The Phony US-China Truce

Dec 8, 2018 Barry Eichengreen, Project Syndicate

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

There is no shortage of precedents for the approach to the escalating trade dispute taken by Donald Trump and Xi Jinping. But if the US economy shows signs of falling into recession, Trump will need to blame someone – and in this case, we can be relatively certain about who that will be.

BEIJING – On December 1 in Buenos Aires, US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed on a 90-day moratorium on increases in import tariffs to provide a window for negotiations. Unfortunately, this approach to mediation does not always succeed, and investors were not impressed – as was evident in the 800-point fall in the Dow Jones Industrial Average on December 4. And if markets were skeptical then, they will be even more skeptical now, with the arrest of Huawei Chief Financial Officer Meng Wanzhou for violating US sanctions on Iran.

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Yes, this is the dumbest American president ever speaking

Date: 08-12-2018
Source: The Wall Street Journal
Subject: Tillerson Says President Was Undisciplined; Trump Calls Him ‘Dumb as a Rock’

President Trump reacted on Twitter to ex-aide’s remarks, also calling his former top diplomat ‘lazy as hell’

During his tenure as secretary of state, Rex Tillerson, left, appeared out of step with President Trump.

President Trump and his former secretary of state, Rex Tillerson, exchanged criticism and insults in full public view late this week.

Mr. Tillerson, speaking first in an interview nearly nine months after his firing as secretary of state, attributed his clashes with Mr. Trump during his time in office to differences in style and values, as well as to the president’s frustration with his guidance.

“Part of it was, obviously, we are starkly different in our styles. We did not have a common value system,” Mr. Tillerson told CBS News’ Bob Schieffer on Thursday. He also said Mr. Trump was undisciplined, didn’t read and didn’t like to delve into the details of issues.

Mr. Trump responded in a Twitter message Friday afternoon in which he praised current Secretary of State Mike Pompeo, adding: “His predecessor, Rex Tillerson, didn’t have the mental capacity needed. He was dumb as a rock and I couldn’t get rid of him fast enough. He was lazy as hell. Now it is a whole new ballgame, great spirit at State!”

US and China: From Co-Evolution to Decoupling

Date: 08-12-2018
Source: YaleGlobal by Vincent Ni

Henry Kissinger secretly visited China in 1971 to restore US ties, and the Chinese have respected him since. With a trade war underway and US concerns about intellectual property theft, the relationship has soured and transformed: from co-evolution, described by Kissinger as pursuit of domestic imperatives and cooperating as possible to decoupling. “The parochial outlook in the United States and the growing nationalism in China is heading toward disengagement,” explains Vincent Ni, journalist and 2018 Yale Greenberg World Fellow. Ni describes this as disruptive and dangerous, forcing countries to choose sides. Ni urges Chinese and US leaders to develop new rules for 21st century trade, economics and technology while finding ways to cooperate and contribute to global public goods while coexisting militarily. As Kissinger suggested in his writings, a good relationship is essential for world peace and progress even as both nations pursue their own paths of exceptionalism. – YaleGlobal

As China’s economy steadily grows, its relationship with the United States has transformed from cooperative co-evolution to decoupling

Climate Action Trumps Trump

Dec 7, 2018 Laura Tyson , Lenny Mendonca, Project Syndicate

Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley, and a senior adviser at the Rock Creek Group.

Lenny Mendonca, Chairman of New America, is Senior Partner Emeritus at McKinsey & Company.

President Donald Trump continues to deny the realities of man-made climate change, even in the face of warnings by his own administration that it will impose massive costs on the US. Fortunately, in the absence of federal leadership, businesses, citizens, and state and local governments are taking action on an unprecedented scale.

BERKELEY – Now is not a good time to be a climate-change denier like US President Donald Trump, given all the recent evidence that the atmosphere is warming faster than expected. On the Friday after Thanksgiving, for example, Trump’s own government published a major report warning that unchecked climate change will impose massive economic and human costs on the United States. And that came on the heels of an alarming study by the United Nations Intergovernmental Panel on Climate Change (IPCC) that painted a dire picture of Earth’s near future.

Arrest of telecom giant’s CFO escalates U.S.-China tech battle

Date: 07-12-2018
Source: The Wall Street Journal
Subject: U.S. Takes Aim at Huawei

Huawei founder Ren Zhengfei, second from left, with Chinese President Xi Jinping at the company’s London offices in 2015.

The Trump administration’s efforts to extradite the chief financial officer of China’s Huawei Technologies Co. over criminal charges mark the start of an even more aggressive phase in the technology rivalry between the U.S. and China and will increase pressure on Washington’s allies to shun the telecommunications company.

Armed with a U.S. extradition request, Canadian authorities arrested Meng Wanzhou on Dec. 1, the same day as President Trump was holding a summit with Chinese counterpart President Xi Jinping. But White House officials said Mr. Trump had no advance knowledge of the arrest, indicating the action was on a separate track from trade talks currently under way between Washington and Beijing.

Ms. Meng’s detention underscores a sense of urgency, at the Justice Department and other U.S. agencies, to address what they see as a growing threat to national security posed by China’s ambitions to gain an edge in the tech sector. For years, Washington has alleged the Chinese government could compel Huawei, which supplies much of the world with critical cellular network equipment, to spy or to disrupt communications.

