Trump’s “$250 Billion” of China Trade Deals: As Usual, Hype Greatly Exceeds Reality

Trump, who said he’d do only “great” trade deals and would designate China a currency manipulator, announced $250 billion of trade deals with China as proof that he has successfully wrestled mano-a-mano with Premier Xi and bringing home lots of goodies for long-suffering American workers.

A more accurate point of view might be that Xi appears not to have gone out of his way to put Trump down, as Trump had done during Xi’s Mar-a-Lago visit, by arriving after Xi had landed and other diplomatic snubs. Worse, while Xi was under US surveillance, the US launched air strikes on a Syrian airbase. I thought if I were Xi, I’d be furious at my inability to talk freely to my aides and military advisers, and most important, diplomats who handle Russia and Syria, while such a potentially destabilizing event was in play.

Instead, Xi engaged in the classic Chinese strategy of overwhelming leaders with ceremony and pampering. Quartz explained that this show is effective:

But Chinese president Xi Jinping added a creamy layer of pomp and circumstance to the mix when the White House delegation reached Beijing. Trump has been feted with everything from an unprecedented private dinner in the Forbidden City to a red carpet welcome in Tiananmen Square, the Beijing landmark where hundreds of students were killed by the Chinese military in 1989…

China’s government is “playing Trump like a fiddle,” said Jorge Guajardo, Mexico’s ambassador to China from 2007 to 2013. “You don’t have good chemistry with a Chinese leader who doesn’t speak your language and is geared to not develop chemistry,” he said.

The Communist Party’s top aides are masterful at making diplomats and foreign businessmen feel special…

“You leave that meeting thinking ‘It went great,’” said Guajardo. And then when it comes time to negotiate a practical agreement, if you invoke the special friendship you’ve formed, Beijing officials “laugh and say ‘No, let’s not confuse all that pomp and circumstance with the meat of the matter.’”

“I would be lying to you if I tell you I didn’t fall for it when I was there,” he added.

Max Bauchus confirmed Guajardo’s take:

Max Baucus, a former U.S. ambassador to China, told Bloomberg Television, “This is classic Chinese. They have been doing this for thousands of years.”

“It’s their technique to try to suck you in,” Baucus said. “I think all this ceremony here is designed by the Chinese in part to prevent any serious conversation. The more there is pomp and circumstance, the less there is time to talk.”

This snippet from the Washington Post indicates expectations from this summit were low:

While both sides were pleased to see a high-stakes visit end without incident, there are questions about what was gained and what, perhaps, was lost.

Trump was on good behavior:

Trump brought up North Korea but said Xi could solve it. He raised the trade deficit but said it was not China’s fault. He said the Chinese people are very proud of Xi.

Trump is hampered not only by being a foreign policy newbie who has a distaste for boing up, but also by having gaps in staffing of his Asia team. And underpreparation didn’t help. From Bloomberg:

The non-committal nature of many of the deals reflects a lack of planning or advance work ahead of Trump’s visit to pin down significant agreements or concessions from China, according to two administration officials who asked not to be identified to speak about private deliberations.

The result was a big headline number – $250 billion! – that is mainly hot air. Many of the actual deals were either already done or largely done or things that China wanted and had previously been denied. The rest were handwaves that may not get done. From Bloomberg:

The reality, however, is that the roughly 15 agreements unveiled on Thursday are mostly non-binding memorandums of understanding and could take years to materialize — if they do at all. A day earlier, Commerce Secretary Wilbur Ross announced $9 billion of deals, many also MOUs with few details, rather than contracts…

The officials pointed to the fact that there were no agreements on giving U.S. companies more access to Chinese markets, or opening up Chinese financial markets — something investors have been demanding for years…

China Aviation Supplies Holding Co. agreed to buy 300 aircraft worth about $37 billion from Boeing Co. Still, it was unclear how many of them were new orders..

The lack of substance during the trip risks undercutting one of Trump’s main objectives in Asia: to cut deals that effectively narrow the U.S.’s trade deficits with some of the region’s biggest economies. Trump walked away from Japan and South Korea largely empty-handed from visits that focused mostly on solidifying security ties.

