U.S.-China trade deal that satisfies no one to be signed Wednesday

“We must bear in mind that the trade war is not over yet — the U.S. hasn’t revoked all its tariffs on China and China is still implementing its retaliatory measures. There are still many uncertainties down the road.”

That is the view from Beijing, as told by Taoran Notes (in Chinese), a WeChat blog that is “affiliated with the official Economic Daily newspaper that is used by Beijing to manage trade talk expectations,” the South China Morning Post reports. The post, made yesterday, was the first from the account in two months.

“The U.S. hasn’t revoked all its tariffs on China” is a vast understatement. According to calculations by Chad Brown at the Peterson Institute of International Economics, the “phase one” trade deal that is expected to be signed in Washington, D.C. this Wednesday will reduce Trump’s tariffs by less than 2 percent — from 21.0 percent to 19.3 percent.

“The deal isn’t what either side said it had wanted,” the Wall Street Journal summarizes (paywall). “The U.S. doesn’t get the fundamental reforms in Chinese economic policy it sought to help American businesses. And levies remain on about $370 billion of China’s exports.”

Back to the status quo we go

Trump is preparing to rebrand a preexisting part of U.S. foreign policy and call it a win, even though it changes little in substance, a separate report in the WSJ suggests (paywall). The upcoming trade pact will establish “at least bi-annual meetings,” tentatively called the Comprehensive Economic Dialogue — essentially just a new name for what was called the Strategic and Economic Dialogue in the Obama administration. If this pattern of rebranding sounds familiar, that’s because it’s exactly what happened with NAFTA.

Another piece of the status quo that is being restored: The Trump administration has agreed to revoke its designation of China as a “currency manipulator,” which was made largely as an act of political symbolism last August.

Other reports about the techno-trade war:

“China’s commitments in the Phase 1 trade deal with the United States were not changed during a lengthy translation process and will be released this week as the document is signed in Washington, U.S. Treasury Secretary Steven Mnuchin said on Sunday,” Reuters says.

“Much of the U.S. economy is largely unscathed by two turbulent years of trade war with China, economic indicators show,” the WSJ reports (paywall). However, “economists warn it could take years for the full consequences to be realized.”

“The Trump administration is set to ground one of its biggest civilian drone programmes permanently because the devices have been made at least partly in China,” the Financial Times reports (paywall). Nearly 1,000 drones used by the Department of the Interior are likely to be taken out of service, though “David Bernhardt, secretary of the interior, has not yet signed off on a final policy.”

“Goldman Sachs Group Inc. plans to double its headcount in China over the next five years,” from 300 to 600, according to Bloomberg (porous paywall). This plan assumes that China “continues down the path of opening up its financial markets.” Company executives are openly salivating about the “‘explosive’ growth in asset management” opportunities in the country. See also, in Pensions & Investments: Foreign managers see new opportunity from Chinese banks.

—Lucas Niewenhuis