The US-China trade truce: a time-out or a possible armistice?

by ocanuto, Roubini EcoMonitor, December 6

The US-China trade truce will become a time-out or an armistice pending on China’s response regarding technology policy​

The trade truce between the United States and China, announced after the dinner of the presidents of the two countries in Buenos Aires on Saturday after the G20 meeting, must be assessed in accordance to three different motivations that can be attributed to President Trump as reasons for starting the war. Although special attention has been given to immediate implications of the truce for the global macroeconomic environment and its impact on financial markets, it is important to keep in sight what it will take to become either a short time-out or a step to armistice.

The US-China bilateral trade clash has been a crucial moment in the transition from multilateralism to bilateralism in US foreign relations since the arrival of President Trump to power. Full multilateralism faced great difficulties during the Doha round of trade negotiations, in which complex negotiation processes required unanimity for approval and were vulnerable to blockades set by a few countries. The Obama administration initiated its replacement by plurilateral negotiations, with support from the countries involved, as proposed in the Trans-Pacific Partnership and a possible later agreement with European countries. President Trump buried such an initiative and has argued there are advantages for his country to negotiate on a bilateral basis.

Sind Chinas Handelspraktiken wirklich unfair?

Dec 5, 2018 Daniel Gros, Project Syndicate

Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.

BRÜSSEL – Der zeitweise Waffenstillstand zwischen US-Präsident Donald Trump und seinem chinesischen Amtskollegen Xi Jinping beim gerade abgeschlossenen G20-Treffen in Buenos Aires wird beiden Seiten etwas Zeit geben, um über die betreffenden Themen nachzudenken. Und das grundlegendste dieser Themen ist die Frage, ob die amerikanischen Vorwürfe gegenüber China – die auch von vielen anderen Industrieländern geteilt werden – eigentlich gerechtfertigt sind.

Natürlich sind unilaterale US-Maßnahmen im Rahmen der weltweiten Handelsregeln nicht vertretbar. Haben die Industrieländer – die bereits eine informelle Kontaktgruppe von „Chinaverlierern“ gegründet haben, zu der auch Vertreter der Europäischen Union, Japans und der Vereinigten Staaten gehören – aber recht damit, dass Chinas Handelspraktiken teilweise unfair waren, könnten Gegenmaßnahmen durchaus berechtigt sein.

Postal Service Review Proposes Sweeping Changes Likely to Hit Amazon

Date: 05-12-2018
Source: The Wall Street Journal

The report calls for raising prices for many types of commercial package deliveries

Among other things, a Trump administration review of the U.S. Postal Service says package deliveries “have not been priced with profitability in mind.”

WASHINGTON—A Treasury-led task force is proposing that the U.S. Postal Service charge more for certain package deliveries, going after Amazon.com Inc. and other online retailers that President Trump has said benefit at the post office’s expense.

The Postal Service hasn’t priced package deliveries with profitability in mind, according to the task force’s report released Tuesday. It said the agency should be able to charge market-based prices for mail and package items that aren’t deemed essential services. The report, requested by Mr. Trump in April, recommended raising prices for many types of commercial package deliveries, a growing business for the Postal Service.

Mr. Trump has often claimed on Twitter that the Postal Service has given a sweetheart arrangement to Amazon, which he blames for unfairly hurting bricks-and-mortar retailing. Mr. Trump also has clashed with Amazon founder Jeff Bezos over coverage of his administration in the Washington Post, which is owned by Mr. Bezos.

Trump Team Set to Take Tough Stand in 90-Day Trade Talks With China

Date: 05-12-2018
Source: The Wall Street Journal

Bolton, at Journal’s CEO Council event, seeks law to bar imports of goods generated from intellectual property theft

Trump administration officials said they planned to take a tough stand in their 90-day trade negotiations with China or impose further tariffs, as optimism over a truce gave way to uncertainties about how the two sides could find agreement on a wide range of issues.

Having emphasized last weekend the possibilities for a wide-ranging deal, President Trump and other officials switched their focus to issues they want to see addressed and the consequences of not reaching an accord in a time frame that China initially didn’t acknowledge.

Mr. Trump, in a series of tweets Tuesday morning, said he expected to see China start buying more U.S. agricultural exports immediately, which the U.S. said had already been agreed upon in the meeting between Mr. Trump and Chinese President Xi Jinping in Buenos Aires, a commitment Beijing hasn’t commented on.

“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,” he said, adding: “I am a tariff man.” He also noted that the U.S.’s 90-day deadline for negotiations began last weekend.

The US-China trade war is on hold

Date: 03-12-2018
Source: The Economist

Donald Trump and Xi Jinping agree a fragile truce at the G20 summit

PERHAPS IT was the dessert of caramel-rolled pancakes, crispy chocolate and fresh cream. Or perhaps President Donald Trump had already decided that, during a working dinner on December 1st, he wanted a deal with President Xi Jinping of China. Whatever it was, after sounds of applause drifted out to assembled journalists, the two announced a “highly successful” negotiation. „This was an amazing and productive meeting with unlimited possibilities for both the United States and China,” said Mr Trump.

A more realistic assessment would be that the meeting produced a truce based on two elements: some murky mercantilism, and a deal to talk about a deal. China will increase its purchase of American farm produce, energy and some industrial goods. In exchange America will delay an escalation in tariffs, from 10% to 25% on $200bn of goods planned for January 1st. That is on hold until March 1st at the earliest. But because the formal talks between the two countries could well fail, this truce is worryingly fragile.

The Chinese commitment to raise purchases of American goods is by an amount “not yet agreed upon, but very substantial”. That is supposed to reduce America’s bilateral trade deficit with China. Requiring the Chinese government to manage import flows is odd given how America’s government complains that China still behaves like a non-market economy.