Mar-a-Lago Summit Can Start Revival of Sinking U.S. Economy
April 3, 2017 (EIRNS)—In contrast to British forecasts for war talk at the Trump-Xi meetings later this week, Chinese and American experts both suggest the probability that it will be a success.
At a meeting of the Washington, D.C. Center for Strategic and International Studies, veteran American diplomat Stapleton Roy, an expert on China, forecast that President Xi was likely to be taking a package of investments in the U.S. economy to this summit. China expert Kevin Nealer of CSIS, answering EIR’s question, spoke of the possibility of a "special purpose investment vehicle with a very large dollar figure" being created, but estimated that this would take quite a while to negotiate, although it could be raised at the summit.
An "expert on U.S.-China relations at Tsinghua University in Beijing," Sun Zhe, is quoted in the April 3 Washington Post saying he expects Xi figuratively to "bring a huge check" to purchase American agricultural products—soybeans primarily, perhaps also equipment—and promise to open China’s market further to U.S. companies. U.S. exports to China are already growing much faster than Chinese exports to the United States, although the trade deficit is still large. Another expert, Shen Dingli at Fudan University in Shanghai, said that a discussion of up to $250 billion in investments in U.S. infrastructure could take place; Xi intends to "give Trump a victory: buy more American products and hire more American people," Shen said.
Writing in Asia Times, a Chinese-American business leader in California, George Koo, also looked for infrastructure and jobs agreements, the central promises of Trump’s Presidential campaign. Koo pointed out that Chinese companies are world leaders in modern infrastructure quality and costs, and that several (including China Construction through a U.S. affiliate and China Railway Rolling Stock Company) are already building bridges and metro train sets in U.S. cities, sourcing both employees and most materials and structural parts in America. Fittingly, China Construction won awards for a bridge over New York’s Harlem River—the Alexander Hamilton Bridge, named for the founder of the American System of Economy. As for the big projects, like national high-speed rail networks, Xi will also want China to cooperate in financing them.
The opportunities confront a U.S. economy which, despite a "Trump rally" in the stock market, is failing. The Federal Reserve expects first-quarter economic growth to be down at 1% again, after just 1.7% for all of 2016. Bank lending has suddenly stopped growing again since late 2016, credit is drying up in the housing and high-yield bond markets; both corporate capital investment and corporate profits are falling. The huge debt binge of U.S. non-financial companies since 2013 looks like its entering the collapse danger zone.
An injection of real productivity and productive employment growth is urgently needed, and only needs to be provided by large-scale credits for new, modern infrastructure.