An Empty Truce

Chinese-language web browsing patterns suggest the Trump-Xi trade war detente will be short-lived.

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Markets breathed a sigh of relief when Donald Trump and Xi Jinping met on the sidelines of the G20 in Buenos Aires and agreed to stop escalating the trade war. But Predata signals give reason to doubt that the momentary truce will translate into an actual trade deal. 

First, Chinese-language online interest in Peter Navarro and Robert Lighthizer, the Trump Administration’s top trade officials, leapt on the news of the truce. These signals have been elevated since the trade war began in earnest and tend to spike amid rocky periods in trade relations. The surge in interest in the two officials may indicate that Chinese online observers are skeptical the truce will stop the trade war.

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Second, the U.S. readout of Trump and Xi’s conversation said that China had agreed to holding discussions on contentious issues, such as Chinese economic policy, intellectual-property protection, and forced technology transfer. China’s readout, however, made no mention of these subjects, and Predata’s signals show that these issues received no increase in Chinese-language online attention. This is yet another sign that the Americans and Chinese negotiators are talking far past each other and are failing to agree on even the initial framework for negotiations. 

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Stock indices leapt on the news of the trade war detente. But the Federal Reserve has been warning that the escalating tit-for-tat threatens the growth of the American economy. If the truce fails to lead to a deal, expect the market elation to be short-lived.