And from the Independent:

There was very little detail announced. A number of them are non-binding, so could easily collapse. Some would probably have happened anyway.

It was announced that China plans to invest $100bn in US energy projects.

This will include an $84m Chinese state investment in West Virginian shale gas and chemical manufacturing and $43m for Alaskan liquefied natural gas.

But the reality is that China has been eager to invest in Western energy for years. It was famously rebuffed by the US Congress when it attempted to buy a minor American oil company called Unocal way back in 2005.

The problem has been Western reticence to allow Beijing to do so. Trump is simply giving China what it has long wanted.

The Independent goes through other major categories. It deems the aviation deal potentially more meaningful but questions how many of the planes were already on order. Qualcomm getting a “deal” to sell chips for Chinese smartphones is just a MOU plus Qualcomm is already a significant in China, raising questions as to whether this handshake was even a meaningful advance. China made another non-binding commitment to import $5 billion of soyabeans. With Chinese demand rising, this again looks like nothing more than extrapolating the current trend.

One possible upside, if you are of the “tough on China” school, is that Trump may engage in another regular practice, of giving good meeting (Trump is apparently very likable in person) and then stabbing his guest in the back a day or two later. From Bloomberg:

Still, the business community in Beijing is abuzz with talk that Trump may announce very tough trade policies against China when he gets back to Washington, said McGregor, who attended the signing ceremony with Ross on Wednesday. The U.S. is currently investigating China’s intellectual property practices, a move that Beijing has said could lead to a trade war.

So the most you can say about this trip is Trump has managed to sabotage himself less than when in the US. Maybe he should stay on the road.

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  1. cnchal

    Psychopaths versus narcissists. The narcissists get played like a fine fiddle.

    It was announced that China plans to invest $100bn in US energy projects.

    This will include an $84m Chinese state investment in West Virginian shale gas and chemical manufacturing and $43m for Alaskan liquefied natural gas.

    Expect that corner of West Virginia and Alaska to become completely crapified, just like the corner of Wisconsin where Foxconn is putting their LCD display plant, where the land and water will be deliberately poisoned. Peasants be damned.

    China has poisoned itself, and now that will be their next export, along with the horrifying working conditions the Chinese peasants currently enjoy.

    In case everyone has forgotten, Chinese labor has no rights, the wealth created by them is stripped by the pact between the Western elite and Chinese Communist Party, which now has a leader for life.

    Something the elite here want to emulate and they have the bought politicians to do it.

    Globalization. A total disaster from every peasant’s viewpoint.

    1. Jim Thomson

      Countries that had their natural resources exported as raw materials ( to some more developed nation) used to be called colonies.

      1. cnchal

        In that light, Canada is a colony of China.

        As the current prime minister says, we need moar trade with China. Practically, nothing Canada makes ends up there, only raw materials, which are processed into finished goods in the most polluting way possible, and then shipped back.

        For the cherry on top, Canadian and foreign companies rape Canadian taxpayers through SRED tax credits (Scientific Research and Experimental Development) for product development, and that is transferred to China wholesale, where the resulting products are made.

        RIM and JDSU anyone? Of course Canada’s elite like it that way, and call the shots. Canadian peasants be damned.

        One of the selling points of NAFTA was that Mexican labor would have wage increases, which in hindsight was a blatant lie. The Mexicans end up working in what are effectively prison factories.

        Division of labor creates wealth. Division of profits concentrates wealth.

  2. The Rev Kev

    Who would ever have guessed that pampering someone like Trump with great demonstrations of pomp and ceremony would have ever worked on his ego? Not me! This is the difference between people that think in terms of decades and people who think in terms of this financial quarter. The Chinese government thinks in the long term, which is the way that it should be, and gave Trump a nominal victory that will turn out to be all that it is – as pointed out in this article.
    This is something you see often and I think that most people may have noticed the difference between style and substance. Such as the techie salesman that promises you tech heaven – and then gives you Windows 10! Even the Texans have a saying here about someone who is ‘all hat and no cattle’. Trump follows the Washington line of ‘sending messages’ such as when he announcing that he was attacking Syria during a Presidential Dinner with the Chinese President thinking that would impress them all to hell but I seriously doubt it.
    I would reckon that the Chinese have long memories about such matters. Remember when a Falun Gong activist berated the Chinese president on the White House lawn for three minutes without being crash-tackled by the Secret Service in 2006? Most people don’t but I bet the Chinese remember. I bet too that the Chinese have also not forgotten when the US bombed the Chinese Embassy in Belgrade in 1999 killing three Chinese (the only CIA-strike during the entire war). One day there will be the devil to pay for all this – and he’ll be out to lunch and everybody else will be holding the bag.

