Deal or no deal with China?

As one wise axiom instructs, handshake deals aren’t worth the paper they’re printed on. Donald Trump thinks that he came away from the G-20 summit this weekend with an “incredible deal” in its trade conflict with China. Trump told reporters on Air Force One that he will suspend the next round of tariffs on Chinese imports in exchange for Xi Jinping’s agreement to open its markets to US exporters:

After meeting at the G-20 summit in Argentina, Trump and Chinese President Xi Jinping have agreed a temporary stop to their bilateral trade disagreement, striking a deal to hold off on any additional tariffs on each other’s goods after January 1.

“It’s an incredible deal. It goes down, certainly, if it happens, it goes down as one of the largest deals ever made,” Trump said while en route to Joint Base Andrews in Maryland.

As per an earlier statement from the White House , the U.S. leader also said China would now look to buy from the U.S. a “tremendous amount of agricultural and other products,” in a bid to address the one way flow of trade.

“It’ll have an incredibly positive impact on farming, meaning agriculture, industrial products, computers, every type of product,” Trump told a gaggle of reporters.

The deal supposedly puts in a 90-day cooling-off period on all tariff changes. The US and China will negotiate terms during that period in an attempt to address all of the trade concerns between the two nations, which will include intellectual property theft and market access in China. At the same time, though, China will make a “substantial” increase in its US purchase of products, primarily in agriculture, energy, and industrial categories so as to reduce the trade imbalance about which Trump has long complained.

Sounds like a good deal for all sides … or at least for us, anyway. What does China have to say about this big breakthrough? Not much. Actually, nothing at all:

China seems to have a markedly different view of the trade war cease-fire reached with the Trump administration over the weekend, with state media making no mention Monday of the 90-day time frame or the reduction in tariffs on imported American cars or indeed any specifics about buying more American products.

That raises the prospect that the two sides have come away from their meeting in Buenos Aires, on the sidelines of the G-20, with very different ideas about what comes next. …

The People’s Daily, the official newspaper of the Chinese Communist Party, ran a photo of Trump and Xi shaking hands and smiling at the top of Monday’s front page. But the story, while stressing agreement and cooperation, had nothing about buying “very substantial” amounts of agricultural, industrial goods and energy products, as the White House said, and nothing about the 90 day deadline. Nor was there anything about tariffs on car imports into China.

Nor did news bulletins on CCTV, the state broadcaster, include any mention of buying more American goods or coming to an agreement within 90 days. Only the nationalist Global Times tabloid mentioned the time frame, and then they attributed it to the White House alone.

Chinese media did mention discussions on “gradually” reducing the trade imbalance, the Washington Post reports, rather than the big move Trump just promised. That’s not a promising sign for a bilateral agreement, but it’s not an outright indicator that Trump got it wrong, either. If Trump did succeed in getting Xi to agree to these terms, it would put the Chinese strongman in a difficult position at home after all of the self-sufficiency rhetoric from Xi and his regime over the last few years. Those kinds of concessions would likely get rolled out very slowly for domestic consumption, lest they stoke criticism and political instability.

The markets seem to think the deal’s for real:

U.S. stocks rose sharply after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day ceasefire in the trade war that has weighed heavily on global stock markets for most of 2018.

The Dow Jones Industrial Average surged 343 points, while the S&P 500 gained 1 percent. The Nasdaq Composite surged 1.3 percent.

Futures on oil and copper jumped on hopes a possible new China-U.S. trade agreement would boost global economic growth.

Treasury Secretary Steve Mnuchin talked up the deal this morning, telling CNBC that Trump would lead the negotiations himself. He also confirmed that Xi made commitments to the previously announced concessions, calling it the “first time” for having received them:

“This is the first time that we have a commitment from them that this will be a real agreement,” Mnuchin told CNBC’s “Squawk Box. ” “I’m very hopeful we can turn this into a real agreement.” …

While the administration is optimistic that a lasting deal can get done, Mnuchin emphasized that China has to keep to its word. The White House is looking to reduce the trade deficit with China and to stop it from stealing intellectual property and technology.

“They put on the table an offer of over $1.2 trillion in additional commitments. But the details of that still need to be negotiated,” Mnuchin said. “This isn’t just about buying things. This is about opening markets to U.S. companies and protecting U.S. technology. Those are very important structural issues to the president.”

What about Trump personally leading the negotiations? Mnuchin said trade representative Robert Lighthizer would be a “principal,” despite earlier reports that he would lead the US delegation, along with several other high-ranking US officials.  Mnuchin didn’t go into detail on Trump’s role within the talks other than to say he would “lead” them, but one has to assume that it would be a ceremonial position at most. These talks will take weeks, and presidents have too many other duties to get bogged down in the minutiae of trade deals.

Besides, a comment like this might not go over well on either side of the negotiating table:

As the Wall Street Journal notes, that has some unpleasant echoes:

Mr. Trump’s remark appeared to echo the slogan of Chinese Communist leader Mao Zedong’s Great Leap Forward economic program of the late 1950s and early 1960s, a campaign to collectivize agriculture and industrial production and catch up with the West. It resulted in widespread famine and the deaths of tens of millions of Chinese.

The Great Leap Forward nearly derailed Mao’s career. He launched the Cultural Revolution a few years later, vaulting him back into supremacy by accusing other party officials of “bourgeois” desires for capitalism, leading to violence and further oppression. Even a casual reference to any “leap forward” at the bargaining table is likely to draw some criticism, let alone undercut the effort to open China’s markets. Best to let Trump focus on the White House and let sleeping Maos lie.

Addendum: It’s Lighthizer:

He’s the toughest on China on Trump’s team, so that choice best reflects Trump’s own position.