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Trump Slams China For Unfair Trade But Praises XI, Blames Predecessors; Unveils $250BN In Deals

President Trump held a press conference with one of the most powerful people in the world and the event was...  underwhelming. It didn’t last long, the two stood fairly far apart at their lecterns and afterwards ignored questions from reporters (presumably in case one asked Xi about press freedoms again). In brief, we were informed about improving Sino-US relations, progress being made on the trade balance and co-operation on the North Korean issue and both leaders said it was a great success. On another sensitive subject, Xi’s asserted that the Pacific Ocean is big enough for both countries.

Here is how the press conference was characterised by the South China Morning Post (SCMP).

Trade and North Korea predictably topped the bill, but they also discussed security cooperation and the relationship between their citizens. The joint press conference lasted less than 15 minutes, with both leaders staying on-script to speak about further cooperation on a range of bilateral issues, from security on the Korean peninsula to Sino-US trade tensions. Both heralded the trip as a success. The joint press conference ends, with both leaders ignoring shouted questions from reporters. Journalists were told ahead of the conference that they would not be allowed to ask questions, after a New York Times reporter embarrassed Xi during Barack Obama’s 2014 visit with a question about press freedom in China.

In one of the more memorable statements by Trump, the US President said China is taking advantage of American workers and American companies with unfair trade practices, but he blamed his predecessors in the White House rather than China for allowing the massive U.S. trade deficit to grow.

“Right now, unfortunately, it is a very one-sided and unfair [relationship]. But – but – I don’t blame China. After all, who can blame a country for taking advantage of another country for the benefit of its own citizens? I give China great credit. But in actuality I do blame past administrations for allowing this out of control trade deficit to take place and to grow. We have to fix this because it just doesn’t work … it is just not sustainable.”

Speaking alongside President Xi Jinping on Thursday at a briefing in Beijing, Trump’s words were in contrast to what he said was a "very good chemistry" between the two leaders as they announced $250 billion in investment deals, many of which came in the form of tentative agreements

Below are some of the “key” moments from SCMPs live feed during this underwhelming press conference.

  • Xi says Trump’s China trip is a success, and China is willing to further promote the development of Sino-US relations
  • Xi said it is necessary to have continued in-depth of discussion on trade and lessen restrictions on the investment environment.
  • Xi says the two also discussed the need to strengthen United Nations peacekeeping operations, as well as joint counter-terrorism efforts in places such as the Middle East and Afghanistan.
  • Xi tells the press conference he has told Trump that The Pacific Ocean is big enough to accommodate both China and the United States.
  • Xi says he explained the outcome of the recently concluded Communist Party congress to Trump.
  • Trump thanks Xi for the welcoming ceremony this morning, describing the Forbidden City as “majestic.”
  • “Your people are also very proud of you,” Trump said, as he congratulates Xi for the “successful” 19th party congress last month.
  • Trump said he looks forward to building an “even stronger relationship” between China and the US, as well as further exchanges between the people of their nations.
  • Trump said the two discussed bilateral trade issues such as forced technology transfers, market access, and the “chronic imbalance” in trade.
  • On North Korea, Trump says China has agreed to step up economic pressure until the Kim regime gives up its nuclear ambitions.

The subject of North Korea had seen Trump at his most firm with his Chinese hosts earlier in the day, as The Guardian reports.

“But time is quickly running out. We must act fast, and hopefully China will act faster and more effectively on this problem than anyone…China can fix this problem easily and quickly and I am calling on China and your great president to hopefully work on it very hard. I know one thing about your president: if he works on it hard it will happen. There is no doubt about it.”

The main focus, however, was always going to be the trade issue. What surprised us was Trump’s about turn on blaming China for the trade deficit, to blaming previous governments in his own country. Perhaps he was simply overwhelmed by the (apparent) warmth of the welcome he received from Xi and the rest of the Chinese leadership.

