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Trump in Beijing: Art of the empty deal

President Donald Trump waves after attending a joint news conference with Chinese President Xi Jinping at the Great Hall of the People Thursday. Trump is on a five-country trip through Asia traveling to Japan, South Korea, China, Vietnam and the Philippines. (AP Photo/Andy Wong)

President Donald Trump on Thursday celebrated a flurry of new commercial partnerships between U.S. and Chinese companies with a burst of the marketing flair that has defined his career. The nearly two dozen deals announced in Beijing, valued at $250 billion, were “tremendous, incredible, job-producing agreements,” the president enthused at a joint appearance with Chinese President Xi Jinping.

“We’re off to a very, very good start,” said Trump, who is midway through a five-nation Asian trip.

But for all Trump's tough talk about trade as a candidate and during his earlier stops in Japan and South Korea, Secretary of State Rex Tillerson acknowledged that the President has had only limited success in closing the trade gap -- and experts said there was no guarantee the full value of the deals would ever materialize.

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Such heavily trumpeted commercial announcements are nothing new for visiting foreign leaders. Many of the arrangements announced Thursday were nonbinding memorandums rather than legal contracts. And despite the claims of success, the overall trade relationship between the world’s two largest economies has grown increasingly rocky.

“It’s hard to call a quarter trillion dollars in deals not worth very much, but this has to be the least valuable $250 billion in deals that the U.S. and China have ever agreed to,” said Scott Kennedy, director of the project on Chinese business at the Center for Strategic and International Studies in Washington.

The largest single project unveiled Thursday was China Energy Investment Corp.’s plan to invest $83.7 billion in power generation, chemical manufacturing, and underground storage of natural gas liquids and derivatives in West Virginia. The state’s Department of Commerce said representatives of the state-owned Chinese company had visited West Virginia several times and have begun drawing up plans.

But the two sides signed only a memorandum of understanding, not a formal contract, and the eye-popping dollar figure covers a 20-year period, the state said.

“There’s a still a long way to go before opening the champagne,” said Kennedy.

Likewise, Sinopec, China’s sovereign wealth fund, and Bank of China agreed with Alaska to jointly develop a liquefied natural gas project. Governor Bill Walker said the $43 billion project would ignite “an economic boom comparable to the development of the trans-Alaska Pipeline System in the 1970s,” but acknowledged “there are more steps before a final investment decision is reached.”

Rosetta Alcantra, a spokeswoman for the state’s Alaska Gasline Development Corp., said the two sides hoped to conclude definitive agreements by the end of 2018 and make a final investment decision in the first quarter of 2019.

In other deals, Boeing won $37 billion in orders and commitments for 300 jets, though the company declined to say if any of that represented new business. Chip maker Qualcomm said it signed three agreements to sell $12 billion in semiconductors to Chinese companies, but all are existing customers and the deals are nonbinding.

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Goldman Sachs and China Investment Corp., Beijing’s sovereign wealth fund, agreed to establish a $5 billion fund to invest in U.S. manufacturing, industrial, consumer and health care companies.

Cheniere Energy and China National Petroleum Corp. also signed an MOU that envisions continued discussions to strengthen cooperation on LNG export projects and long-term LNG procurement cooperation, a Cheniere spokesman said.

The deals were the financial highlight of the president’s first pan-Asia swing, which so far has underscored the gap between his tough trade talk and the paltry gains that have resulted one year after his election.

As both candidate and president, Trump has been a harsh critic of Chinese trade practices. Campaigning in Indiana in May 2016, he said: “We can't continue to allow China to rape our country, and that's what they're doing.”

While the U.S. and Chinese leaders this week were friendly in their public remarks, Tillerson said the president took a tougher line behind closed doors. Tillerson also said China had yet to take sufficient action to shrink the trade deficit, despite the new business deals.

“While we appreciate the long hours and the effort that our Chinese counterparts have put into those trade discussions, quite frankly, in the grand scheme of a $300 to $500 billion trade deficit, the things that have been achieved thus far are pretty small,” he told reporters in Beijing. Tillerson added: “We just can’t continue on this path and this trajectory that we’re on.”

Likewise, the president earlier in his trip hit his hosts in Tokyo and Seoul for their trade practices, but flew on with little to show for the effort. Trump’s decision in January to withdraw from the 12-nation Trans-Pacific Partnership negotiated by his predecessor has left him on the sidelines of regional trade discussions.

If the president hoped that Thursday’s commercial hoopla would convince critics that he was making progress on his repeated vow to close the yawning trade gap between the U.S. and China, he is likely to be disappointed.

“It isn’t going to make much of a dent in a bilateral deficit of $350 billion,” said Nicholas Lardy, an expert on the Chinese economy at the Peterson Institute for International Economics, who said the deals’ impact on U.S. exports would be “vanishingly small.”

The president’s visit to China came amid increased friction in the countries’ trade ties. Last month, the Commerce Department said it would slap preliminary import duties of 96.8 percent to 162.2 percent on Chinese aluminum foil, saying it was being sold at unfairly low prices.

Separately, the department concluded that China remains a nonmarket economy, disappointing Beijing’s long-standing hopes of attaining market economy status, a designation that shapes U.S. trade policy toward the country.

Coupled with the president’s tough talk, the recent moves have some fearing further deterioration in the Sino-U. S. relationship. The danger of a downward spiral is only exacerbated by the lack of a clear direction from Washington, Lardy says.

“There is no U.S. policy on this. We have a lot of Trump campaign promises,” he said. “There are still deep divisions within the administration over how to reduce the bilateral imbalance.”

Additional reporting by Steven Mufson.