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Trump May Not Play Nice With China in Upcoming Trade Meeting

The U.S. president has no plans of going easy on China in a scheduled trade meeting next week.

Taking to Twitter on Thursday, Donald Trump said over two separate posts, “The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits…and job losses. American companies must be prepared to look at other alternatives.”

The president will host China’s President Xi at Mar-a-Lago on April 6 and 7, and White House press secretary Sean Spicer said in a briefing Thursday that the two leaders (who are meeting for the first time since Trump took office) will “chart a way forward on a bilateral relationship” and discuss trade in general, and North Korea trade in particular.

When it comes to trade in general, the focus will likely weigh heavily on trade deficits—something the president has harped on and promised to rectify.

Speaking to CNBC on Friday, Commerce Secretary Wilbur Ross said the country’s too-high trade deficit is the result of bad trade deals.

“Our trade deficit overall is about $500 billion a year,” Ross told CNBC on Squawk Box. “Quite miraculously, that also equals the net trade surplus with the rest of the world.”

China has been on the receiving end of much of President Trump’s ire over trade because its surplus alone is $300 billion of that total. Though China says the trade situation isn’t as bad as Trump sees it.

“In China-U.S. trade, although we are running surplus in trading goods, we are on the deficit side when it comes to trading services,” Xinhua Net reported Chinese vice foreign minister Zheng Zeguang as saying at a press briefing. “China does not seek a trading surplus, and it is not our intention to stimulate export through competitive currency devaluation.”

The trade imbalance, Zeguang said, could be helped if the U.S. eased regulations on high-tech exports to China and allow for more Chinese investment in the U.S.

Varied views aside, Trump is expected to sign an executive order Friday that will call for a 90-day study of the U.S. annual trade deficit, which will examine each country and product that has contributed to it, and draw possible solutions to put in place to correct it. China, naturally, is expected to be subject to considerable scrutiny.

Despite the impending scrutiny and the tough talk ahead with the U.S. president, China’s manufacturing sector appears to be flourishing more now than it has in the last five years.

China’s official manufacturing Purchasing Manager’s Index (PMI) hit 51.8 in March, the National Bureau of Statistics in China reported Friday. That’s the strongest it’s been since April 2012, and above the 51.6 economists had expected.

Production was up to 54.2, well above the 50 mark that separates expansion from contraction. New orders were also up, delivery times improved and factories didn’t cut as many jobs. Economists are concerned, however, that China may not be able to sustain this growth for much longer.

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