MOODY's chief economist has dashed hopes that the US is gaining major ground in
its negotiations with China aimed at preventing a trade war.
"I think it's a lose-lose. There are no
winners here," Mark Zandi told CNBC. "This is face-saving because
clearly they're not going come to terms on anything - at least, not in
Mr Zandi was referring to Treasury Secretary Steven Mnuchin's
announcement that a trade war was "on hold" as the world's two largest
economies agreed to drop their tariff threats and discuss parameters for
a wider trade agreement.
China consented to continue discussing measures under which it would
purchase more US products to reduce the US$335 billion annual trade
deficit between the two, but no specific dollar number was put forward.
Mr Zandi added that the discussions should have instead been focused on
structural issues like intellectual property (IP) protection for
investors, echoing the sentiment of many economists that the trade
deficit figure should not be the focus of the US-China trade
"America wants the Chinese to buy $200 billion more of what America
produces, but it's neither here nor there when it comes to protecting IP
rights, which is really what we should be focused on here," he said. "I
think it's a silly debate argument that is going to end up nowhere."
Other experts have warned that a deal with China focused on a dollar
figure for trade is not a sustainable solution in the long term. Former
US Under-Secretary of Commerce for International Trade Frank Lavin told
CNBC on Monday that a narrow focus on the trade imbalance misses the
more pertinent issues at hand.
"If they (China) give you a check, watch out. They're sort of buying you
off and getting you just to go away for that money, so be careful of
that," Mr Lavin said. "I'd say focus more on structural changes, getting
market opening, fair treatment, level playing field, IP issues,
US Trade Representative Robert Lighthizer made this point, saying in a
statement: "Real structural change is necessary. Nothing less than the
future of tens of millions of American jobs is at stake."