With all that, the most likely outcome is still one in which the two parties iterate to a deal because of Chinese concessions. But the probability declines over time and a qualifier cited earlier becomes more important. The longer it takes to get to a deal, the lower the probability that such a deal will constitute a decisive end to trade tensions. Instead, it is more likely to be a cease fire. And, of course, the longer China waits to accede to U.S. demands, the greater the risks to its development process, the bigger the threat to the global economy, and the harder the challenge for central banks and other countries – particularly emerging economies.
Mohamed A. El-Erian is a Bloomberg Opinion columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. His books include “The Only Game in Town” and “When Markets Collide.”