Kick the can down the road as ceasefire

Jinping and Trump have decided to defer threats their countries have made in their trade war. Trump can claim the fragile truce as a piece of his statecraft. But Xi is aiming for a reset of China's engagement with the US. And his strategy of never initiating hostility but ever retaliating appears to be paying off. The agreements over export curbs and tariff rollbacks are piecemeal, and partial, efforts at keeping the economic engagement going. They are far removed from attempts to rebalance the world's two biggest economies. China's industrial overproduction is a function of US overconsumption. It is impossible to set one right without setting the other one as well. That is the point Xi is making, and it's nice that Trump is listening.

If Xi can make Trump see reason, other countries smarting under Trump tariffs may well be inclined to try their hand at it, too. It won't be easy, though. Few other economies are as deeply coupled with the US as China. The Chinese also have a unique toolkit of tactics to rein in US economic arm-twisting. Strategic equations come into play when talking trade, which positions China as a natural counterweight to the US. It could end up making new friends among its business partners if the US accepts its terms of economic engagement. There may be merit for economies intertwined with Chinese manufacturing to use it as an interlocutor.

Global supply chains at risk of fouling up over a Sino-US trade war will seek greater clarity than is available in the Xi-Trump bonhomie. The feeling may not last if the trade negotiations drag on. At this point, companies can assume no further escalation. But de-escalation will involve concrete steps to restructure the US-China relationship. The two sides have issued weak acknowledgement of the way forward. The devil - despite the back-thumping and Trump giving the meet his trademark hyperbolic approval - lies in the details. The world's two largest economies have kicked the can down the road. Which in today's transactional geopolitics is quite the diplomatic thing to do.