Markets were forced to digest an unwelcome dose of trade war headline hockey on Thursday afternoon, when Global Times editor Hu Xijin popped up on Twitter with another one of his infamous “what I know” hot takes.
As ever, you’re reminded that Hu is Xi’s media man, so what he “knows” is precisely what Beijing tells him, hence his ability to move markets with a single tweet.
“Both China and the US should cherish the current talks”, Hu said on Thursday afternoon, on the way to cautioning that “many US officials easily misread China’s goodwill [and] think it shows Beijing’s weakness”.
That, Hu said, is a mistake.
“China doesn’t like talking tough before the negotiations, but I know China is not as anxious to reach a deal as the US side thought”, he went on to say.
Following working-level discussions in Washington this week, the Chinese delegation led by Vice Minister for Agriculture and Rural Affairs Han Jun, plans to visit Bozeman, Montana and Omaha, Nebraska, according to two people with knowledge of the visits cited by CNBC. The Montana Farm Bureau on Thursday confirmed the reports. “It’s encouraging to see progress in the negotiations”, one Montana farmer quoted by the network said. “It is also very encouraging to see that we expect a delegation from the Chinese negotiating team to visit Montana [as] we have been suffering”.
Yes, it’s been a nightmare for farmers, who have been forced to accept what amounts to government welfare after watching in terrified disbelief as Trump’s trade war cut them off from critical export markets.
CNBC’s “good news” story was undermined not only by Hu’s tweet, but by an SCMP piece which cited notorious China hawk Michael Pillsbury, Senior Fellow and Director for Chinese Strategy at the Hudson Institute. Trump famously referenced Pillsbury during the infamous “George Washington” press conference, when, in an exchange with CNBC’s Eamon Javers, the president declared that Beijing has “total respect for Donald Trump and Donald Trump’s very large, ahh-brain”.
Pillsbury has enjoyed the limelight and on Thursday told SCMP that the tariffs could go much higher if necessary. Here’s the quote that markets briefly fixated on:
Does the president have options to escalate the trade war? Yes, the tariffs can be raised higher. These are low level tariffs that could go to 50 per cent or 100 per cent. There are other options involving the financial markets, Wall Street, you know, the president has a whole range of options.
It wasn’t immediately clear what he meant by “Wall Street” options, but the “50% or 100%” headline was disconcerting, especially considering how much Trump admires Pillsbury’s views on China and trade.
As for whether anyone should take his comments seriously, CNBC’s Kayla Tausche suggests not.
“A Republican White House ally says Pillsbury is freelancing, stirring up recurring frustration at Treasury and State, but not with President Trump”, she said, noting that according to her sources, the president “likes having Pillsbury out there with a harder line” as it “gives POTUS more room to negotiate”.
In other words, Xi has Hu Xijin and Trump has Michael Pillsbury.