Produced by Gregory Bobillot. Edited by Donell Newkirk. Filmed by G. Bobillot and D. Newkirk. Graphics supervision by Brooke Fox
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So the United States and China may be beginning to come to terms on trade. We're not really sure what's in the negotiations right now. Here's what we know so far. The Chinese have promised to stabilise their currency. That's a really good thing. It's not really a problem right now. But the yuan has at times been severely undervalued. So promising for the future to make it more predictable is definitely a concession. Check.
There's also a possibility that they may be willing to reduce their trade surplus to the United States. This has been a particular problem for Donald Trump. He tweets about it all the time. Trade surplus is basically Chinese exports to the United States minus US exports to China. OK, it's a tall order. But let's put it up here.
How are they going to do this? Not at all obvious. Here's what we're looking at right now. This is US exports to China for the last 10 years. Sonny Perdue, he's the US secretary of agriculture, has said in a tweet that China is willing to buy 10m more tonnes of soybeans from the United States. That is a big number. Let's write that number out, see how big it is.
What does that number actually mean? Current market prices that's about $3.5bn worth of soybeans. OK, that's another big number. But let's look at what we're doing already. This right here is soybeans - US exports to China. The latest data is as of 2017. We just wanted to look at what happened before the trade war. OK, so that number goes up. Lots of big numbers. The Chinese trade surplus with the United States is... that's a really big number. Hard to see how we get there with soybeans.
What else did the US sell to China? Airplanes and airplane engines and airplane parts. What we're basically talking about is Boeing. It is, in fact, the single largest export that the US has to China. But here's where we get into trouble. There is a plan that China has produced called...Made in China 2025.
Basically China has said that it wants to get into the stuff that's really hard to make. They've made easier things up until now. They want to make things like more cars, more airplanes. Airplanes are very difficult to make. The United States is very good at making them. It's hard to see how when China has this explicit plan for state support of industries like aircraft that they want to get into that they're going to meaningfully increase the number of imports from America of aircraft.
Here's another thing that's in Made in China 2025... semiconductors. Computer chips. Again, very difficult to make. Hard to see how this number increases meaningfully when China is carrying out a plan to make more of it domestically.
So what are the concessions that China has been willing to make so far? What they're basically telling the United States is we are prepared to have you export even more commodities to China. That's good. But it doesn't solve the problem.