“The stakes couldn’t be higher”: Trump and China’s president Xi discuss finance, global trade at first summit

Thursday, April 06, 2017 by

 Today’s China-U.S. summit meeting is an event that could also have enormous implications – in both directions. As Bloomberg’s Richard Breslow notes, one can’t help but be intrigued by the fact that while everyone is looking at the S&P 500, this morning the Shanghai composite traded at its highest level of the year.

(Article by Tyler Durden  from zerohedge.com)

Notably, the Dollar relationship to China’s currency relative to the rest of the world’s relationship to the Yuan is following a very similar pattern to last year’s ‘Shanghai Accord’ – stronger Yuan vs USD as China weakens its basket against all majors. Fooling Trump et al. that China is ‘not’ devaluing?

There doesn’t appear to be any scheduled press conferences just yet but, as Deutsche Bank’s Jim Reid notes, it’s worth keeping an eye on the headlines as the next two days progress. Clearly North Korea will be a subject near to the top of the agenda. Importantly though the meeting is the start of a new China-US bilateral relationship so the rhetoric which follows from the leaders will be closely scrutinised and debated one would imagine.

The stage is set for a carefully choreographed dinners with family and displays of bonhomie, but beneath the facade runs a wary, almost palpable, anxiety — as the men face a make or break moment. As AFP reports, Xi is arriving at the resort with a gift-basket of “tweetable deliverables”, sources say, peace offerings on Trump’s signature issues — trade and jobs — that he hopes will smooth over a relationship that began on shaky ground following disagreements over Taiwan. In return, he hopes to get assurances from Trump on American sales of arms to the island, as well as trade. But what Trump wants is less clear.

Although his comments during a Fox New interview this morning offer some visibility:

  • *TRUMP: WE HAVEN’T BEEN TREATED FAIRLY ON TRADE WITH CHINA
  • *TRUMP SAYS WILL DO REALLY WELL IN MEETINGS WITH CHINA’S XI

So, what’s at stake as President Trump sits down with China’s Xi?

Greg Wright (via The Conversation) explains

The U.S. and China together account for one-third of global economic output, so there is a lot at stake as President Donald Trump meets with his Chinese counterpart Xi Jinping, not least the fate of the world economy over the next few years.And it is precisely the magnitude of the stakes involved that has led some observers to assume that both countries will play it safe and focus on the areas of the relationship that are “win-win” relative to the areas that are more likely to produce conflict.

But there is no guarantee that this will happen. In fact, Trump may have already dealt himself a poor hand thanks to his past rhetoric on trade, which has heightened the political risk that he faces in negotiating with Xi. Perhaps more worryingly, Trump’s focus on achieving short-term victories could also tip the balance against the U.S.

At the end of the day the two countries not only drive the world economy but also rely critically on one another, a fact that should moderate the decisions of these two strong-willed leaders. In fact, my research (with fellow economists Giovanni Peri and Gianmarco Ottaviano) has highlighted the economic risks of miscalculating on trade deals, particularly those with developing countries.

Read more at: zerohedge.com



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