Contrary to claims made Monday by the pro-Communist Global Times, Commerce Secretary Wilbur Ross said Monday during an interview on CNBC that President Trump’s trade war is hurting China more than it is hurting the US – implying that Beijing will relent and strike a trade deal with the US.
Ross claimed that US tariffs are impairing China’s ability to “create jobs” and “stave off social unrest.” Because China exports far more to the US than the US does to China, Beijing is facing a “binary decision”, and it’s finding out just how much it depends on the US.
He added that the talks are happening at an “appropriate level,” and that the US delegation is large because of the number of issues that must be addressed, including eventual enforcement and compliance.
“What will come out of it is a resolution: Will we go the negotiated rout or will we go in the direction of more tariffs.”
Ross said the sanctions against ZTE – which nearly destroyed the Chinese telecoms giant – helped demonstrate to China just how badly it needs the US.
Already, companies are moving manufacturing out of China, Ross said. Though it’s not all coming to the US, Ross said much of it is moving to other Asian countries.
In a sign that China is taking the negotiations seriously, top Chinese trade official Liu He unexpectedly made an appearance at the trade talks in Beijing that began on Monday. The “mid-level” talks are intended to lay the groundwork for negotiations: Breakthroughs aren’t expected until at least next week, when a delegation led by Trade Rep. Robert Lighthizer is expected to meet with a delegation led by Liu in the first round of “high-level” talks.
To be sure, by at least one measure, Ross’s claims that China has been hurt worse than the US doesn’t ring true. While China has absolutely suffered a larger deceleration in economic growth, Chinese stocks have actually outperformed US shares since the US imposed the first $50 billion in China-specific tariffs.
Meanwhile, European shares have underperformed both the US and China as collateral damage from the trade war has stretched across the globe.
As investors try to gauge the success of Monday’s talks, here are seven things to look out for.
Watch Ross’s comments below:
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