CEO DailyCFO DailyBroadsheetData SheetTerm Sheet

Trump’s trade deal with China is coming up short. Do voters care?

October 29, 2020, 11:23 AM UTC

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.

“Make sure I win.”

That was U.S. President Donald Trump’s plea to Chinese President Xi Jinping at a June 2018 dinner in Osaka, Japan, according to former U.S. national security adviser John Bolton.

The dinner, held on the sidelines of a Group of 20 conference, came days after the White House announced a list targeting more than a thousand Chinese products for 25% import tariffs. Trump, according to Bolton’s tell-all memoir, The Room Where It Happened, implored Xi to ramp up Chinese purchases of American agricultural products so that Trump could claim political credit in crucial midwestern swing states—and clinch his re-election.

“I probably will win anyway, so don’t hurt my farms… Buy a lot of soybeans and wheat and make sure we win,” Trump allegedly told Xi.

Trump’s Justice Department deemed Bolton’s recollection of that exchange so damning that it filed a federal lawsuit demanding the book not be released unless Trump’s exact words were removed. (The publisher complied, but unredacted pages of Bolton’s original manuscript were leaked to Vanity Fair.)

Trump and Xi agreed in Osaka to restart trade negotiations, and in January of this year signed a ‘Phase One’ agreement committing China to increase purchases of American goods and services by $200 billion over the next two years. But now, with the election just days away, Trump’s nakedly political appeal to Xi seems almost irrelevant.

As we’ve noted previously in Eastworld, China is buying more farm products from the U.S. each month but at a pace far short of what’s necessary to reach the agreement’s year-end targets. China’s purchases of manufactured products, which account for about 70% of the deal, are even further behind.

America’s trade deficit in goods with China was $345 billion in 2019, only $2 billion less than in 2016 when Trump was elected.

Tariffs remain in place on hundreds of billions of dollars worth of goods traded between the world’s two largest economies. And, as Grady noted earlier this week, the tariffs don’t work the way Trump says they do; they’re not paid by the Chinese government or by Chinese exporters but by U.S. importers and, indirectly, by American consumers. American taxpayers, not China, are paying for federal farm subsidies aimed at offsetting the effects of the trade war, and those subsidies have mostly benefited large, wealthy farms and corporations.

Support for Trump remains high among America’s rural voters. A poll by Farm Futures found 75% of farmers surveyed in July planned to vote for Trump, compared with 73% ahead of the 2016 election. But China and trade policy aren’t hot-button issues among general voters in this year’s race, nor do they seem likely to play a decisive role in determining the outcome of next week’s vote in the battleground states Trump needs to prevail.

More Eastworld news below.

Clay Chandler
clay.chandler@fortune.com

This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com

Eastworld news

A news epoch-alypse

The Epoch Times was long a small, low-budget New York newspaper critical of the Chinese Communist Party. It was founded John Tang, a member of the spiritual movement Falun Gong, which China has banned domestically and describes as a cult. In 2016, the publication took on a two-pronged strategy to grow its reach: back Trump and focus on Facebook. Since then, The Epoch Times has grown its following by tens of millions and has become a mainstay in the U.S.’s conservative media eco-system. The newspaper maintains an aggressive anti-China editorial line, but has also begun promoting right-wing, QAnon conspiracy theories and other disinformation. New York Times

Why so Cirrus?

In the wake of the global financial crisis, the Aviation Industry Corporation of China (AVIC), a state-run aviation giant with ties to China’s military, went on a buying spree in the U.S. The company spent over $3 billion purchasing aviation, engineering, and automotive companies in the U.S. and Europe. Such deals, like one for the Minnesotan aircraft producer Cirrus, would likely be impossible now amid heightening U.S.-China tensions and regulators are re-examining whether AVIC may pose a national security threat to the U.S. The Wire China

