How services are neglected in the US-China trade war - Harry Broadman

Harry Broadman

Tarifs imposed in the US-China trade war focus on goods, but US politicians missed that most of the world trade consists of services, writes international trade expert Harry Broadman in the Gulf News. What has happened to Trump and his advisors over the past twenty years?

Harry Broadman:

While the importance of services trade to US competitiveness may have once been out of the mainstream of trade policy thinking, that was decades ago. If Trump’s economic advisers are worth their salt, they should know better. If they do, then why can’t they get through to the boss?

Perhaps Trump’s distorted view towards the importance of international trade in services stems from sheer ignorance. That is hard to believe. After all, he did attend the Wharton School of Business at the University of Pennsylvania, from which he graduated in 1968 with a Bachelor’s Degree in Economics. 

Such training, one would assume, equipped him with the tools to understand the concept of cross-border services transactions, even if they were not as commonplace then as they are today. 

Alternatively, does it stem from a nostalgic hope to return to years gone by when manufactured merchandise and other goods dominated economic activity in the US and elsewhere? If so, he would do well to recognise that such a wish is far-fetched. Why?

Because over the last 20 years, in every country of the world — rich as well as poor — manufacturing’s contribution to GDP actually has been declining while the share of GDP accounted for by services has been rising. 

It’s ironic that not only is the core of the Trump Organization in the real estate industry, a prime component of the services sector, but Trump’s course concentration in economics at Wharton was in real estate. Even television, Trump’s second occupation, is a services industry. 

Despite this, Trump might well believe that a shift to a services-oriented economy is a sign of economic decline. If so, the latest data, which are for 2015, suggest he would be quite mistaken. In high-income countries, services’ share of GDP has risen to 75 per cent. In low- and middle-income states, the share of GDP accounted for by services has increased to 56 per cent.

Whatever the reason for Trump’s myopia toward the fastest growing portion of international trade, he needs to realise that he — like the rest of us — is not living in an economy of years gone by.

More in Gulf News.

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Trump did not convince the Chinese - Arthur Kroeber

Arthur Kroeber

One year into the trade war, China's negotiators have not been convinced US President Donald Trump is having the upper hand, says economist Arthur Kroeber to the Washington Post.

The Washington Post:

By depressing demand for Chinese goods, U.S. tariffs have cost 3 million Chinese factory workers their jobs, according to Trump, and put pressure on Chinese President Xi Jinping to make a deal. 

Trump's claim to have the upper hand at the negotiating table does not appear to have convinced the Chinese. 

"They've decided Trump is a vacillating guy who can't figure out what he wants and gets spooked every time the stock market goes down or someone accuses him of not being tough," said Arthur Kroeber, managing director of Gavekal Dragonomics, a consultancy in Beijing. "Although there are problems in China, they believe they have their economy under control, more so than Trump. They think he is more vulnerable to a slowdown and that they can afford to wait him out."

The Washington Post.

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China cannot afford to disconnect from the global economy - Arthur Kroeber

Arthur Kroeber

China is trying to find a way out of the irrational Trump policies, as the G20 convenes in Japan. Key is that China cannot afford to lose support from the international business community and the global economy, says economist Arthur Kroeber to the New York Times.

The New York Times:

In response, China’s Ministry of Commerce has threatened to make a list of “unreliable” companies and people who could be punished for disrupting Chinese supply chains. Chinese officials have echoed the threat in meetings with American tech companies. Beijing has also proposed new cybersecurity regulations that experts say could impair the operations of foreign companies in China. 

Still, Arthur Kroeber, a founding partner at the research firm Gavekal, said China would hurt itself as much as it hurt the United States if it took more steps to disconnect itself from the global economy. 

“China’s only hope of influencing U.S. policy in a more positive (from its standpoint) direction is to keep the business community as some kind of an ally,” Mr. Kroeber wrote in an email. “This limits its ability to target U.S. firms for retaliation.”

More at the New York Times.

