US and China sign deal to ease trade war

[Yankee-stani]

The US and China have signed an agreement aimed at easing a trade war that has rattled markets and weighed on the global economy.

Speaking in Washington, US President Donald Trump said the pact would be "transformative" for the US economy.

Chinese leaders called it a "win-win" deal that would help foster better relations between the two countries.

China has pledged to boost US imports by $200bn above 2017 levels and strengthen intellectual property rules.

In exchange, US has agreed to halve some of the new tariffs it has imposed on Chinese products.

• US-China trade deal: winners and losers
• Trade war: US-China trade battle in charts
• A quick guide to the US-China trade war

However the majority of the border taxes remain in place, which has prompted business groups to call for further talks.

"There's a lot of work to do ahead," said Jeremie Waterman, president of the China Center at the US Chamber of Commerce. "Bottom line is, they should enjoy today but not wait too long to get back to the table for phase two."

The US and China have engaged in a tit-for-tat tariff war since 2018, which has led to extra import taxes being levied on more than $450bn (£350bn) worth of traded goods. The ongoing dispute has disrupted trade flows, dampened global economic growth and unnerved investors.


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'Righting wrongs'
At a signing ceremony in Washington, attended by top Republican donors and business leaders, Mr Trump said the deal sets the stage for a stronger relationship between the US and China.

"Together we are righting the wrongs of the past and delivering a future of economic justice and security," he said.

"Far beyond even this deal, it's going to lead to an even stronger world peace," he added.

What's in the deal?

• China has committed to increasing its US imports by at least $200bn over 2017 levels, boosting purchases of agriculture by $32bn, manufacturing by $78bn, energy by $52bn and services by $38bn.
• China has agreed to take more action against counterfeiting and make it easier for companies to pursue legal action over trade secret theft
• The US will maintain up to 25% tariffs on an estimated $360bn worth of Chinese goods; China, which has levied new tariffs on $100bn worth of US products, is also expected to maintain the majority of them

Chinese Vice Premier Liu He, who signed the deal on behalf of China, said the agreement was rooted in "equality and mutual respect" and defended his country's economic model in his remarks.

"China has developed a political system and a model of economic development that suits its national reality," he said.

"This doesn't mean that China and the US cannot work together. On the contrary, our two countries share enormous common commercial interests."

"We hope both sides will abide by and keep the agreement in earnest."

It has been hailed by the White House as a breakthrough in a war that President Trump triggered to protect American jobs and companies from what he viewed as unfair competition from China.

The weapon of choice: billions of dollars of tariffs, or extra charges, on imports. But that has hurt the very workers and businesses they were meant to protect, in both countries.

For all the fanfare - and the unusual appearance of a president at the signing of a bilateral trade deal - this is more armistice than victory - with only a small proportion of the tariffs being reversed and relatively minor concessions granted by both sides. Tariffs remain on around two-thirds of the goods Americans buy from China

Moreover, Washington's fundamental complaints about Chinese practices - from its approach to subsidising businesses to cybertheft - remain unresolved. With President Trump's ambition to rewrite the rules of global trade yet to be achieved, some fear he may turn his firepower on Europe next - just as the UK is looking to broker an advantageous post-Brexit relationship

'Incremental progress'
Mr Trump has said the accord signed on Wednesday is a "phase one" agreement and promised that the administration will take up other issues - such as China's state subsidies - in future negotiations.

The US accuses China of "unfair" business practices, such as providing subsidies for domestic businesses and administrative rules that have made it difficult for US firms to operate in the country.

Mr Trump has defended maintaining the bulk of the tariffs, saying they will provide leverage in future talks. But US business groups and analysts expressed concern.

"While Phase One makes incremental progress, it remains to be seen whether it will deliver any meaningful relief for farmers like me," said Michelle Erickson-Jones, a Montana wheat farmer, who is affiliated with the lobby group Farmers for Free Trade. "The promises of lofty purchases are encouraging but farmers like me will believe it when we see it."

