Trade deal with China hits a pause, attacked by Moody’s calls it a ‘lose lose’
Treasury Secretary Steven Mnuchin’s announcement Sunday that the trade war was “on hold” as the world’s two largest economies agreed to drop their tariff threats and discuss parameters for a wider trade agreement. China consented to continue discussing measures under which it would purchase more U.S. products in order to reduce the $335 billion annual trade deficit between the two, but no specific dollar number was put forward.
The New York Times reported on Friday that the Trump administration had secured a Chinese pledge to purchase an additional $200 billion in American-made goods. But financial journalists from CNBC and Bloomberg both reported Chinese officials saying they had promised no such thing.
Chinese Vice Premier Liu He described the talks as “pragmatic, fruitful and efficient.
“I think it’s a lose-lose. There are no winners here,” Mark Zandi told CNBC’s “Squawk Box Europe” on Monday. “This is face-saving, because clearly they’re not going come to terms on anything — at least, not in the near-term.”
“When you get right down to it, what exactly are they going to do? Are they going lower the Chinese-U.S. bilateral trade deficit? It’s just not going to happen. They’re kicking it down the road because they really don’t know what they want,” Zandi said.
photo/ donkeyhotey
Vox reports that “Trump has a direct financial interest in a major real estate development project essentially underwritten by a state-owned Chinese bank.”
The project in Indonesia, called Lido City, secured a $500 million loan from the Metallurgical Corporation of China (MCC). MCC is a state-owned enterprise, and its involvement in the huge Indonesian development seems to be part of China’s “Belt & Road” initiative.
The actual terms of Trump’s deal with Lido’s developers are completely opaque, with the Trump Organization merely saying it will be “involved with the 700-hectare Lido development” and that the country club “will showcase the Trump brand’s impeccable standard of excellence by offering a captivating golf experience that features state-of-the-art facilities, 24/7 lifestyle concierge at the Lifestyle Country Club, uncompromising personal service and attention to detail.”
But while the specific terms are unclear, Trump has some kind of licensing arrangement, an equity stake in the development, or both. Either way, he has a clear financial interest in the problem going forward, and the loan from the Chinese government is good news for his pocketbook.