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Getting a trade deal that helps both sides might be impossible - Arthur Kroeber

Arthur Kroeber

Observers watch the proceedings at the G20 in Japan as Donald Trump and Xi Jinping will try to hammer out a kind of trade deal. But getting a deal that makes both sides happy is virtually impossible, says economist Arthur Kroeber in the South China Morning Post.

The South China Morning Post:

Arthur Kroeber, research head and co-founder of Gavekal Dragonomics, wrote in a note that “it will be very tricky to come up with a deal that satisfies the political requirements on both sides.” 

Trump, a Republican, decided to break off negotiations in early May because a deal would be a “political liability” for him if right-wing hardliners and Democratic opponents saw its terms as inadequate. 

In China, the terms negotiated by Vice-Premier Liu He, Xi’s top economic aide, were “politically unsaleable,” with powerful forces in Beijing suggesting US demands were excessive, Kroeber added.

More in the South China Morning Post.

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Trump plays political games by accusing China banks to break North-Korea sanctions - Shaun Rein

Shaun Rein

US president Donald Trump fired another salvo in the trade war on the story three major Chinese banks participated in breaking the sanctions on North-Korea. A part of Trump's political game, says Shanghai-based business analyst Shaun Rein in the South China Morning Post.

The South China Morning Post:

Analysts said the timing of the report was sensitive. Shaun Rein, managing director of China Market Research Group in Shanghai, said it could be another “pressure tactic” following the export restrictions on Huawei Technologies by US President Donald Trump, given he is going to meet his Chinese counterpart, Xi Jinping, this week in Osaka during the G20 summit.

“I view it as likely to be a politically motivated attack by Trump administration officials looking for excuses to contain and curb China’s growth … It is doubtful that a large bank such as China Merchants Bank would break sanctions, as it has too much to lose,” he said.

China Merchants Bank dropped by more than 8.2 per cent on Tuesday in Shanghai, but recovered after the bank’s statement to close at 36.1 yuan, 4.8 per cent lower. Its H shares dropped by 7.9 per cent to close at HK$38.4 in Hong Kong. Bocom fell by 3 per cent to close at 6.1 yuan in Shanghai. Its H shares eased 3.7 per cent to close at HK$5.95. SPDB fell 3.1 per cent to close at 11.7 yuan in Shanghai.

More in the South China Morning Post.

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What Mr. Trump has been missing - Harry Broadman

Harry Broadman

As a former US negotiator Harry Broadman looks with shock at how US president Trump is using his tariffs to get his trade policies in place. For Forbes he describes what has been going wrong at the misinformed White House.

Harry Broadman:

Regrettably, for Mr. Trump, there are other constituencies of his base throughout America’s heartland, Rustbelt and elsewhere that are feeling as much pain as farmers from his 2018 tariffs—or will do so shortly as the bite of his newest wave of tariffs kick in. Perhaps saddest of all is the fact that imposing tariffs on merchandise imports—the president’s choice, if not sole, instrument to seemingly induce WTO-sanctioned “behind-the-border” reforms of China’s economic regime, such as a hold by the state on the free play of prices, weak protection of intellectual property, provision of huge subsidies to state-owned enterprises by state-owned banks that only pretend to require debt repayments, and artificial barriers to market entry and exit—simply will not work. 

We Americans are willing to endure pain for gain. But let’s not fool ourselves into thinking as Mr. Trump does, that simply eliminating our bilateral merchandise trade deficit with China, which in and of itself is not an economically meaningful objective but which his tariffs may well do, will alter the core of China’s conduct in the global trading system. 

In a nutshell, no matter how high or expansive are tariffs, they will not create effective incentives for China to execute the fundamental market-oriented reforms Beijing legally obligated itself to undertake in its 2001 WTO Accession Agreement. That is the real endgame. 

