SCMP: China’s trade war deal ‘may be doomed from start’ as skepticism mounts over capacity to buy US products
* Analysis continues to flood in suggesting that if China continues to insist it will buy US goods according to market conditions, it cannot meet Donald Trump’s demands
* With 28 per cent of US exports to China not covered by the deal, economist Chad Bown suggests that these exporters could be cut out of the equation
Almost a week after the signing of the phase one trade deal with the United States, scepticism is continuing to mount as to whether China will fulfil its side of an agreement that “may be doomed from the start”.
Of particular concern is China’s commitment to buying an additional US$200 billion of US goods
over two years, including a clause that would bring its imports of US farm goods to more than US$40 billion a year.
“A close look at the data shows that the numbers are even more unrealistic than first believed,” wrote Chad Bown, a trade specialist at the Peterson Institute for International Economics (PIIE), in a new report. “Even worse, hostilities might renew, leading to a re-escalation of trade tensions currently on hold.”
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WNU Editor: I am one of those who does not believe that China will be able to meet the terms of its agreement with the US. But I wonder if the US-China trade deal is also one of those agreements where President Trump is asking for the moon, but is really happy to get a least something out of nothing. Currently most Chinese imports are facing US tariffs, so the US is losing nothing there. Where the gains will/should come from is when China starts to focus on buying more US goods and resources. It may be less than what they promised, but it will still be something out of nothing. The agreement also stops the unsustainable growth of greater US trade deficits with China. In my book that is the biggest win for the US in this agreement, and it obliges the Chinese to negotiate a phase 2 trade agreement. Of course this will all change if President Trump losses the Presidential election later this year. But my Chinese contacts are telling me that Beijing is now resigned to a second term victory for President Trump this November.
Update: This is so classic Trump. It is announcements like this that are always throwing the Chinese off-guard .... Donald Trump says he and China’s Xi Jinping ‘love each other’, phase two trade talks to start ‘very shortly’ (SCMP).
3 comments:
3, 2, 1 ... BH
Trump is a salesman, true and true. I know, I work for these folks. All good, I expect China to renege on their portion but at least we did not agree to their stupidity. This is negotiating 101 and I applaud Trump in engaging them on this! KUDOS!!
Anon 201
STFU Bitch!
15 or 20 years ago the WSJ argued that trading paper money for capital good such as an engine or a generator made us richer and was a good thing. The WSJ is a fine paper, but they do not get everything right.
Zerohedge, which is all but a Russian front, pointed out that all reserve currencies end. One way to end it is to have a never ending trade imbalance.
When that even happens the future trade imbalance create hyperinflation, which destroys the country.
So Trump is fighting a trade war now instead of later. If it were Jeb, Billary, or some other suck ass, they would simply kick the can down the road.
China retaliated by targeting industrial sectors like agriculture. So we have to support this sector. It is an economic war.
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