Charles Kane, a lecturer at the MIT Sloan School of Management, said Mr Trump sees China as a useful political scapegoat, making any serious negotiation unlikely until after the November presidential election.

"He's using [the trade war] as a political weapon," Mr Kane said.

Related Topics

• Trump tariffs
• China-US relations
• Trade war
• Donald Trump

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https://www.bbc.com/news/business-51114425

 

[AZADPAKISTAN2009]

USA trying to calm down China to make the Iran equation easier to handle

 

[Beast]

"Trade war are easy to won." declared by pompeo and Trump.

 

[8888888888888]

China’s exports actually increase despite the trade war while PPP has increased by 2.4 trillion. China doesn’t really need USA.

 

[powastick]

Trump or the next president will call this agreement void after the 2020 presidential election.

 

[TNT]

China’s exports actually increase despite the trade war while PPP has increased by 2.4 trillion. China doesn’t really need USA.

If china doesn't need USA then why it agreed to such one sided measures? The reality is that US still holds the power and china knows it cannot be in a trade war with the US for long, it will eventually affect china.

 

[beijingwalker]

If china doesn't need USA then why it agreed to such one sided measures? The reality is that US still holds the power and china knows it cannot be in a trade war with the US for long, it will eventually affect china.

A trade war will hurt both, but US will suffer more in the long run, China has 1.4 billion increasingly wealthy people, this massive consumer market sways the global economy more and more.

 

[KungFuLee]

Trump or the next president will call this agreement void after the 2020 presidential election.

Most likely Trump would be the President now he can proclaim "He has won the Trade War", which is why he started the trade war in the first place to begin with.

 

[大汉奸柳传志]

a 2-year truce more likely.

the next Dem president will throw out the deal anyway.. like every other "Trump legacy"..

 

[Beast]

a 2-year truce more likely.

the next Dem president will throw out the deal anyway.. like every other "Trump legacy"..

Sure, then the US farmer will suffer after that. US farmer already declared whoever break this deal will not get their vote.

 

[Hamartia Antidote]

If china doesn't need USA then why it agreed to such one sided measures? The reality is that US still holds the power and china knows it cannot be in a trade war with the US for long, it will eventually affect china.

So many sour grape responses here after 2 years of wringing their hands saying the US will back down and sarcastic “four more years of Trump!!”.

Looks like the opposite happened. China agrees to import more and the US keeps 25% tariffs.

 

[Indos]

The question is whether China is able to absorb 200 billion dollar of US agricultural products, manufacturing goods, and also services within a year. This is actually a very big number and if China fails to do it, the deal will be scrapped by Trump and it means more tariff for China products will come in the future.

What I can say is that this is a big victory for Trump and I expect Trump to win his second term in office due to this deal. This is also one of his promise during his first election campaign and he seems to be able to deliver it and also score victory on this.

The impact of this victory will also be felt by Iran.

 

[beijingwalker]

A win for US? When China signed agreement with US to join WTO in 2001, US also claimed that was a massive win for US. US just never learns, the best trade deal with China is No trade deal with China.

 

[Hamartia Antidote]

The question is whether China is able to absorb 200 billion dollar of US agricultural products, manufacturing goods, and also services within a year. This is actually a very big number and if China fails to do it, the deal will be scrapped by Trump and it means more tariff for China products will come in the future.

The impact of this victory will also be felt by Iran.

Start with 5G hardware!!! Lol!!

 

[Mista]

Explainer: What the partial truce in the US-China trade war means for the global economy, and what comes next

SINGAPORE — Holding up a newly inked deal touted to end two years of tweets, threats and tariffs in a bruising trade war, United States President Donald Trump crowed over his China moment at the White House on Thursday (Jan 16) morning Singapore time.

In hailing the widely anticipated partial truce between the world’s two biggest economies, he said: “Today we take a momentous step, one that has never been taken before with China.”

