The Trump administration postpones increasing 25% to 30% tariffs on $250 billion Chinese imports after China extends an olive branch to de-escalate Sino-American tariff tension. China also resumes purchasing American agricultural products such as soybeans and pork bellies to better balance the current U.S. trade deficit. These reconciliatory gestures of good will arise in the broad context of trade negotiations as both sides reconvene in early-October 2019. From Dow Jones and Nasdaq to Shanghai and Hong Kong, U.S. and East Asian stock markets rebound 3%-to-5% in response to this positive change in the Sino-U.S. trade engagement.

In the next round of U.S.-China trade negotiations, both sides delve into the more difficult legislative structural reforms in Chinese state capitalism. It is important for the U.S. trade envoys and reps to urge Chinese bureaucrats and policymakers to sign into law better intellectual property protection and enforcement. This structural reform would empower multinational corporations such as Apple and Microsoft to institute tort lawsuits over patent, trademark, and copyright concerns in the worst-case scenario of intellectual property infringement. The Chinese Xi administration needs to mull over a genuine compromise. The structural reform may overturn the current fundamental state-centric economic development model in China.