McGonegal says trade war with China is almost over
Analyst says both sides are looking for a positive spin in what has been a war of words
The trade war between the United States and China is almost over, analyst and Seven Stars Cloud Group Co-Ceo Brett McGonegal has told Bloomberg TV.
When asked on air if commercial hostilities between the world’s two largest economies were almost over, McGonegal said “yes.”
“I never thought it started in the context from the US side of a war. I think this was a war of words. I think the words are far apart still, but that’s what the game’s about from the Trump side,” he said.
McGonegal said Trump was in a good position if he played his cards right.
“It’s about the words. And at this point in time, we know there’s a lot of pain in the Mid-Western states, with soybean, with corn, and you have something shaping up that’s a positive thing for Trump and Xi,” he said.
“There’s rumblings in the US that the House is going to push back on any sort of a trade deal because it puts Trump in a tough position. Now if you think about that, Trump will immediately use that to his advantage.
“And then he’ll go to the Mid-West and say ‘I’m trying to do a deal for you, but the Democrats are pushing back’. So he’s got an out. I think Xi will most likely take this as an impetus and start SOE reform in a real manner because it could be part of a trade deal.
McGonegal said never side would come out unscathed, and there may be some casualties.
“I think that both sides need this to happen. They’re both hurt. In a trade war, or whatever you want to call it, there was never going to be a victor that didn’t give up something. So they’re both hurt, they’re both sitting there and they both potentially have a spin out of this that I think is very positive.
“The words can turn positive very quickly. And if you look at some of the people who were against a deal being done – Wilbur Ross and Navarro – they look like they’re on the out now.
“So isn’t it just easy to move on, do a deal, and blame it on those guys and you go ahead. I think it’s that easy for Trump. Other people think it will take years to draw up all the documents. I think he’s already moved on. The mid-terms are done and he’s onto the next thing.
“He wants to win. he’s going to somehow turn this into a victory. I don’t think it is as detailed as anybody thinks, and I think further, his commitment to anything on a long-term basis should be questioned because that’s not the way he approaches things.
“I don’t think he’s focussed long-term.
When asked if volatility in the Chinese market would be reduced if the trade war was over, McGonegal said: “I think without a doubt. The Chinese markets have suffered the most. The first market that will react will be the Chinese market because that was the one that was hurt the most.”
Brett McGonegal is a principal investor in Asia Times.