But international markets are still cautious at the signing of the 96-page “phase one” deal that Mr Trump once called his “big beautiful monster”. The trade war has roiled global trade since Mr Trump made the first move in the trade war in January 2018.

Various differences remain unresolved, and with US$360 billion (S$485 billion) in US tariffs on China still in place, markets and analysts worry that this first step in resolving the trade war may not significantly reduce the uncertainty it has inflicted so far.

Addressing the media on Thursday, Singapore’s Trade and Industry Minister Chan Chun Sing described Singapore’s “guarded optimism” over the phase one deal.

While the trade agreement allows the two countries to better understand how to work with each other, he said that Singapore “must be cognisant that there are still many differences between the US and China, ranging from their technologies, to how they organise their own production system, their R&D (research and development) and their economic system in general”.

Read also: China, U.S. sign initial trade pact but doubts and tariffs linger

“We should not overlook some of these differences that still remain, and we will have to watch this closely,” Mr Chan said.

Reactions to the deal have been mixed. Critics said that the concessions made by China had not been worth the disruption caused by the trade war, while others wondered if either side will hold up their end of the bargain.

Asian stocks dived on Wednesday, the first time this week, on the news that the US tariffs on China will remain in place until a second phase of the deal is concluded, presumably in November, around the time of the Nov 3 US presidential election. Asian stocks were more positive on Thursday.

Read also: US-China deal shows (shaky) path towards trade peace

Despite the doubters, Mr Trump and his lieutenants hail the partial truce as a win in their books — the agreement legally binds China to relieve the yawning trade deficit with the US, to not manipulate its currency, and to not misappropriate the intellectual property and trade secrets of US firms.

China’s Vice-Premier Liu He also lauded the deal and said that both sides will abide by the principle of equality and mutual respect, talking to each other when problems emerge, and accommodating each other's core concerns, Chinese state media reported.

While it is tempting to suggest that the worst of the trade war is over, some economists and business experts said that this is still far from the end.

Read also: Factbox: What's in the U.S.-China Phase 1 trade deal

Mr Alex Capri, senior fellow at the National University of Singapore (NUS) Business School, told TODAY: “We are a long way from the end. In the long term, there will be an acceptance that we are in a new era — that it’s going to be ‘co-operate in areas where we can co-operate’ and ‘do business in niches where we can do business’.

“But for everything else, it is a cold war.”

WHAT THE DEAL SAYS

The phase one trade deal commits China to seven key areas:

1. Intellectual property: China has agreed to improve its intellectual property protections, and address US concerns over trade secrets, patents, trademarks and enforcement against pirated and counterfeit goods. A dispute resolution mechanism allows US companies to seek recourse, including prompt and effective enforcement.
2. Tech transfer: China pledged not to force American companies to hand over their technology in order to access the China market, a first in a US-China trade deal over an issue that has long plagued bilateral relations.
3. Agriculture: Trade barriers in food, agriculture and seafood will be lowered, paving the way for farmers in the US to export more to China. This would involve concessions on health standards previously imposed on American products including meats, rice, pet food and milk formula.
4. Financial services: China agreed to open its financial sector to US competition, in areas such as e-payments, banking, insurance, securities, and credit rating services, so that financial service providers in the US can compete in China on a level playing field.
5. Trade expansion: China will commit to import various American goods and services over the next two years, buying US$200 billion more than it did in 2017 — including cars, steel, aircraft, pharmaceuticals, oil and agriculture, as well as tourism and finance services.
6. Currency: The US and China committed to stop unfair currency practices, by refraining from competitive devaluations and targeting of exchange rates while promoting transparency and providing mechanisms for accountability and enforcement.
7. Settling disputes: Both sides agreed to a framework for alleged violations to be resolved in regular bilateral meetings by high-level officials, failing which enforcement and punitive measures such as unilateral tariffs can be taken.

