Markets seem forever hopeful that President Trump’s trade war with China will get neatly resolved before long. Stocks fall when the trade war escalates, but then rise as Trump talks up the prospect of a breakthrough.

Investors are too gullible. Trump’s reassurances on the trade dispute are losing credibility, as Beijing settles into a state of determined resistance. “China is now focused on a resilience strategy that chiefly aims to wait out Trump,” the Eurasia Group wrote to clients recently. “It leaves the two sides headed for further escalation, which will increasingly turn towards non-tariff measures that nonetheless could be highly disruptive.”

Trump’s latest dodge is a claim he made on Aug. 26 about Chinese officials calling “our top trade people” and supposedly saying, “let’s get back to the table.” China says nobody on their side made such a call, leaving investors trying to figure out whether to believe a U.S. president with a pattern of chronic lying or a mouthpiece for China’s communist government. Hmmm.

Chinese President Xi Jinping knows whether such a call took place. Imagine if there was no such call, and Trump is lying, and Xi knows he’s lying. That tells Xi Trump is so desperate to be seen making progress on trade that he’ll lie to the world about it. Advantage: Xi.

China’s pain threshold

Trump and his supporters keep saying the trade war is hurting the Chinese economy more than the U.S. economy. That may be true, but like the North Vietnamese army colonel said of U.S. dominance on the battlefield, it is also irrelevant. What is relevant is China’s tolerance for pain versus America’s, and President Xi’s political vulnerability compared with President Trump’s.

Trump, of course, has to face an election in 14 months, and he’ll need something to show for his trade war with China other than tariffs that raise prices on consumers and struggling farmers who have lost access to China’s markets. Xi isn’t impervious to political pressure, but he faces no reelection. In fact, there may be more pressure on Xi in China from hard-liners opposed to any deal with Trump that involves concessions the U.S. side can claim as victory.

Research firm Panjiva notes that the trade war began about two years ago and is now in its fifth phase, which the firm characterizes as “two years on and having few chances of peace.” U.S. tariffs on Chinese imports are due to rise in phases on Sept. 1, Oct. 1 and Dec. 15, around the same time China plans a big celebration of its 70th year as a nation in its current form. Analysts think a sense of nationalism surrounding that event will make it difficult for Xi to agree to any concessions after the festival kicks off on Oct. 1.