An Historical Perspective on US/China Negotiations?

The markets continue to gyrate on hope and disappointment regarding US/China trade negotiations.  The risk is that these negotiations will not end soon and the gyrations, if not further decline, will continue.  Historical considerations suggest the issue is about which country -- the US or China -- will dominate the world.

A main US complaint is that China has been stealing US intellectual property.  The Chinese acquisition of technical know-how, either through legal or illegal means, would seem to be equivalent to how rising empires in the past became powerful.  The difference is that in the past these empires obtained their competitors' capital through military conquest.  So, in a sense, the US-China negotiations are in the tradition of a battle over ownership of capital, although it is not now lethal.  Conceivably, the ultimate outcome may be permanent US tariffs on Chinese goods and a slow separation of two "spheres of influence."  Alternatively, China could concede dominance if it finds the loss of the US market too costly.   China could accede to US demands and bide its time until it becomes less dependent on US demand for its goods.

A part of the US complaint is the Chinese requirement that foreign companies operating in China must have a Chinese partner.  From an American perspective, this smacks of coercion, especially as a means to acquire technological property.  But, from a Chinese perspective, it could be understood as a way to prevent a recurrence of European/US mercantile and subsequent military conquest of China in the 19th century. Private companies led the way of European/US imperialism then.  If this is China's motivating factor, required partnership of US/Chinese companies may be difficult to end.

Meanwhile, US data have begun to hint that  the slowdown seen in a number of US economic data in April may be behind us. 

Initial Claims fell to 212k in the latest week, back toward their low range.  Continuing Claims also fell.   The Claims data still point to a smaller Payroll increase in May than in April (+263k m/m), but it is not clear by how much.  Whether the Nonfarm Average Workweek rebounds will be as important as Payrolls in the May Employment Report.  A higher Workweek would likely make Total Hours Worked more consistent with 2+% Q219 Real GDP Growth.

                                  Initial Claims (level, 000s)
          Jan 2019                  220k
          Feb                          229
         Mar                          217
         Apr                          213

         Apr 20 wk                230
                27 wk                230

         May  4 wk               228
                 11 wk              212

The large rebound in the May Philadelphia Fed Mfg Index points to a rebound in the Mfg ISM.  The two moved in the same direction in the first 4 months of the year.