Is it possible for China to cut $200bn trade deficit?

The US demands China to cut $200bn trade deficit in order to end the trade war between the two countries. Let's discuss if China is going to accept this deal. The deal does not only contain the $200bn trade deficit cut, but also includes others including opening up China further to US investment and a removal of the foreign ownership caps. Of course, China also has things to bring to the table, China demands Washington to drop its longstanding objections to China being treated as a market economy in the WTO and threatens to treat the US as a non-market economy to counter it.

By comparing the asks from two countries, the US is easier to accept the deals than China, as the US asks are a lot more specific. I believe if China accepts the demands made by Washington, Washington is very willing to accept the demands from China, since after shrinking trade deficits by $200bn, there is no harm for the US economy to accept China as a market economy.

$200bn deficit cut means China has to increase its imports by $200bn and the increase in its exports to the US. This is a significant large amount. If the US did not place any constraints on its exports to China, this goal would be easy to achieve, since China demands lots of high-tech products from the US and even I think China is also very happy to buy American fighters and other arms. However, we know the US has a very strict rule on its exports to China, so this goal is not easy to achieve. Without making further negotiation, this deal is not acceptable by China. As if China imports products that can be produced at home, it can create harm on its own companies as well as economy.

The US wage fails to rise according to the latest report. After the Fed starts to tighten its monetary policy, the US economy would face more pressure, so it is good for the US to end the trade war. From China's point of view, the problem is much more complicated. If all countries can unite and fight back, then it is beneficial for China to continue to fight this trade war as it can get more market shares in the world market. However, if one country makes a deal with the US, it can create a domino effect that other countries start to make deals with the US, then it is a loss for China to continue the trade war. If China can be the first one to make a deal with the US, it can win comparing with other countries which fight trade wars with the US. Comparing the three states, it is likely for China to be the first to make a deal with the US. I think that the US does not want a long lasting trade war, so the US can give up certain things to win the deal, for example the US can lift up some restrictions on its exports to China and give up some terms in its deal.

Overall, I think that China may accept the $300bn deficit cut but demand the US to lift up some restrictions on its exports to China. If the US allows certain high products to export to  China, then this deal could be a short term gain for the US and a long term gain for China.