Achieving that goal--necessitating a reduction in the fundamental role of the state in China's economy, which of course Chinese President Xi Jinping is loathe to do since that is the raison d'etre of the Communist Party--is a wholly different matter. That would require both using a different arsenal and employing a fundamentally different strategy, especially marshaling a multilateral coalition of the world's leading trading partners. Our president seems to be moving us further away from that path each passing day.

More at the BBC.

Harry Broadman will be in London on June 27-30 and in Edinburgh July 1-3.

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How China miscalculated Trump - Victor Shih

Victor Shih

China's leadership is still trying to figure out how to deal with US president Donald Trump. Making sense out of Trump has been harder than expected, says political analyst Victor Shih, author of Factions and Finance in China. in an extensive interview in the New Yorker.

The New Yorker:

What have you made of the way the Party, generally, and Xi himself, in his personal interactions, has tried to deal with Trump over the last two and a half years? 

I think China suffers from a deficit of true expertise about the U.S. You have these very establishment experts who focus on the Presidency. So you can randomly pick a U.S. expert among the Chinese, and they will know a lot about what President Clinton did, what President Bush did, etc. But they have very little knowledge about interactions between Congress and the executive branch, and very, very little knowledge about interactions between businesses and the executive branch. So I think what they looked at was the electoral map, and they said, “Well, look at these states that elected Trump. They’re all agricultural states. So we’re going to go after agriculture if things between the U.S. and China were to worsen.” What they didn’t realize is that, actually, agricultural subsidies are the one subsidy that, across the aisle, members of Congress actually support. And so, lo and behold, after China punished the U.S. by not buying soybeans and corn, that was easily dealt with by additional agricultural subsidies, and I think that was kind of a surprise to the Chinese side. 

So they have a simplistic view of the U.S., but I think this trade war has educated China on many facets of the U.S. system. But still, I think the expertise is kind of lacking. 

Do you have some sense of what the Party makes of Trump personally? 

On the one hand, they do see this very typical real-estate billionaire, of whom there are many, obviously, in China. The regime is filled with real-estate billionaires—selfish, egotistical, money-hungry. These are all patterns that are very familiar to the Chinese government. But, on the other hand, I think they have been very surprised that doing things like granting Ivanka Trump’s brand copyrights in China, really playing up to Trump’s ego, have not been enough. You have to remember that there was this kind of honeymoon period at the beginning when Xi Jinping visited Mar-a-Lago, et cetera. I think that they were very surprised at how sincere the nationalist rhetoric, the anti-Chinese trade rhetoric, turned out to be. 

They made the same mistake that a lot of people made, which is, Trump obviously doesn’t give a shit about all kinds of things. But on certain things— 

Well, exactly. They thought that ego and money, and the promise of money, would have been enough to at least soften some of his rhetoric against China and trade with China. But it has not done that as much as they had expected. 

Have I made the same mistake that you were saying a lot of Chinese observers of the U.S. make, by focussing too much on the leader and not focussing enough on Party dynamics? 

One should not just focus on him. But I think, in terms of political dynamics, probably just him. The problem faced by Xi is the same one that is faced by Trump, which is that they’re not economic experts. Trump can say, “I’ve been a business person.” In a weird way, I’d argue that Trump actually knows more about economics, how the market works, how the financial markets work, than Xi Jinping, who has lived his entire life under the care of the Chinese government and an entirely socialist internal economy, which still persists within the Chinese government. When you are an official in the Chinese government, your meals come from the government; salary and housing is allocated by the government. He really does not have a lot of intuition about how the market works, until the small group of trusted advisers around him and their advice becomes important. 

So I think it is right that people are focussing on Liu He, one of the technocrats that Xi Jinping trusts a great deal, because they go way back to high school. But for Liu He, there’s still a challenge. Even though he’s trusted, he’s listened to, if he makes a mistake, that trust also can go away. So Liu He is desperately trying not to make a mistake. It’s possible that, given all these other objectives of national greatness, and not having a financial crisis, Liu He may be a true moderating voice in trying to persuade Xi Jinping to make certain concessions. That’s the propaganda line that you see, but it’s possible that it’s true in reality.