Excuse our cynicism, but we suspect that the Chinese appreciated that Trump would need something to “show” (or tweet) on the trade issue…and that’s what he was given. The highlight of Trump’s visit to Beijing, which is grabbing the headlines, is obviously the $253 billion of trade deals (see below) which were signed during Trump’s visit. With Trump having spent the best part of two years, before and after his election, lambasting China for the trade deficit, Xi played “Mr Nice Guy” on trade. Indeed, this is precisely what we expected, see our preview of Trump’s visit “Will Xi Offer Trump A Small Victory On Trade As Cover For His Longer-Term Ambitions” here.  However, as the BBC noted.

They also announced the signing of $250bn (£190bn) worth of business deals during Mr Trump's visit, although it is unclear how much of that figure is past deals being re-announced or simply the potential for future deals.

Bloomberg was equally sceptical.

The White House has unveiled a slew of agreements with China as President Donald Trump seeks to address an imbalance in trade. While Commerce Secretary Wilbur Ross boasted a total of $250 billion in business deals, it’s unclear how one gets to that figure. Many of them weren’t broken out into separate valuations, while a large number were in the form of nonbinding memoranda of understanding or involved agreements with existing Chinese partners.

As we noted in our preview and still stand by.

…our suspicion is that Xi’s plan is to offer a “victory” to Trump with regard to reducing the trade gap, but only a small one. Meanwhile, China will continue with its longer-term “Mackinder-esque” plan to integrate the Eurasian continent via its “One Belt, One Road Plan” and undermine the dollar by accumulating gold and steadily increasing non-dollar trade. If it wasn’t for the small matter of China’s horrendous credit bubble, the US would have an even weaker hand.

Below Bloomberg looks into the $253 billion of trade deals and tries to make sense of the winners and losers.

The White House has unveiled a slew of agreements with China as President Donald Trump seeks to address an imbalance in trade. While Commerce Secretary Wilbur Ross boasted a total of $250 billion in business deals, getting to that figure may require some fuzzy math. Many of the deals weren’t broken out into separate valuations, while a large number were in the form of non-binding memoranda of understanding or involved agreements with existing Chinese partners.

 

Boeing Co.’s $37 billion aircraft order consists mostly of previously agreed deals, according to officials with knowledge of the matter. An agreement involving Cheniere Energy Inc. was presented at the signing ceremony as worth $11 billion, though neither company involved announced the value. Other pacts are stretched over lengthy periods, such as a 20-year shale gas and chemical project in West Virginia.

Still, the wave of deals signals the potential for an easing of tensions between the two countries, in addition to an increase in trade for products ranging from helicopters to beef. Here are highlights of what’s been disclosed so far:

  • Energy

Alaska Gasline Development Corp.: a joint agreement to advance a liquefied natural gas project in Alaska, involving the state of Alaska, Sinopec, China Investment Corp. and Bank of China Ltd. The project has been in discussion for years, and Alaska Gasline applied for federal approval for the development in April. Exxon Mobil Corp., ConocoPhillips, BP Plc and TransCanada Corp. have been involved in the effort, but have distanced themselves since estimating in 2012 that it would cost as much as $65 billion and take more than a decade to construct.

Air Products & Chemicals Inc.: the industrial gases company and state-owned Yankuang Group Co. intend to form a joint venture to build and operate an air separation, gasification and syngas clean-up system for a $3.5 billion coal-to-syngas production facility. Air Products is currently a supplier to the first phase of the project. Earlier this year, Air Products scrapped its plan to acquire China’s Yingde Gases Group Co. after a private-equity firm swooped in.

  • Transportation

Boeing: China Aviation Supplies Holding Co. agreed to buy 300 aircraft worth about $37 billion before discounts that are customary in the industry for large orders. Boeing didn’t disclose how many are new orders. The state has previously placed large orders through a centralized buyer before dividing them up among its airlines and leasing companies. Chinese airlines have been on a plane-buying spree amid a projection for the country to overtake the U.S. as the largest air-travel market possibly in as soon as in five years.

