US, China talks will result in a ‘shaky truce at best’

00:00 Speaker A

And of course last time around, it took the US and China about 18 months to reach an agreement, but we do have a shorter term deadline which is Treasury Secretary Scott Beson’s requirement to head back to the US because he’ll be on Capitol Hill tomorrow for a hearing. Do you think that that speeds up any sort of short-term tiny agreement trickling out of these talks this time around?

00:25 Speaker B

There’s, I, you know, we think of potentially walk away with some kind of very tactical deal or agreement, you know, or an understanding really form for me, you know, formulating this understanding is what’s key here, right? They want to formalize the understandings. Okay, so they could get that done. Uh but in a couple of months here, in a few months here, could we go back to where we are today? We absolutely could. So I think this is a very shaky truce at best if it can be achieved. Um and you know, the secretary Treasury could come back and the talks are still potentially keep on going on. I don’t think that our deadline is necessarily what’s driving the ongoing conversation.

01:38 Shehzad

You know, Shehzad, as we think about some of the moves that were recently made, one of them notably by China yesterday and raising the minimum wage, and I know that this is kind of region by region within China. How are you kind of looking through some of those moves and saying, okay, that’s not necessarily a tariff, but it is an increasing that increasing of the costs, input costs for production that US companies that do engage in the region and rely on it for production are also going to have to consider.

02:29 Speaker B

You know, Chinese production is so heavily subsidized for so many complicated reasons that, you know, wage gains even if they take if these wage increases take place and what they look like and what the phase etc. for all of them is. Uh I’m not necessarily sure that it has a massive cost impact upfront because it may very well be offset by a lot of the freebies that the Chinese manufacturing sector has long been used to.