Reuters has released a useful summary on new “trade deals” reached this week during President Trump’s to China. Amongst the most interesting:
* China Energy Investment Corp, the world’s largest power company by asset value, has signed a memorandum of understanding (MOU) to invest $83.7 billion in shale gas, power and chemical projects in West Virginia.
* China’s top state oil major Sinopec, Bank Of China (3988.HK) (601988.SS) and China Investment Corp CIC.UL agreed to help develop a $43-billion natural gas project in Alaska.
* Boeing Co won orders and commitments worth $37 billion at list prices for 300 jets, including 260 narrow-body Boeing 737s and a total of 40 wide-body 787s and 777s from state purchasing agency China Aviation Supplies Holding Co.
* General Electric Co (GE.N) signed three commercial deals with Chinese partners worth a total of $3.5 billion.
* Qualcomm (QCOM.O) signed three non-binding agreements to sell $12 billion of semiconductors to Xiaomi, Oppo and Vivo over the next three years.
* Ford Motor (F.N) and China’s Anhui Zotye Automobile (000980.SZ) have agreed to invest a combined $756 million to set up a 50-50 joint venture in China to build electric passenger vehicles.
Notably, the trade deals are not all secured, and many are nonbinding. As such, they constitute what either legally or practically could be described as “soft law.” The fact that the agreements have been reached in the absence of any clear sense of obligation, much less an enforcement mechanism could presage the form of deal making that one may come to expect the Trump ministration. As I’ve written before, soft law is more likely where uncertainty pervades negotiations, especially where the stakes to an agreement are high.
Still, I think it’s unwise to read too much into the agreements. According to the New York Times, the deals are apparently transactional, and preliminary. Not only are they being interpreted “as a token of Chinese good will,” but “they broke no new ground in areas, like technology, where the United States is losing market access.” As such, the agreements look much more symbolic than related to rule or policymaking, and are not indicative of changes in the actual conduct of economic diplomacy.