Partial US-China trade deal only ‘baby step’

14 October, 2019 12:00 AM printer

BEIJING: A partial US-China deal may only offer a temporary tariff reprieve because it lacks specifics and leaves the thorny issues for later, analysts said, allowing both economic powers to claim success.

Friday’s initial agreement — which included increasing US farm product purchases, and also covers intellectual property, financial services and currencies — finally breaks an 18-month trade spat, report agencies.

Engulfed in an impeachment inquiry, US President Donald Trump heralded the deal as a major breakthrough.

But it will take weeks to finalise and the details are not clear — nor will it roll back tariffs already in place on hundreds of billions of dollars in two-way trade.

“The lack of specificity and even the fact this baby stepped agreement could take weeks to iron out, quickly cooled trader optimism,” said Axi Trader analyst Stephen Innes.

After earlier attempts at a truce between Trump and his Chinese counterpart Xi Jinping did not pan out businesses remained cautious, Innes said.

There is “fear this could be more of the same old lather rinse and repeat trade détente followed by trade escalation,” he said.

For now, Washington will hold off on a massive tariff increase planned for next week and — as negotiations progress — new December tariffs could also be cancelled, US officials said.

Trump said China had pledged to rapidly increase purchases of American farm products to $40-50 billion — a stunning feat, and more than double 2017 levels.

But China is yet to confirm these details. “Substantial progress had been made in such areas as agriculture, intellectual property rights protection, exchange rate, financial services, expansion of trade cooperation, technology transfer and dispute settlement,” state-run Xinhua News Agency reported citing Liu He, the country’s top negotiator.

“The two sides also discussed arrangements for future consultations,” Liu said when he met Trump Friday, according to Xinhua.