nations.

So.... the USA making noise about reducing the trade deficit is really something independent of this package of deals.

NPR - On Point - Trade With China In The Era Of "America First"

Why would anyone say anything at all if it was all noise and no substance? Well, if noise is all you have, you make it and hope people think there's substance. While that might seem especially pointed at this president, it certainly would not pertain to him, exclusively.

Answer 3

  From Chinese POV, China is getting stronger and US is getting weaker. This is most important thing to understand. US is currently dominant power in the world, but China aims to replace it. And for last 25 years or so, China is getting close to that goal. Already in some areas, China has took primacy.

  Therefore, from Chinese perspective, it is essential to avoid open conflict with US as long as possible. Time works for China, not for US. Rhetoric is cheap, China regularly accuses US for acting unilaterally, breaching international law, sponsoring insurrections and terrorism etc... But money talks and BS walks. As long China views cooperation with US as beneficial, it would continue on present course of mild appeasement and not trading blow for blow (i.e. word for word) . Because, in the end, if China in next 10 years overtakes US as No 1 power in the world, all US rhetoric would not change that fact.