Trade talks and fourth plenum end with a whimper
Two important meetings—on China’s five-year plan and between Xi and Trump—have ended not with a bang but a whimper. Trump retrenched to pre-tariff trade agreements but there were no long-term structural changes or solutions to the underlying conflicts. Meanwhile, China’s Central Committee met for three days for the fourth plenum to outline the next five-year plan, and basically tweaked its current policies with few alterations.
Unfortunately, this leaves the current state of affairs in place. China continues to subsidize exports through an aggressive mercantilism that is likely to result in further barriers to trade from the U.S., Europe and Southeast Asia. China is investing in industry, increasing overcapacity. For example, manufacturing investment in 9M 2025 rose a modest 4 percent but was above 30 percent in 3D printing, robots, and new energy vehicles. These goods must be sold primarily in overseas markets because domestic consumption is structurally weak.
Meanwhile, on the U.S. side, President Trump’s trade policies are failing to address China’s mercantilism, tensions in the South China Sea, or the declining industrial base in the United States. As one pundit noted, the summit in China basically kicked the can down the road—but the can is loaded with economic and geopolitical explosives that are going to blow up on future leaders in both countries.
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