Taking Jyna to the Cleaners
It took slightly longer than expected, but China is coming to the table to talk some sense on trade. PDT announced he will soon meet with Chinese president Ping Pong Table to try to seal a comprehensive trade deal, which the Chinese trade delegation found agreeable, saying the two sides had “clarified a timetable and roadmap” for the next negotiations.
Never one to be outdone in the hype department, PDT told Chinese vice premier Liu He he was optimistic that our two massive economies could reach “the biggest deal ever made”.
No specific plans for a meeting with Ping Pong were announced, but PDT said the upcoming meeting could be one of several, which makes sense considering the sheer number of issues there are to resolve. China has been taking us to the cleaners for years, folks, and it’s gonna take a while to straighten this #BigFatMess out. US trade representative Robert Lighthizer and Treasury nerd Steven Mnuchin were invited to bring a negotiating team to Beijing in mid-February, with dates still pending.
Today’s breakthrough came after two days of high-level talks next door to the White House, in which Liu told PDT China would make a new, immediate commitment to increase soybean purchases. We learned later that the amount would be 5 friggin million metric tons, in effect doubling the amount bought by China since resuming limited purchases this past December.
“Five million tons of soybeans per day,” PDT told reporters in the Oval Office. “That’s going to make our farmers very happy. That’s a lot of soybeans.”
While specifics were hard to come by aside from the giant mountain of soybeans, the Chinese delegation reportedly agreed to “vigorously expand” imports of a wide range of US agricultural products, energy products, industrial manufactured goods, and service products.
“The leaders of the two sides had frank, concrete and constructive discussions on issues of trade balance, technology transfer, intellectual property protection, implementation mechanisms… and made important progress,” said some Chinese guy whose name I’m not even gonna try to type.
MORE THAN JUST GOODS
The US/China trade talks are unique in that they cover a wide array of issues well beyond the mere transaction of goods, mostly because China has been screwing us in a whole host of ways. While they offered increased purchases of US farm, energy and other goods to try to resolve the trade disputes, the true success of these talks will be measured by some of the thornier issues, including demands that China stop stealing our damn intellectual property and forcing US companies to turn over technology to Chinese companies.
Lighthizer said there was “substantial progress” on these issues, including verification mechanisms to enforce China’s follow-through on any reform commitments it makes. “Trust but verify” doesn’t begin to describe the process by which these issues will be remedied, assuming they actually are. As such, our own trade chief is proceeding with very, very cautious optimism.
“At this point, it’s impossible for me to predict success. But we’re in a place that if things work out, it could happen,” Lighthizer said at the Oval Office meeting.
That in itself is lightyears ahead of anything any previous POTUS has done in regards to China. Granted, we have a long way to go to declare victory, but their generals are at the surrender table. And that’s a big deal.
Still, the question of enforcement looms large. Toward the end of talks, Lighthizer said the US objective will make China’s commitments “more specific, all-encompassing and enforceable” with a mechanism for taking action if China failed to follow through, but declined to provide specifics.
The most likely enforcement mechanism would be an automatic snapback to tariffs should China decide to misbehave, assuming we ever get to the point where they can be lifted in the first place, which is likely.
Tariffs are also the likely explanation for China’s willingness to come to the table and #MakeGreatDeals, as The White House reminded everyone in a statement today that a tariff increase is scheduled for March 2nd on $200 billion worth of Chinese goods from 10% to to 25% was a “hard deadline” if no deal was reached by March 1st.
It’s fair to say the Chinese are incentivized to get this done.
For his part, PDT doesn’t believe he’ll need to extend the deadline. “I think when President [Ping Pong Table] and I meet, every point will be agreed to,” he confidently declared.
As noted, we have a long way to go before the victory parade. Many specifics must be worked out. But we’re not empty-handed, either. Concessions such as agricultural buying commitments, energy deals and the death penalty for Fentanyl dealers are all things PDT can hang his hat on before we even really get to the table.
But the most significant concession may be China’s willingness to come to the table itself. We’ve reached a point where they’ve abandoned the strategy of punishing Trump voters in Middle America and decided that wheeling and dealing is in their best interest. It always was, of course, but China has heard tough talk before with no follow-up, so why would they take our word for it?
Welp, after two years of serious damage to their export-based economy, they’ve seen all the follow-through they need to understand they’re dealing with a different kind of animal. PDT has used our economic advantage to leverage ourselves into a very good position going forward.
Simply put, PDT has ‘em exactly where he wants ‘em, and now it’s time to move in for the kill.
Grab yer popcorn!