Stephen Vines

The View | Donald Trump’s US$250 billion of deals with China is ‘fake news’ at best

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Most of the deals are just expressions of interest, projects already underway and aspirational arrangements that will never be realised

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President Xi Jinping shakes hands with his US counterpart during a business leaders event at the Great Hall of the People in Beijing on November 9. Photo: AFP

Stephen Vines

Published: 10:47am, 15 Nov 2017Updated: 10:36pm, 15 Nov 2017

Declarations that the US and China have signed trade and investment deals worth US$250 billion are almost certainly fake news at best and deception at worst.

President Donald Trump in his usual bombastic way described the deals signed in Beijing as being “tremendous, incredible, job-producing agreements”. President Xi Jinping, wisely, declined to echo this hyperbole.

The trusty old MOU merely says X or Y will happen if a number of other things come together. It is barely worth the paper it is printed on

Hopefully Mr Xi’s reticence is because he appreciates that most of these deals are little more than expressions of interest, others relate to projects that were already underway, and helping to contribute to this impressive total are deals amounting to little more than aspirational arrangements with only a slender chance of being realised.

All that can be said in President Trump’s defence is that he was following the lead of other heads of state who need something positive to say in the wake of lacklustre high-level summits and so announce dazzling business deals to fill the vacuum.

The way it works is pretty standard and was explained to me by a wily trade negotiator who accompanied his prime minister on a number of trips, not dissimilar to the one recently seen in Beijing.

Boeing signed US$37 billion worth of orders and commitments for 300 jets. But is it new business or orders already on the books? Photo: AFP

First of all, he explained, you get your big corporate hitters to withhold announcements of orders or agreements until the time of the visit. The deals are done and dusted, but political necessity dictates that they are announced with a flourish so that the president or whoever can claim credit.

Secondly, you put together what are generally described as memoranda or heads of agreement saying that company A will work with company B to achieve this or that amount of business. This is very far from being a legal contract with specific details; it is really no more than a statement of intent.