Chinese – U.S Trade Talks; We Are Living in Most Interesting Times

 Photo Souce A.P Wire Service

According to Wikipedia, “May you live in most interesting times” is an English expression which purports to be a translation of a traditional Chinese curse. While seemingly a blessing, the expression is normally used ironically with the clear implication that “uninteresting times” of peace and tranquility are more enjoyable than interesting ones, which from a historical perspective, usually include disorder and conflict.

While there remains much uncertainty as to the actual source of the saying both in geographical origin as well as authorship, with no actual Chinese source ever being cited. The implications and meaning of the saying are absolutely profound and are just as valid in today’s highly technological world as it ever was.

In 2008 during the financial crisis and global recession it was obvious that the global economy was in disarray. In fact, dozens of articles were written at that time quoting the Chinese curse, and Times Magazine even ran an article referring to it. I will go as far as to extrapolate that this saying is just as appropriate today as it ever was.

The current trade war between the United States and China contain some long-standing, incredibly complex issues, which profoundly shape the financial fabric of the global economy. The hope of the current negotiations is to change the rules or the playing field to be more amicable to both the United States as well as China. While the United States correctly believes that there has been an intrinsically unbalanced reimbursement for the technology developed in the United States that the Chinese now utilize, this is but one of the core issues that this trade war is trying to correct.

Last month it was announced after two days of negotiation in Washington that both sides had finally agreed on some issues and labeled these talks a success and a partial halt to the trade dispute. They appropriately labeled that they had come to a “phase one”, in which there was agreement on both sides to certain issues. However, within days the news coming from both sides would change with the Chinese first saying they required another meeting before anything would be signed, before they did a 180° turn around stating that both President Xi Jinping and President Donald Trump would sign an agreement in Chile this month.

As recently as October 30 it was announced by the president of Chile that the international conference would be canceled. As recently as today the president of the United States suggested that an appropriate venue would be held in Iowa, while the Chinese President suggested Macau as an appropriate place for them to meet.

Wherever they meet is irrelevant because at this point there are two issues that remain completely ambiguous. First and foremost, very few details of the content and context of the “phase one” agreement have been revealed to the public. There has been little if any released information to the public which leads to the second issue; except to speak about agreements on what many believe is simply low hanging fruit. By that I mean the easy to agree upon topics. The agreement is that the United States will not raise tariffs on December 15, and the Chinese agreed that they will purchase our agricultural products and meats. These are the only details so far released.

Lastly this trade war contains some very complex and long-standing issues that will be extremely difficult at best to resolve. These issues revolve around the transfer of technology and reciprocal and fair, not free, payment from China to the United States companies which have produced it.

Unless and until serious negotiations come to an amicable solution to implement a fair compensation for the use of United States technology which is verifiable and sustainable a real end to the trade war is impossible.

Wishing you as always, good trading,