Will US-China trade truce hold?

There has been a mixed reaction to news the US and China have agreed an initial “Phase One” outline to end an 18-month trade dispute that has rocked global markets.

Washington’s top trade negotiator, Robert Lighthizer, said on Friday that China has agreed to buy up to $200bn in additional goods and services over the next two years on top of the amount it purchased in 2017. The agreement would also require China to make “structural reforms and other changes to its economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange”. In exchange, Washington would roll back some tariffs on Chinese goods.

Reuters reports that “US markets have gyrated on rumours and leaks about the trade deal in recent months, but were muted on Friday on news it had been agreed”

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While Donald Trump hailed the it as an “amazing deal”, details remain “largely unknown, leaving close US-China watchers to describe it as ‘He said, Xi said,’ and others wondering what exactly is included in a limited agreement among the economic superpowers” reports CNN.

Beijing’s reaction has been “more muted” says The Guardian, and “neither side offered any detail on what the Chinese reforms might be, leading to fears that the deal will fail to resolve the key underlying conflict between the two superpowers”, says the paper.

The deal with China “offered Trump an opportunity to claim that he is making progress toward fulfilling a major campaign promise as he gears up for reelection”, says the Washington Post. “But the pact, which needs to be officially signed and is only the first part of a long-running negotiation, still leaves a huge cloud over the US business community, which has come to rely on China for low-cost manufacturing labor and know-how”.

USA Today says “the outcome of the broader talks could have enormous consequences for the US economy, Trump's reelection next year and the long-term economic ties between Washington and Beijing. China is already reshaping its economy to focus on other partners and to bolster domestic production, reducing its reliance on American markets”.

But after looking at the preliminary agreement, economists and investors believe neither side is any closer to realising its goals.

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