A state-run Chinese newspaper published an editorial claiming the U.S. and President Donald Trump are under increased pressure from global stock markets to get a trade deal done with Beijing, elevating China’s position in negotiations.
The editorial, published in the Global Times, makes a case for China’s footing and supposed position of strength in negotiating a new trade deal.
The world’s stock markets surged Monday due to the optimistic prospects on the deals that Beijing and Washington are expected to make. US President Donald Trump praised “big progress” in the trade deal on Twitter. His words further stoked the stock markets of the US, which reached the highest in two months and so increased pressure on the Trump administration to close the deal with China.
Analysts believe that if the two countries couldn’t come to an agreement, and as a result the US imposes more tariffs on Chinese products while China responds with fiercer countermeasures, it would be a catastrophic strike to global stock markets.
In terms of avoiding such blows, the Trump administration is probably the most pressured. Thus in general, by the end of the trade negotiations, China and the US have become more psychologically equal.
During a G-20 meeting in December, Trump and Chinese President Xi Jinping agreed on a March 1 deadline before further tariffs were raised on Chinese products as the two sides negotiate further. Little progress reportedly has been made, so Trump is considering an extension to the March 1 deadline.
It’s “not a magical date,” Trump told reporters Tuesday.
He said much the same in an interview last week: “There is a possibility that I will extend the date,” Trump said. “I will do that at the same tariffs we are at now; I would not increase the tariffs.”
The S&P 500 is up nearly 11 percent on the year as of Wednesday morning. The Shanghai composite has risen more than 10 percent as well. Since January, China’s equities have risen $893 billion.
However, as noted strategist Bill Blain wrote in his Blain’s Morning Porridge blog, China is projecting its weaker hand onto Trump.
The recent data highlights the Chinese economy may be slowing faster than XI can maintain his grip – he’s weaker than ever before. (Raising one scenario threat of a long-drawn out period of uncertainty if he is marginalised/deposed and a power struggle follows. That could be very destabilising and disruptive for the Occidental economies desperate to sell the China!)
We reckon XI knows he’s out of time and has to settle — handing Trump a critical victory. Long-term the US-China tech-war is difficult to call. Trump is determined to garner payback for China IP theft, and it’s difficult to imagine the rest of Asia adopting Chinese tech systems if they lose the current trade war to the US. However, you can’t just undo years of China tech development. My techy contacts tell me Huawai’s boasts about the US’s inability to close them is partial bluff and bluster — it’s not as advanced or robust as it claims, plus the US is going to insist on wrecking it — which could prove another long-term friction point.