WHAT IS NEXT

Unlike past US-China trade deals, which often led US officials to accuse China of breaking their promises, the current agreement is meant to hold China to its word.

“There is a real enforcement provision,” US Treasury Secretary Steven Mnuchin told Fox News on Sunday. “And if they don’t comply with the agreement, the president retains the authority to put on tariffs, both existing tariffs and additional tariffs.”

Observers said it remains to be seen if China will risk another escalation of the trade war amid weakness in its own economy, referring to earlier signs of China’s concessions to the US to reduce trade tensions. For example, last year, the Chinese trade surplus with the US fell nearly 20 per cent, or US$50 billion, compared with 2018.

Singapore Business Federation's chief executive officer Ho Meng Kit told TODAY: “When the two biggest economies engage in a protracted trade war, no one wins in the long run. Businesses have been plagued by weak demand and poor confidence over the last year.”

But Mr Ho noted that difficult issues remain untouched in the latest deal, such as the role of China’s state-owned enterprises and the generous subsidy schemes from its government to local businesses.

“Much of the tariffs that the US has already imposed on Chinese goods will also continue to weigh down sentiments and increase price burdens for consumers and companies,” he said.

THE DEVIL IS IN THE DETAILS

Others noted that the items that were covered in the partial deal address issues in ways that sound good on paper, but do little to cause meaningful change. For example, allowing market access to China’s financial market would hardly make a dent in incumbent players such as Alibaba and WeChat, Mr Capri of NUS Business School said.

Mr Tommy Xie, OCBC bank’s head of Greater China research, told TODAY: “As a relatively low-hanging fruit, intellectual property has been well-covered in the agreement — 18 pages out of 96 pages were dedicated to the chapter of intellectual property.

“However, only three pages covered technology transfer, which will be one of the key focuses in the phase two negotiations,” he added.

What the deal does show is that both sides are willing to come to the table and also buy time for real change to be made.

Referring to the terms in the deal which require China to buy US$200 more American goods and services over the next two years, including an additional US$32 billion purchase of agricultural products, Mr Xie said that it puts China in a more feasible position to fulfil what Mr Trump wants.

“Those two changes will reduce the implementation risks in 2020, which will buy more time for both countries to go deeper into the structural reform,” he said.

IMPACT ON THE WORLD

The phase two discussions, he added, will be keenly monitored by the business community. But for now, phase one’s impact on the rest of the world will likely be muted.

“No breakthrough is expected in 2020 as the US heads into the election year. Therefore, we expect the US-China trade tensions to continue to affect business sentiment this year,” Mr Ho from the Singapore Business Federation said.

Global markets too are unmoved: US stocks hit record high as the ink dried on the phase one deal, but the early gains vanished in the later part of the day as the implications of the trade deal sank in.

In China, little changed for the yuan against the dollar on Thursday, even though the Chinese currency was a key part of the deal, and its CSI 300 stock benchmark fell 0.42 per cent.

Singapore’s Straits Times Index closed about 0.65 per cent higher on Thursday, but other Asian markets moved marginally or edged down over the course of the day.

Mr Capri of NUS Business School said that investor and business confidence levels are much the same as before the deal was signed. “Few businesses are going to say, ‘We are going to start investing again, let us open our cheque books and start doing more because of the phase one deal’. Nobody is saying that.”

Likewise for Singapore, Trade and Industry Minister Chan said.

“From what I know (of how Singapore firms behave), I don't think they look at (how the trade war is progressing) move by move. They look at the trend, and when they look at the trend, they know that there are some fundamental issues between China and the US that remain unresolved and they make... their plans (based) on those long-term forces,” he said.

The phase one deal helps to calm the markets, Mr Chan said, adding that people are slightly relieved. “But I don't think people are overlooking the long-term challenges.”

Read more at https://www.todayonline.com/singapo...-war-means-global-economy-and-what-comes-next