By inviting Xi Jinping to attend his inauguration, lowering proposed tariffs and delaying the TikTok ban, President Trump has begun his second term in office delivering olive branches to China. The president’s rhetorical pivot from threats to compliments suggests that he may smell a deal in the air.

However, any potential “grand bargain” is unlikely to deliver on two critical planks of Trump’s America First agenda: trade and security.

On the economic and trade fronts, Trump aims to reshore factories, revive U.S. manufacturing and reduce the trade deficit — goals Beijing could address by promising to boost imports from the U.S., commit to voluntary export restrictions, and make greater investments in the U.S. manufacturing sector.

Nevertheless, any attempt to reduce the trade imbalance would likely disappoint due to the fundamentally export-oriented nature of China’s economy.

China’s economic model systematically suppresses consumption and encourages exports. In 2023, consumption accounted for just 56 percent of China’s GDP — 20 percent lower than the global average. This low consumption is tightly linked to China’s manufacturing and export prowess.

Given the deflation of the country’s real estate bubble and the riskiness of its financial markets, China’s residents increasingly deposit their savings with the banks, whose loans the state steers towards to “new, quality productive forces” in industries such as battery, automotive........

© The Hill