No edit button

In December 2019, Arsenal soccer star Mesut Özil publicly condemned China’s alleged human rights abuses in Xinjiang. And just as Daryl Morey had jeopardized the NBA’s relationship with China months before, Özil's tweet immediately threw the relationship between the Premier League, one of the world’s largest soccer leagues, and China into a tailspin as Mainland broadcast partners dropped some of the English league’s games. Now, Özil claims that his outspokenness on China has effectively side-lined him at Arsenal, which the club denies, even as more sports leagues globally are becoming more unafraid in taking political stances. New York Times  

The long haul

This week, China’s top leaders sketched out a plan for the country’s long-term future, drawing up China’s next five-year plan and a “vision” for goals to reach by 2035. The full details are not yet public, but Chinese state media have hinted that China will focus on pivoting away from the country’s breakneck focus on GDP growth, cutting carbon emissions, and increasing self-reliance in technology and science sectors. CNN

A greener Asia

South Korea and Japan have now followed in China’s footsteps and set concrete goals of achieving carbon neutrality. South Korea and Japan both announced that they would achieve net zero emissions by 2050 this week, setting a deadline is ten years earlier than Chinese President Xi Jinping's. The trend means three of Asia’s largest economies are now committed to reducing their climate footprint, raising hopes for a greener future on the continent. Financial Times

Coronavirus by country

Indonesia

In the last few months, Indonesia has made deals with Chinese vaccine makers Sinovac and Sinopharm and British pharmaceutical giant AstraZeneca to supply hundreds of millions of doses to Indonesians if the vaccines prove successful. But now, Indonesian President Joko Widodo says that vaccine makers may need to clear an additional regulatory hurdle—prove that their vaccine is halal, or acceptable by Islamic standards. The risk of local Islamic authorities declaring a vaccine as haram, or forbidden, is very real. In 2018, the country’s most powerful Islamic council declared that a measles vaccine was haram since it contained traces of pork, which led to falling vaccination rates among Indonesian children. If or how vaccine makers can prove that a vaccine is halal remains an open question, but the Indonesian pharmaceutical company PT Bio Pharma is reportedly already working with Sinovac to ensure that a potential vaccine would adhere to Islamic standards. ASEAN Today

Markets and movers

Tencent – On Monday, a U.S. appeals court rejected the Trump administration’s request to enforce its ban on WeChat, the social messaging app owned by Chinese tech giant Tencent. WeChat will temporarily remain on app stores in the U.S. until a final ruling is made on the lawfulness of Trump’s WeChat ban. Bloomberg

Sinopec – On Wednesday, the Chinese oil major reported its highest quarterly profit since 2003, posting net income of nearly $7 billion. After recording losses in the first two quarters of 2020, Sinoopec has bounced back due to recovering oil demand in China and a booming new refining business. Reuters

Ant Group – The fintech giant, partly owned by China’s Alibaba, will raise at least $34.4 billion as its set to debut in a dual-IPO in Shanghai and Hong Kong on Nov. 5. Ant Group stopped collecting orders from institutional buyers a day ahead of schedule amid strong demand from investors. Wall Street Journal

PT Tokopedia – Google and Temasek Holdings, Singapore’s state investment firm, will invest roughly $350 million in Tokopedia, an Indonesian e-commerce startup backed by Softbank. Deal Street Asia

New Oriental – The Chinese tutoring and education firm is looking to raise nearly $12 billion in a secondary Hong Kong listing, following a trend of U.S.-listed Chinese companies debuting in Hong Kong amid worsening relations between Washington and Beijing. Bloomberg  

Final figure

112

Residents in the city of Melbourne, Australia emerged from their homes this week after a 112-day stay-at-home order, one of the longest and most restrictive COVID-19 lockdown measures in the world. Melbourne's experience offers harsh lessons on the costs of containing COVID-19, as Victoria state, where Melbourne is located, lost an estimated $71 million in economic activities and 1,200 jobs for each day of the lockdown period. Now, even as cases remain low and restrictions loosen, businesses are not yet in the clear, as capacity restrictions and other social-distancing measures make it difficult for the city to bounce back. Fortune