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In discussions that are not yet public, and will likely be empty promises, sources say China Offers a Path to Eliminate U.S. Trade Imbalance.

China has offered to go on a six-year buying spree to ramp up imports from the U.S., in a move that would reconfigure the relationship between the world’s two largest economies, according to officials familiar with the negotiations.

By increasing goods imports from the U.S. by a combined value of more than $1 trillion over that period, China would seek to reduce its trade surplus -- which last year stood at $323 billion -- to zero by 2024, one of the people said. The officials asked not to be named as the discussions aren’t public.

By agreeing to buy more goods from the U.S., China may just shift its trade surplus toward other trading partners, said Tom Orlik, the chief economist for Bloomberg Economics. “If China switches its imports from other countries to the U.S. -- less Brazilian soybeans, more U.S. soybeans -- that might help deal with their bilateral problem with the U.S., but at the expense of worsening imbalances with other countries,” he said.

Additionally, the types of products that China offers to buy more of could matter more than the overall target for a dollar amount, Orlik said. Airplanes, soybeans and automobiles were among China’s top U.S. imports last year.

“Over the years, China has used the offer of purchasing more technologies with national security applications as a gambit in trade negotiations,” said Orlik. “That’s always been unacceptable to the U.S. because of the strategic costs.”

Even a massive buying binge would likely fail to eliminate the trade deficit with China, said Brad Setser, who served as deputy assistant secretary for international economic analysis in the Treasury during the Obama administration.

Closing the trade gap “would require enormous changes and it would require and all out effort to get a Chinese industrial policy to disguise China’s exports to the U.S. by routing them elsewhere,” said Setser, who is now at the Council on Foreign Relations. “You can’t get rid of the bilateral deficit unless you shift the location of final electronics assembly out of China. The math doesn’t work.

Math Doesn't Work

Even though the math doesn't work, Trump will proclaim the greatest trade deal in history.

Economist Brad Setser had a series Tweets discussing the purported deal. Here is the first of 13 Tweets.

Tweet 13 Discusses Phones

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Assume for a second that happened. Here's the result.

The US deficit with Vietnam or some other country would rise.

Boosting U.S. Exports to China by $200 Billion Is a Tricky Task

​Also consider Boosting U.S. Exports to China by $200 Billion Is a Tricky Task

Dear Xi Jinping, Could we interest you in 500 million metric tons of soybeans? How about five Ford-class aircraft carriers and 465 F/A-18 fighter jets? Forty trillion cubic feet of liquefied natural gas? Around 2.8 billion barrels of crude oil? Two and a half million Tesla Model X SUVs?

We’re just trying to make the math work here.

“I don’t see any plausible way that you could reduce the bilateral deficit by $200 billion in two to three years,” said Brad W. Setser, a senior fellow for international economics at the Council on Foreign Relations. “You work through individual sectors, and it’s hard to get close to even $100 billion over that time frame, let alone $200 billion.”

Mr. Setser estimates that a realistic hope for a near-term increase in soybean exports to China is about $5 billion, which would likely come at the expense of other Chinese trading partners, such as Brazil.

Mr. Setser cautioned, Mr. Trump might not like the resulting math. In nominal dollars, he said, American imports from China are growing by about 10 percent a year. If that rate keeps up, it would wipe out some or all of any trade-balance gains that administration officials secure in their negotiations with China.

Bottom Line

Ain't Gonna Happen

Mike "Mish" Shedlock