Much more in the New Yorker.

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The trade war: only uncertainty is certain - Arthur Kroeber

Arthur Kroeber

The markets have given up trying to make sense out of the direction of the trade war between China and the US is taking. Economist Arthur Kroeber sees three possible scenario's for the conflict but is hesitant to pick one, he says in Barron's.

 Barron's:

Gavekal Research’s Arthur Kroeber notes that there are three possible outcomes. First, the two sides could sit down and get a deal hashed out in a matter of weeks. Second, negotiations could take months and only reach a conclusion after the U.S. and China decide they can’t take anymore pain to their economies or markets. Finally, the trade war could become the status quo. “While the first outcome is the most likely and the third the least, the probability of each individual outcome is less than 50%,” Kroeber writes. “Therefore our only certainty now is continued uncertainty.” 

And the market reflects that.

More in Barron's.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Why Trump is blowing it - Tom Doctoroff

Tom Doctoroff

There seems very little doubt whether the complaints president US Donald Trump has about China's trade practices hold ground. But China veteran Tom Doctoroff sees Trump using the wrong methods to correct the trade concerns, he writes at LinkedIn.

Tom Doctoroff:

Make no mistake. China's trade practices are grossly unfair, mercantilistic in the extreme. Obsessed with growth, the underpinning of domestic social stability, the Communist Party does not play nice. It profits from ambiguities that have not been resolved since its accession to the World Trade Organization. The result? Rampant intellectual property theft, state intervention in and protection of "strategic industries" and forced technology transfers. Furthermore, China's recent policies are not friendly. Xi Jinping's "China 2025" plan espouses "self-reliance" in sectors from artificial intelligence to electric vehicles as fundamental to China's "dream" of national glory. It also smacks of epic statist intervention. 

So Trump's push to rewrite the rulebook, with clear "don't cross" red lines, is not unreasonable. That's why, until recently, his PRC trade policies have earned rare bi-partisan support. 

But Trump is blowing it, hugely.

More at LinkedIn.

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How four US constituencies look differently at China - Arthur Kroeber

Arthur Kroeber

As the formal trade war might be heading to an end game, four US constituencies have different views on how to deal with China, even after the trade war ends, explains economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know® at a meeting or the Asia Society.

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The US wants China to stop running their economy as they do - Arthur Kroeber

Arthur Kroeber

The trade negotiations between China and the US might be in their endgame, but the differences are still huge. The US wants China to stop running their economy as they have always done, says economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, to the Asia Society blog.

The Asia Society blog:

In addition to participating in trade talks, the Trump administration has restricted investment by Chinese companies in the United States and tightened export rules, steps that make a grand bargain between the two countries more remote in the short term. 

“From the Chinese perspective, it looks like the U.S. is asking them to abandon a basic method of running their economy as well as implementing a containment strategy,” said Arthur Kroeber, an expert on the Chinese economy at Gavekal. “I think that even if we get a deal on trade in the next 30 to 60 days, it’ll be narrowly constructed and there will still be a lot of sources of friction.” 

For Trump, a president known to boast about his negotiating prowess, even a limited deal with China may be enough to suit his needs. But the fundamental differences between the world’s two largest economies seem likely to remain an issue throughout the rest of his administration — and beyond.

More at the Asia Society blog.

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How Trump's trade war is backfiring - Sara Hsu

Sara Hsu

Trump's trade war against China is backfiring, says financial analyst Sara Hsu at the China Focus. While ideologically the trade war makes sense, US consumers and companies pay a high price, she says.

Sara Hsu:

The problem is that the world is so globalized at present that hurting Chinese interests also harms US interests. Trump’s imposition of tariffs on American consumers and producers, including multinationals producing in China, has resulted in rising costs and economic losses. At present, the world is waiting to find out whether the trade war will escalate or whether tensions will die down. If the Trump administration doubles down on Chinese tariffs, unemployment in the US will rise and economic woes for both nations will set in. 

