- China’s reticent Ministry of Commerce (MOFCOM) intervened in declining Asian markets Wednesday, with a surprise message of trust, during the increasingly opaque trade war truce supposedly delivered at the G20 leaders summit in Argentina.
- That stands in pretty stark contrast to the volley of Tuesday tweets from President Donald Trump that smacked Wall Street and sapped confidence in the US-China trade deal.
- But just as Asian markets began to retreat due to Trump’s tweets and Beijing’s silence, MOFCOM released an unconventional statement essentially stating its confidence in a trade deal for the first time, saying “the sooner the better.”
- China commentator Bill Bishop reckons that while Trump has put the right man on point to deal with China, the bigger picture is simpler – in the last month President Xi has been shuttling around the world building relationships, and President Trump has not.
US stocks tanked on Tuesday and Asian markets were in decline after a morning of tweets from President Donald Trump that further eroded confidence in the US-China deal to step back from the brink of an escalating trade war.
But just as Asian markets began to retreat due to Trump’s tweets and Beijing’s silence, MOFCOM released a peculiar 6-lines of dialogue between an unnamed official and an unnamed reporter, essentially reassuring the watching world that China was confident in a deal, saying “the sooner the better.”
Battered Asian markets resisted the brutal leads from out of Wall Street to end the day only slightly lower.
Hong Kong was the worst hit, shedding 1.5%, in comparison to Standard and Poor’s 500-stock index dive of 3.2%, and the Nasdaq’s 3.8% loss, as the FAANG tech stocks shed $US141 billion between them.
The Australian stock exchange began on the cusp of a new two-year low after investors were caught up in a presidential tweet-storm that included Trump referring to himself as “Tariff Man” and alternately threatening and cajoling the increasingly confused Twittersphere.
While the two sides gave three cheers for the “highly successful” discussions in Buenos Aires, a slow realisation has dawned on policy wonks and crept into markets alike: no one really knows the specifics of the deal Trump and Xi arrived at over the weekend.
“Max out our economic power”
Asian markets had not risen and fallen as vigorously as Wall Street, post-G20, which took the brunt of the president’s disorienting tweetstorm on Tuesday, when he at once thanked his Chinese counterpart for a “wonderful and very warm dinner” and in the next tweet-breath railed of impending and unilateral trade blows.
Earlier, the president pointedly warned, “I am a Tariff Man.”
“When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so,” Trump also tweeted. “It will always be the best way to max out our economic power.”
With markets in retreat following the president’s tweeting, the Chinese Commerce Ministry (MOFCOM) stepped in and released a reassuring if unorthodox statement on the Ministry’s website in mandarin:
Q: (unnamed reporter) We know that the Chinese economic and trade team has returned to Beijing. What is your comment on this (G20) meeting? A: (Unnamed spokesperson) The meeting was very successful and we have confidence in its implementation. Q: How is China prepared to move forward the next economic and trade consultation? A: The two sides will actively promote the consultation work within 90 days, in accordance with a clear timetable and road map. Q: What are the priorities for China? A: China will begin by implementing specific issues that have reached consensus, and the sooner the better.
The fact that an abridged statement was subsequently rereleased via Chinese broadcaster CGTN, China’s English-language facing broadcaster, suggests the extent to which China is playing two distinct narratives on what went on in Argentina to two very different audiences.
Short lived optimism
The sweet but short-lived optimism that followed the G20 ceasefire has now receded on a tide of doubt, and any trust in the Buenos Aires meeting has really been in a state of withering decline from the moment both sides triumphantly released vastly differing and contradictory accounts of the meeting’s outcomes.
As Bloomberg points out, as soon as the “highly successful” G20 dinner discussion was done, officials from both sides released “parallel and rarely overlapping statements.”
While the White House described a laundry list of Chinese concessions in exchange for its 90-day hiatus in raising tariffs, the Chinese side did not even bother to mention the headline 90-day delay in tariff escalation lauded by the White House.
Rather than confirm the big time buy up of American agricultural products – like soy beans – and a lowering of Chinese tariffs on imports of American cars, China instead remained resolutely silent on the White House’s two major selling points, all while the president tweets out his interpretation of the deal.
But which 90 days?
According to Business Insider’s Bob Bryan, after White House chief economic adviser Larry Kudlow announced that the ceasefire kicks in from the new year, on Jan. 1, the White House hurriedly issued a correction, bringing the truce forward to Dec. 1.
“The switch on timing was just another in a string of slapdash efforts by the Trump administration to fill in the blanks on Trump and Xi’s broad agreement,” Bryan said.
As Trump tweets about trade with China, the former Pentagon official Mike Pillsbury suggested to Axios’ Jonathan Swan, that “there’s a risk the deal will come undone.”
“I have advised the president’s team that for the past 40 years the American side avoids disclosing Chinese concessions before the final agreed written statement is released,” Pillsbury warned.
But its not all bad news according to China Watcher and Sinocism publisher Bill Bishop, who lauded the appointment of US trade representative Robert Lighthizer as the point man in future talks.
No squishy deals for China hawk
To better understand why Trump has placed the top US trade rep at the head of the negotiating table, late last month Lighthizer released his latest damning update into what the USTR says is China’s theft and manipulation of US intellectual property, its unwelcome technology transfers, and the ever-present trade in corporate secrets.
In the 50-page report, (available here in full)Lighthizer said China has not only failed to check the “unfair” practices that have blistered bilateral trade relations, but has apparently stepped up its operations.
“Call him a hawk, or a realist, regardless he knows the issues cold and is unlikely to settle for a squishy deal, unless his boss does,” Bishop said.
In the last last three weeks Xi has been everywhere
The comparison between the opposing leaders is just as unnerving for regional markets as it is telling.
“Xi is showing up in lots of places bearing gifts and saying the right things, and that still counts for a lot, especially when the Marxist in him sees a massive historical opportunity in a shifting global order,” Bishop said.
Xi has been tireless these last weeks. Quietly in the foreground at the G20, starring at the Asia-Pacific Economic Forum (APEC), making his presence felt in Singapore at the Association of Southeast Asian Nations (ASEAN), making headline state visits to Papua New Guinea, Brunei, the Philippines, Spain, Argentina, Panama and Portugal – all US allies.
“Xi is meeting leaders, making the effort, giving all these countries and their leaders face and gifts and economic inducements, and Trump can barely be bothered to go abroad or take a meeting even when he does (like at the recent G20),” Bishop said.
“A lot of these countries would like the US to be more present, but they have to go with what the opportunities are.”
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