China is a rising nation and a threat, but often times the threat is overly exaggeration. She has extreme internal problems, including an inability to feed her people without relying on the US and the US-dominated Western Hemisphere. She is known to make rash decisions, including bouts of extreme nationalism without clearly defined goals or long-term thought, and in the process waste large amounts of precious resources, energy, and time that are directed against her own people instead of her enemies on the outside. Likewise, China’s debt that she holds with the US is not to her favor, but disadvantage because the US can simply refuse to pay and leave the Chinese with a mountain of owed bills and no way to collect.
The only way that China is going to be able to rise is if she is able to “balance” her trade deficit with the US, and in doing to to attempt a modicum of stability to her economy. All of her tough talk is meaningless so long as this is not dealt with.
Interestingly, the Trump administration has announced that she will consider a previously agreed currency pact with China as part of an “early harvest deal” that could also see a tariff increase next week suspended that theoretically would bring about a rise in US manufacturing export to China as well as for China an attempt to help balancing her exports.
The internal deliberations come as a team of Chinese negotiators, led by Vice Premier Liu He, arrived in Washington to resume trade talks with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin starting Thursday. It’s the first face-to-face talks between senior officials since July.
People familiar with the Chinese delegation’s arrangements said negotiators are currently scheduled to leave on Friday evening, though there could be changes depending on how the talks progress. One person said there may also be a meeting with Trump that day, though again it would depend on how the talks go.
The signals heading into the talks have been mixed. President Donald Trump last week approved licenses for some American companies to sell nonsensitive goods to Huawei Technologies Co., the New York Times reported, citing people familiar with the move. While Trump committed to the move after meeting President Xi Jinping in June, no licenses have been issued yet. (source)
The discussions around this “deal” come amid discussions of blacklisting Chinese technology firms, the controversy in Xinjiang and the mass detention of Muslims, a fight over free speech between China and the NBA, and the situation with Hong Kong protesters. The Chinese said they were interested as part of it in making large purchases of American commodities, but added that success was contingent on President Donald Trump halting further tariffs.
This entire “deal” is a political stunt.
It will take years to seriously fix the US-China trad imbalance. The 2020 election is barely a year away.
If Trump makes this deal, the Chinese will buy large amounts of American made goods. This will show “prosperity” for the US, which Trump will take credit for, and people in the Midwest manufacturing sector will thank him for by giving him the votes he needs to get re-elected, at which time he can easily cut the deal if he wants to with no consequences to him.
China gets to feel as though they have a hope of making their trade balance better, and because they will not trust the US, the will likely try to buy as much as they can. They “win” because they get a sense of hope without fundamentally dealing with their problems. The working class Trump voters get a temporary financial benefit from the deals, meaning money in their pockets and in their minds, Trump to thank for it. Trump’s campaign gets propaganda to use against the “socialist loving Democrats” that he can use to make himself look good.
All of this China “tariffs” and “trade deals” in nonsense. It is a temporary financial benefit to investors as well as a political stunt to help him over the next year. It means nothing beyond that.
The animosity between the US and China will continue to become more serious.
The US will give more support to Japan as she continues to remilitarize.
The US will also ensure that no serious changes happen to her trade deficit with the Chinese.
It is all politics as usual.