Trump’s nationalist ideology might have felt like a necessary antidote to fighting the unseen adversaries of globalization. For a man who sees the world in black and white, and for Americans tired of losing jobs to their cheaper Chinese counterparts, making China the primary enemy of the US is a winning strategy. However, this approach is already backfiring, creating costs in the US and abroad. 

What Trump has gotten wrong is that while China is most definitely a rival of the US, it is not a foe. It’s dangerous to position other nations as antagonists, because this opens the door for hostilities to grow. While Obama’s approach to China was far more subtle, it did less harm to the global economy and preserved a key partnership between the two nations. 

Going forward, it will be challenging to restore this critical connection while also maintaining a healthy rivalry. In all likelihood, even after the political tides have changed, nothing the US will do to check China’s global ambition will be looked upon benignly. The most important bilateral relationship in the world has become a game of brinksmanship, under reactionary strongman politics. So much for globalization. 

More at the China Focus.

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Why China and the US will remain at loggerheads – Arthur Kroeber

Arthur Kroeber

Even when China and the US will reach a kind of trade agreement, both countries have such different ideologies, solving hostilities will be a matter of the long haul, says economist Arthur Kroeber, author of China’s Economy: What Everyone Needs to Know to the Atlantic. “Xi has clearly nailed his colors to the mast of a much more state-directed economy,” said Kroeber.

The Atlantic:

Many of the problems Washington wants resolved in China will require more than a few regulatory tweaks. The bureaucratic harassment, theft of intellectual property, and overt favoritism toward local firms that make doing business in China such a nightmare for American chief executives are caused by the very way the Chinese economy works. Changing them means changing China’s basic economic system. Beijing’s leaders cannot possibly achieve such an overhaul in the short term—assuming they even want to.

“It is going to be a very long haul to get the changes the U.S. considers to be required because that really would force China to fundamentally alter the way it organizes itself,” Arthur Kroeber, a founding partner at Gavekal Research and the author of China’s Economy: What Everyone Needs to Know, told me.

At its heart, then, the trade dispute is about far more than tariffs and deficits. It is a contest of two very different national ideologies. Though the Trump administration has deviated from this somewhat, the United States believes that openness—political, economic, and social—creates prosperity, resolves disagreements within society, and promotes the diversity that spawns innovation and progress. China—or, more accurately, its leadership—sees government control as critical to developing the economy, achieving social peace, and forwarding the best interests of the nation overall. Americans tend to think open, free markets that are operating in a fair regulatory environment produce the best economic results. Beijing, on the other hand, doesn’t trust market forces and instead wants the state to play a more direct role in achieving the economic outcomes it determines are necessary for the country...

There is an argument that state largesse leads to wasteful investment that ultimately hampers innovation. But it is doubtful that the current regime of President Xi Jinping is willing to make such significant changes. Since coming to power in 2012, Xi has placed a premium on strengthening Communist Party control over the economy, and despite frequent rhetoric about “opening up” and free trade, he has shown few signs of resuming more liberal reforms that would diminish state dominance.

“Xi has clearly nailed his colors to the mast of a much more state-directed economy,” said Gavekal’s Kroeber. “I’m pretty skeptical that there will be significant movement by China on these large-scale structural issues the U.S. is talking about.”

More at the Atlantic.

Arthur Kroeber is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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What happens to the trade war after March 1 - Arthur Kroeber

Arthur Kroeber

On March 1 the 90-day truce in the trade war between the US and China expires. Leading economist Arthur Kroeber, author of China's Economy: What Everyone Needs to Know®, expects a deal is possible, but that certainly does not mean the end of all hostilities, he tells Barron's.

Barron's:

Many investors are still skeptical whether U.S.-China trade negotiations could see any real breakthrough by the March 1 deadline. But Arthur Kroeber from Gavekal Research believes the odds are tilting slightly toward a deal, as an embattled President Donald Trump seeks a political win at home and China is eager to take some pressure off its slowing economy. 

