Trade Talks & The Chinese New Year: The Year Of the Pig [And The Poke]

‘Don’t buy a pig in a poke’ might seem odd and archaic language. It’s true that the phrase is very old, but actually it can be taken quite literally and remains good advice.

The advice being given is ‘don’t buy a pig until you have seen it’. This is enshrined in British commercial law as ‘caveat emptor’ – Latin for ‘let the buyer beware’. This remains the guiding principle of commerce in many countries and, in essence, supports the view that if you buy something you take responsibility to make sure it is what you intended to buy.  

A poke is a sack or bag. It has a French origin as ‘poque’ and, like several other French words, its diminutive is formed by adding ‘ette’ or ‘et’ – hence ‘pocket’ began life with the meaning ‘small bag’. Poke is still in use in several English-speaking countries, notably Scotland and the USA, and describes just the sort of bag that would be useful for carrying a piglet to market.

A pig that’s in a poke might turn out to be no pig at all. If a merchant tried to cheat by substituting a lower value animal, the trick could be uncovered by letting the cat out of the bag. Many other European languages have a version of this phrase – most of them translating into English as a warning not to ‘buy a cat in a bag’. The advice has stood the test of time and people have been repeating it in one form or the other for getting on for five hundred years, maybe longer.    —  phrases.org.uk

The Wall Street Journal reports,

• At the meeting, Mr. Liu said China would buy 5 million tons of U.S. soybeans daily, a number Mr. Trump repeated, adding it would “make our farmers very happy.” The administration later clarified that China has agreed to buy an additional 5 million metric tons of soybeans—but not daily, and no time frame was specified.
• Wednesday at the Eisenhower Executive Office Building near the White House, people briefed on the talks said. It includes more Chinese purchases of U.S. farm and energy products and promises to invite more U.S. capital into the manufacturing and financial-services sectors.
• But the offer falls short of what Washington has been seeking.
• The two sides are still far from a deal, and they didn’t agree Thursday to a written framework with blanks left for areas where there is disagreement—the kind of document that is standard in trade negotiations.
• At the same time, Beijing is also unlikely to accept U.S. demands to remake its industrial policy and scale back the role of the state in the economy, said Cornell University China expert Eswar Prasad.
• “The more likely scenario is a deal where Trump declares victory, which is relatively modest in scope, and the two sides de-escalate tension and continue discussions on complicated issues left unresolved,” said Mr. Prasad, who speaks regularly with Chinese officials.  – WSJ, Jan 31st

We are expecting no more than a pig in the poke in the Year of the Pig.  Of course, spun as the “greatest trade deal in the history of the world.”

There will be some Mad King risk as Trump will come under pressure for caving and to scrap the deal at the last minute as he did during the government shutdown.

The stronger the RMB, which is a real-time measurement in the country’s economic prospects,  China’s negotiating leverage increases,