Does Trump’s Meeting With Jack Ma Bode Well For U.S./China Relations?

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January 11, 2017 6:38am NYSE:FXI

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From Brad Hoppmann: When it comes to China, it’s tough to get a consistent read on the president-elect.


Throughout the campaign, Donald Trump used China as a whipping boy. He criticized the country’s trade practices as unfair. And he blamed much of middle America’s economic angst on “really bad trade deals.”

He also made a lot of noise about China’s “currency manipulation.” As such, he accused policymakers there of rigging the game in favor of their exports and against U.S. imports.

Yet the president-elect’s campaign rhetoric didn’t just fade after his election victory.

We know this based on the continued verbiage against China, including the mention of steep tariffs on Chinese goods. Then there was the acceptance of the congratulatory call from Taiwan’s president, a move that represented a diplomatic breach of etiquette from the so-called “one-China” policy.

Then there was the biggest move — the creation of the White House National Trade Council, headed by outspoken China critic Peter Navarro. Mr. Navarro is an economist, and the author of “Death by China,” a book eminently critical of China’s trade practices.

So, what should we make of the president-elect’s China posture followed by his seeming embrace Tuesday of the most well-known, as well as the richest, business leader in China — Jack Ma of Alibaba (BABA)?

Image credit: World Economic Forum

In what the president-elect described as a “great meeting” yesterday at Trump Tower, the Alibaba executive chairman and Donald Trump discussed 1 million new U.S. jobs.

According to a CNBC report:

Ma said that Alibaba’s expansion would focus on products like garments, wine and fruits, with a special focus on trade between the American Midwest and southeast Asia.

“We’re focused on small business,” Ma told reporters. “We specifically talked about … supporting 1 million small businesses, especially in the Midwest of America. Small businesses on the platform selling products — agriculture products and America services — to China and Asia, because we’re pretty big in Asia.”

The willingness of Donald Trump to speak with the face of Chinese business is interesting, confusing …

And ultimately, I think, very encouraging.

It’s interesting, because given the blatant opposition to China and its trade policies, you might suspect that Mr. Trump wouldn’t want to be seen speaking to Mr. Ma in any type of collaborative way.

Of course, Mr. Ma isn’t a Chinese policymaker, so the analogy isn’t quite appropriate. Still, Ma does represent Chinese business success, and the new era of Chinese capitalism.

BABA shares are already up 10.1% in 2017, and up 36.6% year-over-year.

Moreover, Mr. Ma and Alibaba both have benefited mightily from China’s trade policies — and that makes the meeting more than just a bit confusing.

Yet what is encouraging about the meeting between President-elect Trump and Jack Ma is that it represents a sort of “end around” in the communications department.

A meeting between two business/world leaders discussing job creation now is a sort of proxy for diplomacy … and to me that’s a positive development.

What’s also a positive about this meeting is that it might just put China on notice that things are going to be very different.

In an op-ed on the subject for CNBC, senior columnist Jake Novak described the situation in the following fashion:

Ma … represents something much more dangerous to China than Taiwan ever could: an idea. In this case, the idea of individualism.

And the fact that Ma and Trump discussed the even more individualistic topic of global small business entrepreneurship puts an exclamation point on it all.

That, to me, is very encouraging. It shows that Donald Trump might just be able to shrewdly connect with leaders outside the traditional political realm to improve relations between countries.

If this can be accomplished, I’ll be among the first to offer congratulations.

The iShares FTSE/Xinhua China 25 Index ETF (NYSE:FXI) rose $0.12 (+0.33%) in premarket trading Wednesday. Year-to-date, FXI has gained 4.49%, versus a 1.31% rise in the benchmark S&P 500 index during the same period.

FXI currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 32 ETFs in the China Equities ETFs category.


This article is brought to you courtesy of Uncommon Wisdom Daily.


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