China has taken a number of steps to address U.S. concerns since the December truce, including buying U.S. soybeans, lowering tariffs on U.S. autos, playing down the Made in China 2025 program, and establishing new penalties and laws to restrict the forced transfer of technology. 

But a deal doesn’t have to solve every trade issue. 

“U.S. hard-liners can still use export controls to pressure China,” explains Kroeber. “This would shift the trade war from a macro risk to a tech-specific risk.” But some kind of deal before the deadline can prevent further tariffs and lift stocks of multinational companies in both countries that depend on trade. 

China’s economy has been showing weakness since last year, but recently enacted stimulus measures should start showing results later this year. With policy support and positive trade developments, China should still be able to grow its gross domestic product by more than 6% in 2019, estimates Kroeber. That would certainly help calm fears that a slowdown in the world’s second-largest economy will lead to a global recession.

More in Barron's.

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US politicians find common ground: restrict foreign investments - Harry Broadman

Harry Broadman

The American political landscape might be more divided than ever before, political analyst Harry Broadman sees one field where Republicans and Democrats find common ground: restricting foreign investments, especially but not only those from China through the Committee on Foreign Investment in the US (CFIUS), he writes in Gulf News.

Harry Broadman:

Historically, the US has had one of the most open policies toward foreign direct investment (FDI) — the ownership or control by a foreign entity of 10 per cent or more of a domestic enterprise. Indeed, FDI has played an increasingly important role in propelling US economic growth.

In absolute terms, the US is the world’s largest recipient of flows of FDI, and it has been so ever since 2006 (except for the brief 2010-14 period, when comparable inflows to China were slightly larger). 

The shared concern of both the Trump White House and the Democratic House, however, is that an increasing number of these foreign investors are from nations where there is significant involvement in business decisions by governments whose agendas are perceived — indeed known — to go way beyond commercial objectives. 

China, while hardly alone in not having effective separation between government and business, including in its FDI pursuits in the US, epitomises the case.

The understandable response by the US — as well as by other advanced countries, for example, Germany — is to intensify its scrutiny of the national security risks such inbound transactions might pose domestically, particularly in sectors considered sensitive. The US inter-agency body with the authority to make these national security assessments, The Committee on Foreign Investment in the US (CFIUS) — pronounced “syfius” — was established in 1975 by Executive Order by President Gerald Ford.

More in Gulf News.

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2019: not just your average trade war - Shaun Rein

Shaun Rein

US president Donald Trump might think he is just fighting a trade war, but for China's president Xi Jinping this is going much further, says political analyst Shaun Rein to CBS news. It can be the beginning of a new Cold War or worse, he says.

CBS News:

"2019 is the year we are going to find out whether or not this is just a trade war, the beginning of a cold war, or worse," said Shaun Rein, who runs the China Market Research Group in Shanghai. 

He says the Chinese government may not view this as a simple trade war but rather the United States trying to contain China's rise. 2019 marks the 70th anniversary of the Communist Party's takeover, and President Xi Jinping will want to project strength. 

Rein said, "I'm very concerned about Trump underestimating the resolve of President Xi to demonstrate to the world that China is now a rival superpower to the United States."

More predictions at CBS News. Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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How Trump is missing the point on China - Harry Broadman

Harry Broadman

The world, including China, is still trying to make sense out of the Trump/Xi trade talks. The Trump trade team is fighting the wrong battle, argues former U.S. Assistant Trade Representative Harry Broadman for Gulf News. "The Trump trade team continues to fight the wrong battle with China."

Harry Broadman:

For the US — as well as for the rest of the world — the strategic challenge with China is that fundamentally it is not a bona fide market economy. More importantly, it has not lived up to its legal commitments under its 2001 WTO accession agreement to reform into one.

Yet the White House — whether in Buenos Aires or Beijing or Washington — does not squarely focus on this issue. 

Instead, the Trump trade team continues to fight the wrong battle with China, uses the wrong weapons, and is in the trench alone while China’s harm to the US is little different than what it inflicts on the world’s other major trading partners. What do I mean? 

