Beijing Reportedly Offers To Scrap Joint-Venture Requirement To Secure ‘Skinny Deal’

For the second time, President Trump is expected to sit down with Liu He, the leader of China’s trade delegation, Friday afternoon as talk of a “skinny” deal – something the president once denounced as a non-starter – percolates.

The market now expects the “skinny” deal will become a reality: After all, it’s probably the best option for both sides to save face and prevent another sharp selloff in stocks. And according to Fox News reporter Edward Lawrence, Beijing is preparing to “completely remove” forced joint ventures by Jan. 2020 as its major deal concession. In exchange, the Chinese government is hoping the US will agree to roll back at least some of the trade war tariffs that have hammered China’s all-important manufacturing sector.

However, Lawrence deleted his tweet shortly after he published it – injecting a degree of uncertainty into the report.

The US has repeatedly insisted that it wouldn’t agree to roll back all the trade war tariffs at once, and that the complete removal would need to be contingent on evidence that Beijing has held up its side of the deal.

Eliminating the JV requirement would fall under the Trump administration’s demands for China to improve market access, something that Beijing has said it also wants. With Beijing having already approved several market liberalizing reforms over the past few years (mostly improving foreigners’ access to its debt and equity markets), it’s unclear whether Trump would find such an offer enticing.

Then again, Trump might care as he is desperate for a deal – and market liberalization could be spun as an impressive “concession” to sell as the basis for a deal.