According to Chinese news reports, President Xi will give Trump a little of what he wants in terms of reduced tariffs and intellectual property protection when all the trade war smoke clears. And Bob Lighthizer and his trade team get a signed agreement. Trump will want more, but Mr. Trump knows the Chinese will drag the negotiations out until political pressure forces him to sign an agreement, and it won’t be a better deal, according to Chinese news reports.
But Xi won’t stop South China Sea development plans to appease the United States. And China won’t drop all the tariffs Trump wants dropped. That may disappoint investors who expect big results from the trade war, according to a Washington Post article.
But whatever Trump finally agrees to accept, he’ll call it a victory. The trade war gave the economy a serious case on constipation, in the first quarter of 2019, according to new economic reports. U.S. Gross Domestic Product growth doesn’t look too good when it’s compared to the 6-6.5 percent growth the Chinese expect in 2019. Economists say 2019 U.S. economic growth will end up around two percent.
China knows 2019 is the year of economic challenges. According to Li Keqiang, China’s second-in-command, his country is in for an economic struggle. Li Keqiang said the government wants to make sure economic growth meets 2019 projections.
The Chinese government plans to increase spending, cut billions of dollars in taxes, and increase foreign firms’ access to its consumer markets. That will be part of the trade deal, according to several U.S. news reports.
Mr. Li said China will experience more challenges in 2019. And they will be bigger. Li believes his economic stimulus package will keep the economy strong. The trade war hurt China, but according to the BBC, it hurt the United States more.
During the National People’s Congress, Mr. Li told thousands of delegates the government would inject $298 billion into China’s economy by cutting taxes and from value-added tax collection. The VAT tax for manufacturers will drop by three percent, and the construction and transportation sectors can expect a one percent VAT drop.
China plans to increase its military budget by 7.5 percent. That’s 0.6 percent lower than the 2018 military budget, according to the BBC. The government cut the country’s reserve requirements several times in 2018 in order to increase consumer lending.
China’s economy grew by 6.6 percent in 2018. U.S. economic growth was 2.9 percent.