Half a Trade Truce
The US and China don’t trade much nowadays, except punches. With Trump red-faced and ready to spar again, President Xi of China wants him to breathe, think happy thoughts, and not make any rash decisions.
At last, China realizes that fighting fire with fire won’t put out the trade blaze. So, time for plan B! It’s a zen, diplomatic approach to negotiations. China’s Ministry of Commerce just hinted that the current economic argie-bargie would not be worsened by Chinese retaliation, even as tariffs against the country fall due in only a few days.
Most assume Xi only hopes for a new tone of trade talk, but some investors see a good reason not to agree. Economic data has trickled out of China in recent weeks, exposing visible trade wounds. The tariff-slapping contest has been vicious so far, and any more of the same could splinter the Chinese economy. With its new approach to trade talks, the superpower may want to take the pace out of the conflict and find a safe space between this agreement to stop waring, but no agreement to change the long-term trading relationship.
It’s a delicate in-between, but a perfect limbo for Xi to stall things if he can make it last until November 3rd, 2020. Then, he may be in the money if a new US president is elected. Most presidential hopefuls are more passionate to see the trade war end than they are to fight on for that elusive long-term deal.
Perhaps we should all learn to live with the anxieties of the economy that we have. It has rewarded us with substantial gains this year, after all!