As expected, President Trump and China’s President Xi Jinping signed today (Thursday) in Beijing, China $250 billion in investment deals, of which many came in the form of tentative agreements, which in clear language doesn’t mean that we are talking here about “firm” trade deals.
At the event, Trump said: “The trade relationship "between China and the U.S. has not been a very fair one as we all know America has a huge annual trade deficit with China, a number beyond anything that anyone would understand. Both the United States and China will have a more prosperous future if we can achieve a more level playing field.”
To have an idea about what kind deficit we are talking about, the numbers of the U.S. Census Bureau of the United States show a deficit for trade in goods with China in 2016 of about $347 billion while at the end of September that deficit stood at $273,759 billion.
In the past, President Trump has repeatedly criticized the “very one-sided and unfair” trade relationship between the U.S. and China. Today, he stopped short of castigating President Xi Jinping for the situation and said he doesn't blame China while adding that the U.S. and China must immediately address the unfair trade practices that drive the trade deficit, along with barriers to market success, forced technology transfers and intellectual property theft.
Interestingly he stated: “But I don't blame China. After all, who can blame a country for being able to take advantage of another country for the benefit of its citizens? I give China great credit.”
Investors should better not expect a quick structural shift in the trade relationship between the U.S. and China.
Meanwhile, China’s National Bureau of Statistics informed that the consumer price index (CPI) rose 1.9 percent in October, which was higher than the expected 1.8 percent and up from 1.6 percent in September. The producer price index (PPI) rose 6.9 percent, which is its 14th consecutive month of expansion.
Because it’s worth mentioning it, while speaking at the South Korea’s National Assembly, which was by the way the first address to the Korean legislature by an American president in nearly 25 years, Trump did suggest that China should cut all ties with North Korea. At the same occasion, Trump called Russia(!) and China by name saying that all responsible nations must join forces to deny Kim Jong Un’s regime any form of support, supply, or acceptance.
“The longer we wait, the greater the danger grows, and the fewer the options become, and to those nations that choose to ignore this threat -- or, worse still, to enable it -- the weight of this crisis is on your conscience.”
In my opinion, this sounds like grandstanding for a domestic U.S. audience because diplomatically this is a nonstarter.
Over in the States, the local elections have once again reminded us of the dangers of relying on opinion polls and the power of polarization.
The Virginia gubernatorial elections saw a Democratic win with around an 8 percent margin of victory. The polls had been predicting a 2 percent margin.
The surprise came with more motivated Democrat voters turning out in larger numbers.
A more polarized political debate does potentially increase the turnout and that’s something that makes opinion polls less reliable.
It also increases the risk of significant policy shifts when government control changes hands.
Of itself, North Virginia is probably not something international financial markets care that much about, but this might have a bearing on the November 2018 midterm elections, which international financial markets will care about.
Finally, the Russian press agency “Tass” has informed that Russian President Vladimir Putin will meet with President Trump in Vietnam on Friday, November 10, at the meeting in Vietnam on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit. The information was provided by the Russian Presidential Aide Yuri who also said that Putin and Trump could discuss the situation in Syria and on the Korean Peninsula and bilateral relations, which have reached a low point.
From its side, the Chinese news agency Xinhua informed that the Chinese President Xi Jinping told today, Thursday, November 9, President Donald Trump that Taiwan is the most important, most sensitive core issue in the Sino-U.S. ties.
Yes, there is still a lot of work to do.
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