Trade

There Will Be No “Phase Two”

JM Ashby
Written by JM Ashby

While "phase one" of Trump's "greatest and biggest deal ever" remains up in the air, we already had plenty of reasons to doubt there would ever be a "phase two" and we can include the words of government officials in that assessment now.

"Phase two" of a deal would supposedly tackle the hard questions of structural reforms in China's economy while "phase one" would more or less function as a truce with little in the way of substantive changes.

Some officials say they they won't discuss phase two in 2020 because they don't know if Trump will be in the White House in 2021.

Officials in Beijing say they don’t anticipate sitting down to discuss a phase two deal before the U.S. election, in part because they want to wait to see if Trump wins a second term.

“It’s Trump who wants to sign these deals, not us. We can wait,” one Chinese official told Reuters.

Representative Jim Costa, a California Democrat who sits on two key agricultural committees, said in Congress on Wednesday that “pragmatic” Chinese sources had told him the same thing.

It's a long way off, and I shudder to even write the words, but even if Trump is reelected I don't expect there will ever be a phase two.

If it's true that China won't engage in serious talks about a second phase in the next year, I expect "phase one" will fall apart. It seems unlikely that Trump could make it through an entire year of feeling ignored by Bejing without ripping apart his own deal and escalating again. Trump can barely make it through a month without doing that even when he's not on the campaign trail.

Reuters also reports that Chinese officials don't want to appear as if they're "kowtowing to U.S. interests" by making big, structural changes; something that Trump makes even more difficult each time he opens his big mouth and attacks China's sovereignty.

  • 1933john

    Makes one wonder if Trump can deal cards.

  • muselet

    The Chinese government understands all too well they’re dealing with a madman and, understandably, would rather not. Waiting to see what happens in US domestic politics is not unreasonable, under the circumstances.

    As for Donald Trump, he wants a crushing win! against China—he’s been whingeing about Chinese trade policies since before he announced his candidacy—he can crow about at his Nuremberg rallies. If he doesn’t get what he wants, history tells us he will try to exert even more pressure, to the detriment of both the US and Chinese economies (he’s also likely to spend even more hours tweeting eccentrically-capitalized screeds, and somehow all this will be the fault of Hillary Clinton’s emails and CrowdStrike).

    –alopecia