General Electric Co.: Juneyao Airlines ordered GEnx engines for its Boeing 787 fleet and ICBC Leasing ordered LEAP-1B engines for Boeing 737 MAX aircraft. The list prices for the two deals totaled $2.5 billion. GE also said it signed a cooperation agreement with China Datang Group to provide the Chinese company with gas turbines and other products and services.

Honeywell International Inc.: contract with Spring Airlines Co., the Chinese budget carrier that flies over 130 routes with a fleet of Airbus A320 planes. The U.S. company is a supplier for the C919, a new single-aisle plane being produced by state-owned Commercial Aircraft Corp. of China Ltd.

Bell Helicopter: the subsidiary of Textron Inc. signed an agreement to sell 50 of its helicopters to Reignwood International Investment Group Co. The company had already ordered 60 choppers, according to Bell Helicopter.

Ford Motor Co.: Ford gave financial details of an electric-vehicle alliance with China’s Anhui Zotye Automobile Co. that was first announced in August. The companies will invest 5 billion yuan ($754 million) to develop the cars they’ll sell under a new brand unique to the Chinese market. Ford has said at least 70 percent of its own Ford-brand vehicles sold in China will offer electric or hybrid propulsion by 2025.

  • Agriculture

Beef and Pork: JD.com Inc. agreed to buy $1.2 billion of beef from the Montana Stock Growers Association and pork from Smithfield Foods Inc. over the next three years, as part of a deal by the Chinese online retailer to import $2 billion of U.S. goods over that period.

The beef portion, about $200 million, would signal a big increase in the appetite for red meat among Chinese consumers, as shipments remain low due to the limited supply that meets requirements. According to China’s Customs General Administration, the country imported 2.3 billion yuan of beef last year.

The pork deal may not be much help creating jobs at Smithfield’s U.S. factories: The company can’t sell made-in-America sausage, ham and bacon to Chinese consumers because China prohibits imports of processed meat, CEO Kenneth Sullivan said in an interview in March. Smithfield parent WH Group opened an 800 million-yuan factory in central China in 2015 to produce American-style packaged meat products.

Archer-Daniels-Midland Co.: memorandum of understanding with state-owned COFCO Group for the export of U.S. soybeans into China.

  • Financial

Goldman Sachs Group Inc.: China’s sovereign wealth fund and Goldman Sachs announced a fund to help invest as much as $5 billion in American companies that have existing or potential business connections with China. State-backed China Investment Corp.’s role in the fund could complicate investments in American companies, after the Trump administration in September rejected a China-led takeover of a U.S. chipmaker on national-security grounds. Moreover, Goldman Sachs may only be able to contribute 3 percent of the fund because of U.S. rules regarding banks’ private-equity investments.

  • Technology

Qualcomm Inc.: non-binding MOUs with Chinese smartphone vendors Xiaomi, Oppo and Vivo - all of them current customers - to sell approximately $12 billion in semiconductors over three years. The San Diego-based chip company’s China sales of $14.6 billion accounted for 65 percent of its revenue for the fiscal year ended Sept. 24.

  • Industrial

DowDuPont Inc.: memorandum of understanding between Dow Chemical and Beijing Mobike Technology Co. to cooperate on developing lighter-weight and more environmentally friendly bicycles. The two companies began working together last year, the official China Daily reported Tuesday.

Caterpillar Inc.: cooperative framework agreement with newly formed China Energy Investment Corp. -- a combination of Shenhua Group Corp., the nation’s largest coal miner, and China Guodian Corp., one of its top-five power generators. The pact “outlines future agreements” for sales and rentals of Caterpillar mining equipment and other products and services, the U.S. company said in a statement. Honeywell International: an MOU with Oriental Energy Co. to cooperate on five propane dehydrogenation projects in Chinese cities. Honeywell announced in May that two Oriental Energy subsidiaries had licensed its technology to begin producing propylene.