Trump’s preoccupation — actually it borders on being a fetish — with reducing the US bilateral merchandise trade deficit with China is a wholly misplaced battle. Bilateral trade deficits in and of themselves are not economically meaningful — especially in a world where supply chains are multinational. 

If anything, they reflect symptoms rather than a disease. 

At the same time, tariffs, which, after all, are really taxes on imports, are very crude instruments to try to induce economic change “upstream” in a supply chain. Perhaps if China were truly a market-driven economy, where prices are set freely by supply and demand, tariffs might bring about some changes “behind-the-border”. 

But in non-market economies, prices do not hold the import in conveying value as they do elsewhere. 

More to the point, in the case of China, the core trade problems are inherently part of the underlying fabric of the country’s domestic economy. 

The backbone of China’s economic engine remains dominated by large state-owned enterprises (SOEs), propped up by large state-owned banks (SOBs). The rub is that the SOEs and SOBs are at the core of the Communist Party’s raison d’etre and the “socialist market economy” philosophy that has underpinned China’s political economy structure since 1978. 

To say it’s going to take a lot more than tariffs to unwind these would be an understatement. 

It’s no surprise Trump prefers to negotiate bilaterally. But structuring one-off real estate transactions in New York are no match for today’s complexities of crafting global trade deals. In fact, when an opposing party engages in trade practices that many of your closest allies also judge to be unfair, it makes no sense to not bring them into the fold to strengthen your negotiating leverage. 

Yet that is exactly the formula Trump has been following — and not just with respect to China but all other trading partners. 

Finally, the accord Trump struck with Xi at the dinner has only deepened the openly contradictory US trade policy the White House has been pursuing with China. Here’s the contradiction in a nutshell: the US asserts it is appalled over China behaving as a non-market economy but then goes ahead and asks the Chinese government, itself, to purchase more US exports. 

Is it any wonder why Xi thought the dinner was a great success and his top economic advisers continue to shake their heads trying to make sense of US trade negotiation strategy?

More at Gulf News.

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Downturn in luxury purchases, certainly in the US - Ben Cavender

Ben Cavender

Consumers from China are spending less, and certainly luxury brands in the US will feel the downturn at least in the short run, says luxury consumer expert Ben Cavender to AP. Tighter visa restrictions under President Donald Trump also make it harder for Chinese shoppers to get to the United States.

AP:

Forecasters including Euromonitor International and Bain &Co. say Chinese customers will be the luxury industry’s main growth engine over the next decade. But this year, shoppers are skittish amid cooling economic growth, trade tension with Washington and weak real estate and stock markets. 

“Consumers are just not as excited about spending that kind of money right now,” said Ben Cavender of China Market Research Group. 

Demand for Tom Ford suits and Jimmy Choo shoes held up better than some other Chinese spending as economic activity slowed following a government clampdown on bank lending to cool a debt boom... 

In the United States, retailers face pressure from China’s weak yuan, which makes prices in dollars more expensive for Chinese shoppers. 

Tighter visa restrictions under President Donald Trump also make it harder for Chinese shoppers to get to the United States, said Cavender. 

Chinese tourist arrivals in the United States fell 20 percent from a year earlier to 880,000 in the three months ending in September, according to an estimate by the China Outbound Tourism Research Institute in Hamburg, Germany. The number going to France rose 20.7 percent to 664,800 and those bound for Italy rose 18.9 percent to 850,000. 

“If people previously were going to the U.S. to buy an American luxury brand, that’s not their first choice anymore,” said Cavender. “They would rather go to Japan, New Zealand or someplace in Europe where the process is easier.”

More at AP.

Ben Cavender is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more speakers on luxury consumers at the China Speakers Bureau? Do check out this list.  

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Jim Rogers is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the trade war between the US and China? Do check out this list.

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Jim Rogers is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

Are you looking for more experts on the ongoing trade war between China and the US? Do check out this list.