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Last month, analysts commented that Trump had Xi in a box. He either had to meet Trump at the G20 or Trump would escalate tariffs.

Allegedly, this was a win for Trump and a defeat for Xi.

Not quite. Today Xi turned the tables.

China Sets Preconditions

The Wall Street Journal reports China to Insist U.S. Lift Huawei Ban as Part of Trade Deal.

Among the preconditions for a trade agreement, Chinese officials with knowledge of the plan said, Beijing is insisting the U.S. remove its ban on the sale of U.S. technology to Chinese telecommunications giant Huawei Technologies Co. Beijing also wants the U.S. to lift all punitive tariffs and drop efforts to get China to buy even more U.S. exports than Beijing said it would when the two leaders last met in December.

The U.S. chief trade negotiator, Robert Lighthizer, and his Chinese counterpart, Liu He, talked by telephone this week on ways to get the talks back on track and expect to meet in person in advance of the presidents’ Saturday lunch meeting after a Group of 20 summit in Osaka, people familiar with the discussions said. It is far from clear what the two will manage—and whether their bosses will approve their work.

Face-Saving Maneuver

This maneuver allows Xi to appears as if he is not bowing down to Trump.

And he isn't, or at least hasn't.

No Preconditions?!

CNBC reports Larry Kudlow: There are no preconditions for the China trade talks

It is not for the US to say whether or not China has preconditions.

Fox News Interview

Larry Kudlow discusses preconditions with Fox News.

Kudlow's gambit on Fox news was to say "There are no preconditions for Xi meeting Trump," but that is not what headline reports state.

Sandra at Fox interrupted ...

"Not to nitpick Larry, but words are so important. Words can move markets."

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I expected Sandra to point out the difference between preconditions on meeting Trump and preconditions on a trade deal. Those are two different things.

However, she let Kudlow off the hook.

Perfect Happiness

Kudlow managed to switch the subject to "happiness".

"Trump is perfectly happy where we are," said Kudlow.

What can be better than perfect? By definition, it cannot be improved on.

I suggest that it is more than a bit silly to seek changes if you are "perfectly happy" as is.

Fake News

Speaking of the Wall Street Journal report, Kudlow said "I don't know where those stories comer from, but it is fake news".

US Preconditions

Curiously, Kudlow went on to name US preconditions!

"We insist and will continue to insist, structural changes on intellectual property, and forced transfer of technology .."

​Sandra Interrupted. Stop.

I expected her to ask: How can there be no preconditions if the US has them? But once again she blew it.

Her interruption was to ask a lame question about interest rates.

Are There Preconditions?

  • Yes, by China
  • Yes, by the US. Kudlow names them.
  • But in general, no, there are none.

Hopefully, this is clear.

Mike "Mish" Shedlock