The top US trade negotiation team will travel to China next week but expectations are low as Trump Says China May Delay Trade Deal Until After 2020 Elections
“I think that China will probably say, ‘let’s wait,’” Trump told reporters in the Oval Office on Friday. “When I win, like almost immediately, they’re all going to sign deals.”
The biggest sticking point from China’s perspective is a U.S. demand to keep the punitive tariffs in place until Beijing actually implements reforms to state-owned enterprises and intellectual property. It’s politically unfeasible for Xi to accept any deal that doesn’t remove the tariffs: Nationalists in the Communist Party are pressuring him to avoid signing an “unequal treaty” reminiscent of those China signed with colonial powers.
U.S.-China Trade Talks Set to Resume With Modest Expectations
The Wall Street Journal also down plays the talks in its report Trade Talks Set to Resume With Modest Expectations.
“I don’t know if they’re going to make a deal,” Mr. Trump said Friday. “Maybe they will, maybe they won’t.”
Among the possible smaller achievements that might be obtainable, close observers say, would be a commitment by China to purchase more agricultural products and action by the U.S. to relax its ban on U.S. companies selling to telecommunications equipment giant Huawei Technologies Co., which President Trump has already agreed to do in general terms.
Progress toward a small agreement on Huawei and agricultural purchases could set the stage for negotiators to tackle bigger issues in a follow-up meeting in Washington, the people following the talks say.
“There are things, besides buying a million bags of soybeans, that China can do on the structural issues that would actually be helpful and would make a difference,” said William Reinsch, a senior adviser at the Center for Strategic and International Studies. “But that’s at best 30% down the road of what the U.S. has been demanding.”
I expect some minor deal that Trump will brag about. But the winner will be China if Trump relaxes the ban on Huawei.
The “big” win is always around the corner. When trump wins China will sign big deals “almost immediately”.
Mike “Mish” Shedlock
How can anyone take him seriously???? I imagine world leaders are looking over Trump’s shoulder for the “adult” in the room.
If there’s one thing at which Trump has succeeded big time, it is convincing other nations that any “deal” or “treaty” with the USA is worth nothing. Americans can change at a whim if the “deal” is no longer in their favor, whether in “real” terms or just in terms of domestic partisan politics. Iran, China, and Russia, and increasingly most other nations, know that America cannot be trusted (the Russians even have us the term недоговороспособны for it, meaning not “agreement competent”, like being a minor or not “mentally competent”) and that any lecturing about principles is always self-serving. Whether it is about international order, weapons, trade, terrorism, justice, or peace — everybody has long since concluded none of it is to be taken literally. They will play along to humor America’s political elites, but only insofar as it suits their own tactical interest.
The US can no longer afford to be the global consumer of last resort. Too much debt. The US is going to pull back from consumption growth because it doesn’t have a choice. Financial repression (keeping interest rates below CPI) is a survival tactic, not a Fed decision. It won’t work long term unless spending gets brought under control.
The Chinese economy is over-levered to exporting to the global consumer of last resort, who is bankrupt. Other economies are not big enough to replace US exports. China will try to grow domestic consumption out of necessity, not by choice. But China must also increase capital savings (infrastructure, etc), so materially increasing consumption isn’t really an option.
Trump and Xi can make all sorts of promises and threats, but they are both forced to play the hands they were dealt. Its difficult to imagine a trade agreement that would address either China or the US’s concerns, much less both at the same time.
No trade agreement can make social security solvent. No trade agreement will fix health care costs. No trade agreement will fix unfunded retirement vehicles. No trade agreement will allow US politicians to spend money and add new programs like they have in the past. It doesn’t matter who the President is, the money isn’t there.
No trade agreement will allow China to continue growing exports at the same rate as in the past. A country ranked #2 GDP cannot grow faster than global GDP, no matter what the communist party wants. China will “suffer” reversion to the global mean, and there is nothing Xi can do about it. China isn’t a small economy anymore.
Excellent post that captures the forces at work.
I had reckoned pre-Trump the credit-go-round between USA and China would unwind through Chinese repatriating profits to buy USA assets — such as real estate, thereby giving US sellers a buyout that would redress some of the fragility of our debt picture, at the cost of asset ownership. I suppose trump imagined some sort of creeping mercantlist version of Chinese power, and he thought it necessary to abruptly do a big reset. But I like particularly Tater-Man’s take, as an update and re-think of all this. I see both countries facing some strong jolts, trying to adjust to the new situation. China’s holding lots of ;our paper doesn’t give them a smooth path out either, if we aren’t importing the level of “stuff” they need to ship. And no other market can ramp up in any short time frame to replace us.
The tables have turned, China calling the shots now?
Given they are the biggest buyer historically of IOUs I would say yes. They can wean themselves off and grow their domestic economy.
Ha-ha, Trump is a joker. I argued here before for his re-election, but I have no conviction on this point anymore. His time might have come and gone.
Ditto here. The emperor has no clothes on. Populism doesn’t survive once the populist gets exposed as a blowhard fraud.
Ha! Some of us knew the emperor wasn’t wearing clothes from day one.
I don’t throw my money away on cheap poor quality (no quality lol)Chinese junk (if I can help it).Go to Walmart or Lowes to buy that over priced junk ,may as well buy 2 (3)because the first one may last a month…..if you’re lucky…..and the prices keep goin up on that garbage….why?They pay them $200 month so why the constant price increase?