...A corollary of last year's "Be long what China is short of and short what China is long of".
It seems to still be the guiding principle nine years later.
From FT Alphaville:
China has agreed only to import more of what it doesn't want to make at home
China and the US aren’t fighting over what China exports now — assembled electronics, toys, socks, furniture. They’re fighting over what China wants to make at home in the future. China has a plan to become self sufficient in electric cars, aerospace, bio-medicine and farming equipment. These things are hard to make. They require decades to figure out, and a well-educated, productive, high-wage workforce. Xi Jinping didn’t compromise on this goal in Argentina. It’s hard to see that he ever will.
Mr Xi met with Donald Trump over Malbec and grilled sirloin at the G20 summit in Buenos Aires this weekend. He agreed to talk for three months about intellectual property transfers and state support of industry. As an immediate good-faith gesture, he will also punish Fentanyl exporters more severely. Also, according to the White House:
China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately.First, China is explicitly conceding that it's a command economy. In an open market, China's companies and hog farmers should buy oil and soyabeans from wherever they're cheapest on the global market. Mr Xi shouldn't have the power to compel them to buy from Texas and Iowa. That he can is in fact the definition of the problem the world's free-market economies have with China. The US and China didn't remove any structural or tariff-based market distortions in Buenos Aires. Rather, Mr Trump jawboned Mr Xi to command some changes at home. That's diplomacy, but it's not really commerce....MORE
