https://www.bloomberg.com/news/arti...025-target-for-china-to-fulfill-trade-pledges Makes sense... china real Foreign Dollar Reserves are around 1-1.5 Trillion, running deficit accounts from 2019 on, any pledge to reduce trade deficit is impossible, it would bankrupt them even quicker then crash of 2019. They spend so much US Dollars defending there currency, they need every dollar they can get, reducing trade deficit will never happen voluntarily, it can't happen in theory or practice. If this article is true, this is quite a shocker. Under the proposed agreement, China would commit by 2025 to buy more U.S. commodities, including soybeans and energy products, and allow 100 percent foreign ownership for U.S. companies operating in China as a binding pledge that can trigger retaliation from the U.S. if left unfulfilled, the people said on condition of anonymity because the talks are private. Other non-binding promises China has offered to implement by 2029 wouldn’t be tied to potential U.S. retaliation, they said, without elaborating. Non-Binding by 2029 ? It's non binding, and 10 years later ? Why even sign it, just shake hands and pretend it never happened
I always suspected the Trump trade "deal" with China might be a nothingberger, but this is just a ridiculous photo op. Another Trump "I'm gonna, but not really".
He promised on day one as President to declare China a "currency manipulator". But then, uncle Ben Bernanke and Janet Yellen were also "monetary policy-side-effect-currency-manipulators".
One of the major issues is that "unfairness of trade" is a structural result of China's political-economic system, not just a set of policies which can be changed. There's no independent judiciary to enforce laws or contracts independent from party whims, while businesses with state connections (whether formally SOEs or not) get demonstrably favorable treatment compared even to other Chinese business in China which lack such connections. Something like this deal is probably the best you can realistically get, and should be adequate provided that the U.S. is willing to aggressively enforce its own interests. Slap tariffs on quickly at the first sign of trouble, rescind them slowly and only after much deliberation. Eventually you'll have a more-or-less stable equilibrium.
China's survival and I mean complete survival is dependent on the biggest Deficit running country to buy there exports, that is why they never cared about profitability before, as long as they get mass inflows of US Dollars ( Reserve Currency ), in theory they can technically print to Infinity in there own money ( Inflation kills that part in practice ), they don't use the RMB much for international transactions... RMB worldwide Swift transactions was 1.86 % in 2018 according to bloomberg, which means they buy Oil from Russia and Iran with RMB's, that's about it. They don't float there currency and never will as long as cpp is in charge, it would collapse the RMB immediately and world trade at same time. US can get all the structural reforms it wants, and if china doesn't want to operate like the rest of the world, keep tariffs permanent... They will come around and are already coming around out of desperation, they are in the Turkey/Argentina end phase, domestic debt is just crushing country and consumption GDP through High Inflation. They desperately need Foreign Inflow of Capital to stay afloat and plug holes, not even about growth at this stage for them. The biggest reason why the US can get anything from china, china is running deficits from 2019 on, they are losing 30 Billion US + a month to keep defending RMB, on top of Debt Issued in US Dollars at 3.5 Trillion. Looking at maturity's this year, china will hit below 1 T in Foreign Reserves, they will dump another 100 billion of US Treasury's to get to 1 T in Treasury's, but won't cross that line out of need to keep a front everything is OK... They can't reduce deficit with the US, and they won't voluntarily... What you are seeing since 2016 is Job Offshoring from many Multinationals across the world, but US multi's have been much slower, now catching up. china benefited the most with Globalization, making it the biggest surplus in the world of Reserve Currency, Deglobalization will affect china the most, drastically reducing there Foreign Reserves permanently, problem is they never prepared for it and leadership's stupidity/arrogance let them down the biggest debt hole the world has ever seen... china's government, local governments and LGFV is estimated by there own account to be around 20 Trillion US, in reality could be even bigger. The chinese government has a bigger debt then the US government, let that sink in for a moment and you realize just how degenerate there monetary policy leader's were
Great video from March 2018, I don't think china will get two lost decades and recover, they will be permanently out of the game,but he thinks so... He's a great economist, he knows china very well
https://www.nytimes.com/2019/04/05/business/china-trade-trump-jobs-decoupling.html It's been happening since 2016, deglobalization... Also the fact the high majority of companies in china operate at a steep loss and rely on non stop loans to survive will have big time implication when government goes bust later this year. Adidas one shocked me, they said with Automation and 3D Printing, was cheaper to make in Germany then in china. Also china factory employee wage forcibly doubled due to sky high Inflation ( Non stop QE since 08 ). NY Times trying to make Trump look like the man, multi nationals been moving away from them since 2016... That's why they wanted to try becoming a consumption based economy but they can't, they printed too much money, highest cost of life in the world is in china... 9 out of top 10 Cities Mortgage Price To Income Ratio are in Asia, with china leading the way. Average Price to earnings was above 30, now 29.60 due to housing deflation... Look at Tier 1 Cities, there all around 50!!!!! US Price To Income Ratio is around 4. Highest consumer indebted country by a longgggg margin, is china https://www.numbeo.com/property-investment/country_result.jsp?country=China