While the While House initially claimed that China would buy up to $50 billion in American farm goods as part of Trump's "greatest and biggest deal ever," Trump's top economic adviser Larry Kudlow said those purchases aren't guaranteed and will depend on consumer demand and market conditions.
So, what are the market conditions in China?
American markets erased their gains for the week this morning because China posted it's slowest growth and weakest demand in nearly 30 years overnight.
BEIJING (Reuters) - China’s third-quarter economic growth slowed more than expected and to its weakest pace in almost three decades as the bruising U.S. trade war hit factory production, boosting the case for Beijing to roll out fresh support. [...]
Downbeat Chinese data in recent months has highlighted weaker demand at home and abroad. Still, most analysts say the scope for aggressive stimulus is limited in an economy already saddled with piles of debt following previous easing cycles, which have sent housing prices sharply higher.
Nie Wen, a Shanghai-based economist at Hwabao Trust, pinned the worse-than-expected GDP growth mainly to weakness in export-related industries, especially the manufacturing sector.
This isn't all or even largely about Trump's trade war, but for the sake of argument let's say it is; Trump does like to take credit for hurting China's economy, after all.
So, let's say Trump has hurt China's economy. What does that mean for the plan to sell up to $50 billion in American farm goods to Chinese consumers?
China imported a total of $20 billion in American farm goods under ideal conditions (before Trump's trade war) in 2017 when China's economy was still growing by nearly 7 percent each year. China's economy grew by just 6 percent during the third quarter of 2019 and is expected to slow to 5.9 percent in the fourth.
If Chinese purchases of American agricultural are dependent on demand and market conditions, and if both demand and market conditions are significantly worse today than they were before Trump's trade war, how can anyone expect to see Chinese purchases more than double their previous record high? Shouldn't we expect to see them import fewer farm goods in 2020 than they did in 2017 even if Trump's trade war ends?
With all of that said, Trump cannot claim as much credit for hurting China's economy as he would like to.
Trump's trade war has definitely contributed to weakness in China's economy, but it has also contributed to weakness in the global economy. Our own trade deficit with China could still reach a record or near-record high in 2019 so it's not as if weak demand from American consumers is the biggest factor. We're also very far from China's only trading partner, just the largest. China exported a total of $2.2 trillion in goods in 2018 and $479 billion of the total was exported to the United States.