In keeping with standard, Trump administration procedure when it comes to informing the public about sensitive foreign policy negotiations, the President decided to tweet his version of the details from a phone call he claims he had on Thursday with Xi Jinping.
“Just had a long and very good conversation with President Xi Jinping of China”, Trump said on Thursday morning, adding that the two “talked about many subjects, with a heavy emphasis on Trade.” Trade was capitalized, despite not being a proper noun.
“Those discussions are moving along nicely with meetings being scheduled at the G-20 in Argentina”, Trump continued, before exclaiming that he and Xi “also had good discussion on North Korea!”
Of course Trump needn’t actually call Xi to let the Chinese President know what the administration is thinking, because Chinese spies are already listening to everything Trump says when he dials up friends to rant. But I guess there’s no harm in having an “official” dialogue.
It’s not entirely clear what the point of today’s call was, but one imagines Trump is starting to understand the necessity of delivering good news on the trade front in light of October’s egregious selloff in U.S. stocks.
As we’ve tried to make clear since June, Xi isn’t worried about any “elections” – he’s going to lead China for as long as he wants to lead China and as far as the stock market is concerned, don’t forget that Beijing has an actual plunge protection team that can be deployed in emergencies to stabilize equities. If that doesn’t work, they can always just halt everything (or damn near everything) like they did during the 2015 crash.
On Goldman’s estimates, the National Team collectively bought ~110 billion yuan worth of shares in the second quarter. “Our proxies suggest the ‘National Team’ may be supporting the market, at least during the latest sell-off, although the size of intervention may not be as significant as it was during the 2015 market meltdown”, the bank wrote, in a note out late last month.
Sure, China could lose control of things, but Beijing has demonstrated time and again that they are more adept at keeping all the spinning plates aloft than naysayers are inclined to admit.
How many times have you heard, over the last several years, that Beijing won’t be able to de-leverage without something breaking? How many times have you heard that internationalization of the yuan isn’t possible given the PBoC’s penchant for occasional draconian interventions? How many times have you heard that the debt bubble would pop? How many times have you heard the shadow banking bomb was going to explode?
Through it all, China has persevered.
Donald Trump isn’t the existential crisis for Beijing that many people (including Trump himself) seem to believe. Meanwhile, Trump’s grip on power is inherently tenuous. Despite his successful attempts to erode America’s checks and balances, the leeway the GOP has afforded him is largely down to the fact that his base is so fervent. If that base starts to believe the trade war is taking a toll on things and that Trump was wrong to suggest China would blink, well then their support might waver.
If that happens, Trump’s clout with GOP lawmakers could fade, because with the exception of the sycophants, Republicans are probably looking for any good excuse to distance themselves from the President and his “ahh-very large ahhh-brain”.