WSJ report
China is counting on promises of big purchases of semiconductors and other goods to ease trade tensions and convince Trump to extend the tariff truce, according to the WSJ.
The report doesn't cast progress on talks in a good light with China denying theft of IP.
"During the negotiations this week that were in their fourth day Thursday, U.S. and Chinese officials have remained deadlocked on a number of issues underlying the current trade dispute, according to people with knowledge of the matter. These include Washington's complaints that China pressures American firms to share technology and uses industrial policies to favor domestic companies at the expense of U.S. competitors."
China is proposing increasing US chip sales to China to $200 billion over six years, a five-fold increase. They're also promising to scrap subsidies for domestically made cars.
China hopes the pledges are enough to schedule a summit between Trump and Xi, where they will work out the tougher issues.
The hint in the report is that Lighthizer won't like the proposal, which doesn't address structural issues.
There are also some smoke-and-mirrors here:
Some of China's plans to increase U.S. purchases could also run into trouble with American business groups and companies. The semiconductor plan would require U.S. companies to rework their supply chains, so that chips are shipped directly to China from the U.S. instead of being routed through countries like Mexico or Malaysia, where many semiconductors are assembled and tested, the companies said. The goods would be counted as U.S. exports, rather than, say, Malaysian exports.
I think markets are far too optimistic about a trade deal. It will get worse before it gets better and this is the first step.
