U.S. China Trade Deal: No Guarantees

[errolanderson]

Soybeans wobbled yesterday for the fact that the POTUS again delayed the prospect of a ‘Grand Deal’ with China. No summit with Xi for at least 4 more weeks, but farmers will be very happy with the negotiations according to Trump.

As a market observer, it appears that negotiations have struggled. China wants to become a global leader in IT by 2025. And with incoming U.S. restrictions, this is likely not sitting well. Also, both sides don’t want to be seen caving in negotiations. China has a much longer view in negotiations than the U.S. (IMO), despite a slowing economy.

And the U.S. trade deficit continues to widen despite tariffs. To me, the only way the trade deficit will begin to narrow is when the U.S. economy enters a recession.

Politics will likely continue to polish the look of negotiations, but major concessions will likely have to be made by both sides for a Trump / Xi summit to actually occur (IMO).

[agstar77]

By the time emperor Trump gets a deal with China all us peons will be Bankrupt!

[ajl]

As far as the US is concerned, they might as well collect tariffs on Chinese goods. Those goods have no other market so might as well get a tariff. A tariff is much more preferable to higher domestic taxes, and the US does have debt to service. There are some whining soybean farmers, but US corn prices are higher than a year ago. The other issue is the fact that China is going broke and can't buy as much canola and soybeans as they used too anyways. That reality will take some getting used to on both sides of the border.

[AlbertaFarmer5]

As far as the US is concerned, they might as well collect tariffs on Chinese goods. Those goods have no other market so might as well get a tariff. A tariff is much more preferable to higher domestic taxes, and the US does have debt to service. There are some whining soybean farmers, but US corn prices are higher than a year ago. The other issue is the fact that China is going broke and can't buy as much canola and soybeans as they used too anyways. That reality will take some getting used to on both sides of the border.

Someone who actually gets it.

[Oliver88]

How big of a factor is the African Swine Flu in this? How many hundred thousand hogs have actually been quarantined that now won’t require feed?

[malleefarmer]

Some positive economic news about china/the world


https://www.abc.net.au/news/2019-04-07/green-shoots-pop-up-in-the-global-economy-as-china-keeps-pumping/10972450 https://www.abc.net.au/news/2019-04-07/green-shoots-pop-up-in-the-global-economy-as-china-keeps-pumping/10972450

[macdon02]

How big of a factor is the African Swine Flu in this? How many hundred thousand hogs have actually been quarantined that now won’t require feed?

Rough estimate is they've lost a third since 2014. Actual number is unknown as the "tall poppy" policy (anyone that speaks up gets their head cut off) means no one admits there's a crisis. It's 10s of millions dead hogs. Id build a barn if regulation didn't impede it. The disease is spreading into other countries now and has the ability to mutate through proteins and jump species. Its nasty.

[AlbertaFarmer5]

Rough estimate is they've lost a third since 2014. Actual number is unknown as the "tall poppy" policy (anyone that speaks up gets their head cut off) means no one admits there's a crisis. It's 10s of millions dead hogs. Id build a barn if regulation didn't impede it. The disease is spreading into other countries now and has the ability to mutate through proteins and jump species. Its nasty.

True, in a country who has, or had around a half a billion pigs, losing a few hundred thousand wouldn't even make the local news, the scale of this is unfathomable.

[errolanderson]

Interesting comment in an European paper today . . . .

"China will pay lip service to much of what is being discussed, sign a weak deal, buy some stuff, approve some deals in the short term and treating foreign companies differently as much as they can. But longer term, China will be pursuing and focusing on Made in China 2025 plan"

Global power re-balancing in-progress (IMO) that may take years to sort out . . . .

[shtferbrains]

From Wikipedia, the free encyclopedia



Made in China 2025 (Chinese: ä¸å›½åˆ¶é€ 2025; pinyin: Zhōngguó zhìzào èrlÃng'èrwÇ”)[1] is a strategic plan of China issued by Chinese Premier Li Keqiang and his cabinet in May 2015.[2] With it, China aims to move away from being the world's "factory" (producing cheap, low quality goods due to lower labour costs) and move to producing higher value products and services.[3] It is in essence a blueprint to upgrade the manufacturing capabilities of Chinese industries.[4]

The goals of Made in China 2025 include increasing the Chinese-domestic content of core materials to 40 percent by 2020 and 70 percent by 2025.[5] The plan focuses on high-tech fields including the pharmaceutical industry, automotive industry, aerospace industry, semiconductors, IT and robotics etc, which are presently the purview of foreign companies.[6]

The Center for Strategic and International Studies describes it as an "initiative to comprehensively upgrade Chinese industry" directly inspired by the German Industry 4.0.[1] It is an attempt to move the country's manufacturing up the value chain[7] and become a major manufacturing power in direct competition with the United States.[8][9] Chinese government is committed to roughly investing $300 billion US dollars to achieve this plan.[3]


I can't see Trump getting anything close to what he wants anytime soon on this deal.

The increased AG imports might have helped the trade balance but if the reports of the loss of the equivalent of the North American hog herd are true they don't require the extra product.

Looks like time to find our shit storm googles because we are first to get splattered.