The list of those who are skeptical about the viability of what Donald Trump has variously described as a “large”, “Phase One” trade “deal” with China includes China itself.
Beijing is now seeking more talks before the end of this month in order to iron out the details around the nebulous agreement the US president touted in the Oval Office on Friday, when Trump, Bob Lighthizer and Steve Mnuchin used Chinese Vice Premier Liu He as something of a stage prop.
The “deal” itself is largely amorphous. China has agreed to ramp up farm purchases and Trump promised not to hike tariffs on $250 billion in Chinese goods this week, but outside of that, not much is known with any degree of certainty or specificity.
Markets were disappointed that no decision was made on the planned December 15 tariff escalation that, barring another concession from Trump, will see the US impose 15% levies on $160 billion of Chinese goods including key consumer items just days before Christmas.
Beijing is reportedly pressing to have that escalation scrubbed from the calendar.
“Beijing may send a delegation led by Vice Premier Liu He [to the US later this month] to finalize a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile”, sources told Bloomberg, whose coverage notes that according to one source, “China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn’t yet endorsed”.
Chinese media and officials are lukewarm on the arrangement. Trump’s “large” deal was described merely as the US and China “agreeing to make joint efforts toward eventually reaching an agreement” by Party mouthpieces, while the foreign ministry would only express its desire to see further efforts for the two sides to “meet each other halfway”.
“A lot of details are still missing and much still needs to be agreed upon such as China subsidies and support to SOEs and enforcement mechanisms”, BofA’s Asia FI/FX team said Sunday, adding that “the tone from China is cautious and government media news agencies still characterize the situation as facing many uncertainties, but have called the deal rational and pragmatic”.
US equity futures fell as Bloomberg’s story crossed. Lackluster Chinese trade data out overnight wasn’t a total disaster, but it did underscore that the world’s second largest economy continues to struggle in an environment where both external and domestic demand have been crimped by trade tensions.
A raft of key data from Beijing, including GDP, is due this week. Some economists see growth falling below 6%. Q2 represented the most sluggish expansion in nearly three decades.
Last month, industrial production rose just 4.4%, missing the lowest estimate from 34 economists, and disappointing those looking for a rebound after July’s numbers betrayed the slowest pace of growth in 17 years.
As Bloomberg goes on to write Monday, Beijing is now just as wary of Trump as the everyone else, following the US president’s decision to break both the Buenos Aires and Osaka truces in May and August, respectively. The Chinese also did not appreciate Trump fabricating a call between his “top people” and Beijing over the summer.
Xi, Bloomberg reminds you, likely won’t agree to a final deal that doesn’t include the complete lifting of tariffs.