Larry Kudlow: Trump-Xi 'Bromance' May Spur China Trade Deal

Matthias Oesterle via ZUMA

Sources said the pressure was on Liu, the 66-year-old Harvard-trained technocrat, to achieve "some kind of agreement" ahead of a planned trip by vice-president Wang Qishan to Washington in early July. "I think that's where we are as a group". He told Axios there's a "little bit of a bromance" between the two, reiterating that the Trump administration wants to avoid a full-fledged trade war with China.

CHINA FACTOR: President Donald Trump tweeted Sunday that he was working with President Xi Jinping of China to put Chinese telecom ZTE "back into business, fast" after US sanctions threatened ZTE's existence and 70,000 Chinese jobs. "Trump may have recognized that backing off on ZTE clears the path for him to claim at least a partial victory in the U.S".

The Wall Street Journal reported Monday that the two countries were in talks about such a potential swap: The U.S. would spare ZTE, and Beijing would drop plans to impose tariffs on U.S. farm products. "The US must continually and aggressively respond to China's systematic theft of US technology, trade secrets, proprietary data, research and development across wide swaths of the US economy, Evanina told lawmakers".

The company shut its main operations after the Commerce Department last month banned USA companies from selling components to ZTE for seven years for violating the terms of a settlement deal for illegally shipping goods made with US parts to Iran and North Korea. "Stay tuned!" Trump tweeted on Tuesday.

USA officials recently went to China to open trade talks about Beijing's unfair trade practices.

Kudlow was critical of ZTE in an interview with the Politico news outlet, saying it was a "very poorly run company" with "many internal flaws".

Brock Silvers, managing director of Kaiyuan Capital, a Shanghai-based investment advisory firm, said: "The real aim [of China's deleveraging campaign] is the reduction of risk to the state via tighter control over access to capital". This trend goes beyond Trump. With these narratives I referred to, the genie is out of bottle - there are obviously limits to the Cold War parallels but they don't look as far-fetched as they once did.

After accusing the Chinese of raping our economy and currency manipulation, Trump sure did a big about face as he now directs Commerce Secretary Wilbur Ross to save all those ZTE jobs post haste.

In March, Washington introduced a 25 per cent tariff on imported steel and a 10-per cent tariff on imported aluminium.

Per Reuters, China said on Monday that it appreciated the US's position on ZTE and that it's in close communications with the United States.

"The Chinese have said 'we want to see the specifics.' We gave them all the specifics in terms of trade issues". Still, Ross added, he is looking at "alternative remedies" for ZTE and expects to find some "very, very promptly".

Branstad said the United States could rescind the "Section 301" tariffs if China opened its agriculture and auto markets.

The companies are controlled by the Communist Party of China and could be used for operations to compromise US communications infrastructures, the report said. It also sends the message that the United States doesn't have the stomach for the larger economic battles with China to come. They may decide to increase focus on developing custom chips as well as an operating system to rival Android, in order to get out in front of similar bans in the future.

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