It’s quite tough trying to keep up with the current state of the US-China possible trade war, but it appears, bottom line, that the Chinese have offered a $200 billion cut in the trade deficit and have cancelled the threat of tariffs against US sorghum, while Trump has indicated an intention to overrule his own Department of Commerce over the fate of sanction-buster ZTE.
What is needed is a calm and reasonable discussion not only on those points, but also on the clear systemic differences that are at the heart of the problem and how to resolve them or offset their impact, but that doesn’t appear likely. Offering a cut in the trade deficit is a great way of changing the subject, but it doesn’t make the problem go away, and deficits that go down can also go back up. Meetings continue as the two sides parry amidst the transparent chaos that is Washington today.
Then there is the Korea meeting situation with the North apparently threatening to pull out of a proposed deal. What the deal is that is being discussed is not clear and Pyongyang has been playing versions of this game for decades. Is it possible things have changed? It seems unlikely. But we would love to see the war declared over and the two Koreas set on a track towards dialogue and normalcy. Let’s choose to be optimistic in the interim. It would be useful to know what Kim and the Chinese leader have been talking about in their meetings, but somehow Zhongnanhai just doesn’t seem to leak like the White House does.
We’re hearing that the foreign exchange quota of $50,000 per person per year may be pulled back or even abolished. That would be an interesting reflection of the scale of demand for foreign currency, if it’s true. Meanwhile, the property market is feeling weak, but the stock market is looking perky with the prospect of MSCI-mandated inflows. That would all mean in effect foreign money replacing Chinese money in the big balance.
What a fascinating country this is.