US-based Politico reported that US officials were expected to look closely at whether China had carried through on earlier promises. In late 2018, Chinese officials gave the United States proposals to address its government subsidies, market access barriers and intellectual property theft. Those documents, and a more recent US response, are expected to be the focus of this week’s talks.
“If Gerrish hears that the Chinese are really serious about doing some hard things, putting meat on the bones of vague commitments and willing to work with the US on verification and enforcement mechanisms, then I think you’ll see negotiations move forward at an accelerated clip,” a US industry official told Politico.
If not, “it’s going to be more difficult”, the official said.
Inside the US delegation for China trade war talks: Washington’s big guns will be absent
Observers said both sides needed to tackle the problems because the tariffs had taken a bite out of the economy, sending US stocks tumbling and adding to downward risks in China.
The stock market isn’t the “real” economy, which judging by last week’s jobs report, the business and consumers who do the actual hiring and spending are feeling much more confident than Wall Street is.
Which leads us to the…
“China’s economy is definitely slowing quite a bit across a bunch of sectors, and this slowing momentum is likely to continue for another couple of months at least,” said Arthur Kroeber, the founder of Gavekal Dragonomics, a research firm in Beijing. “And consumer confidence is definitely down, which is probably part of what’s behind the Apple numbers.”
Months after Starbucks announced a massive China expansion this year, it said that China sales would increase just 1 percent, far below those in the United States. Jaguar Land Rover briefly shut a factory in Britain after September sales in China dropped by a half. LVMH, the luxury giant that owns Louis Vuitton and has often been used as a barometer for consumer spending in China, said the Chinese were spending “a little bit less.”
Although Chinese officials report that GDP have been growing at more than 6 per cent a year for a few years, “it looks truly like some sixth grader got out their ruler and drew a straight line with a slight downward slant,” said Christopher Balding, an expert on the Chinese economy at Fulbright University in Vietnam. “It’s totally unrealistic.”
Car sales have been shrinking for the first time since 1990, when most of the country was peddling bicycles. A key manufacturing survey at the end of the year showed Chinese factory activity actually contracting. And revenue from consumption tax was down 72 per cent in November from a year ago, Balding said.
It won’t be easy going, but I suspect Trump will get most of what he wants out of Beijing, given the real weakness in the Chinese economy, and the brittleness of authoritarian regimes that stop delivering the economic goods.