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A public policy blog from AEI
Here’s what the White House said about the Saturday US-China meeting and here are President Trump’s personal comments. Bottom line: For better or worse, the mostly vague outcomes announced do not change anything, except for stock market investors who want to sell into strength this week. What might matter:
1) The president took aggressive positions on tariffs into early October. The shift came at the start of November when he started talking privately about a deal. The basic terms outlined on Saturday — the US delays tariff escalation scheduled for January 1st and the PRC resumes buying some commodities — were set in early November.
2) That the deal was largely set in advance matters because, based on what’s been made public, very little was achieved since. America and China have 90 days to resolve fundamental issues before tariffs jump, versus the 30 they had before the weekend. The US investigation which led to those tariffs began in August 2017. If the 15 months since then didn’t do the trick, why will an extra 2?
3) On the positive side, if China’s relabeling of fentanyl eventually brings with it less production and export, it could be an important step in easing the opioid crisis. President Trump did not seem to compromise American ability to retaliate against Chinese technology theft and coercion, which is potentially the most valuable part of US policy. Plus the happy stock market for a bit.
4) On the negative side, the president does seem to have abandoned his policy path for the sake of Chinese concessions which could amount to almost nothing. This is similar to the case of American sanctions on state-owned ZTE, which President Trump watered down. Both times he emphasized a personal relationship with Xi Jinping, the man responsible for the creation of what look like concentration camps, among other acts of repression.
5) Whatever your view of the trade truce, the US dilemma hasn’t changed. China’s development model involves acquiring foreign technology by hook or by crook, and warping competition at home while demanding open markets overseas. Either the president will accept the time and costs necessary to push the PRC away from some of these policies or he will follow Presidents Obama and Bush and back down. Only the decision date has been moved, and not by much.
This morning, President Trump may look uncomfortably like his predecessors, who touted meaningless Chinese promises while leaving their harmful trade practices unchallenged. Concerning a merger between Qualcomm and NXP, Trump said:
You may also want to say that [Xi Jinping] has agreed that if the Qualcomm deal that they rejected — which was one of the larger deals of its kind, which China rejected — if that deal came back to him, he would most likely approve it quickly, which is a big thing.
President Trump’s comments over the weekend compare very poorly to Candidate Trump vowing to take on Beijing for the sake of millions of American workers.
Scheduling more talks and green lights for corporate mergers is more of the same. But the 2020 election looms. President Trump will either remember that he promised to be different on China, or he’ll be savaged by his political critics. This is the definitive reason why the weekend’s big meeting doesn’t amount to much.
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