  3. upstater

    The Alaska LNG deal was $43B as reported by Reuters, not $43M.

    “A final investment decision (FID) for Alaska LNG is expected in the first quarter of 2019, with construction starting in the same year and the first cargo expected around 2024 to 2025.”

    The $43B likely includes the cost of the gas itself. It is interesting to note who will benefit from the engineering and construction management (hint: not the US).

    It is probably the same type of deal Mozambique is getting for their gas…

  4. Ifigniea

    This is all a great deal of speculation and apparently another excuse to throw shade at Trump which while every liberals favorite thing, isn’t exactly constructive. I’m sure it is entertaining to say Trump was played like a fool yet that’s based on mostly wishful thinking.

    When Obama was a candidate he accused China of unfair trade practices and currency manipulation. Not surprisingly he said nothing of the sort while in China. And let’s not forget the fistfight that occurred upon Obama landing as well as the conspicious absence of so much as a staircase for him to disembark from AF1.

    And I do find it amusing that there is some inference of wisdom and quality to this purported long term thinking of the chinese regime. The same authoritarian regime that makes Trump look like Gandhi? Or is it the one that’s engaged in a massive ponzi scheme, shadow banking largesse, and debt amounting to some 260 percent of GDP?

    The Chinese people and their culture shouldn’t be confused with the Communist Party. The latter being rather expert at creating hell for the country while enriching themselves and a tiny elite while using a repressive state media and police that destroys dissent.

    These visits are just theater by and large…as the deals presented fit that mold The real question is what happens thereafter and what concrete actions are taken. It’s clear that among the most obvious are those pertaining to the North Korea, trade, and the South China Sea.

    And most of those seem largely intractable. There’s no version of reality that’s going to include North Korea voluntarily giving up its arsenal thanks to US actions against Qadaffi and Hussein. The trade imbalance has as much to do with american companies setting up shop for indentured labor with local chinese muscle to keep it down as it does with americans buying cheap crap on amazon. As for the SCS, with all that the chinese have invested in area access denial and their desire to control the resources and shipping lanes…it also seems unlikely they’d give that up readily. I suppose Taiwan could be a bargaining chip but that would heavily affect american credibility with its allies.

    Unfortunately a collision course between the two countries seems very likely with only the timing in doubt. The situation is eerily similar to the leadup to the great wars of the first half of the 20th century.

  5. sleepingdogmatist

    As upstater notes of the Alaska portion, The Independent turned billions into millions in reporting the WV investment numbers. Should be $83.7 billion. Compare reporting from eg the Charleston Gazette-Mail:

    What I wouldn’t give for a West Virginia license plate riffing on the old “Coal Keeps the Lights On” bit — “Communist Capital Keeps the Lights On” would rile up the natives.

  6. Desai

    It seems that trump has learned this tricks from modi goverment. When Modi was Gujarat’s Chief Minister he repeatedly pulled the same tricks under “Vibrant gujarat” but at much larger scale. For instance :-

    From , above wikipedia page:-

    “Vibrant Gujarat 2011 Summit was held at Gandhinagar on 12–13 January 2011. It is to be held at a special site dedicated for Vibrant Gujarat named Mahatma mandir situated at Gandhinagar sector 13. About 7936 MoUs were signed worth $462 billion in the two days.”

    462 billion USD. Trump is clearly baby in this regard. As a resident of Gujarat I can attest that even MOUs rarely turns to contract. I personally find rahul gandhi very incompetent because he is only making this an issue now instead of years ago.

  7. MichaelSF

    . . .is that Trump may engage in another regular practice, of giving good meeting . . . and then stabbing his guest in the back a day or two later

    It has worked with North Korea and others for so long, why not China? /s

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