China and the US have reached an initial deal to resolve a bruising trade war between the two countries, according to statements from both sides.
China’s vice-commerce minister, Wang Shouwen, said in a late night briefing on Friday that the US had agreed to cancel some of its existing tariffs on Chinese goods, while Donald Trump tweeted that the two countries had agreed to a “very large Phase One Deal”.
Calling the agreement an “amazing deal for all”, Trump said China had agreed to “many structural changes and massive purchases” of “Agricultural product, Energy, Manufactured Goods, plus much more”. He said the 25% tariffs would remain and previous 15% tariffs would be halved to 7.5%.
He also confirmed that a new round of tariffs planned for 15 December on goods including laptops, toys and video games would not go ahead “because of the fact that we made the deal”.
Trump said negotiations on a phase two deal would begin “immediately, rather than waiting until after the 2020 election”.
The remarks came after a day of silence from Beijing, following US media reports that an agreement “in principle” had been reached that would see the US roll back some of the tariffs on $360bn of Chinese goods in exchange for Chinese commitments to buy US agricultural products and other concessions.
News of the deal comes days before the White House is due to impose the new tranche of tariffs on $160bn in consumer goods, which experts say would have escalated trade tensions further. Reports said China had agreed to purchase $50bn worth of US farm goods while the US offered to cut existing tariffs on Chinese goods by as much as 50%.
Chinese officials did not confirm commitments to purchase US agricultural products, stating only that the country “will buy more high quality of American agricultural products” but relevant detail would be disclosed later.
Officials said the two sides had agreed on the text of a nine-chapter agreement covering intellectual property, technology transfers, agricultural products and dispute settlement among other topics. Wang said both sides would need to go through legal checks, translations, and arrangements for an official signing ceremony.
Liao Min, of the office of the Central Commission for Financial and Economic Affairs, said China would also consider not implementing previously planned tariffs on US products, to go in effect on 15 December.
“China hopes the US will fulfill its commitment. Removing tariffs is the core concern of China’s,” he said.
The Dow Jones Industrial Average and S&P 500 index closed only slightly higher on the news on Friday and experts questioned how much the agreement resolves long-running tensions between the two countries.
“The deal will ultimately be weighed in terms of how much it does to address structural issues like intellectual property and market access,” said Shehzad Qazi of China Beige Book. “The push for financial decoupling and of course the larger technological competition are also all here to stay.”
“Trump’s trade war may have been the opening salvo of a long drawn conflict,” he said.
As China comes under more pressure to support its slowing economy, major structural changes are less likely.
“The trade war so far has damaged the bilateral relationship in every dimension,” said Dan Wang, the China analyst for the Economist Intelligence Unit.
“This may be the end of act 1, but far from the end of the trade talks. China will continue to rely on industrial policies and the state sector to lead growth. The role of state-owned enterprises is strengthened, not weakened during this economic downturn and the opening-up policies are rather limited,” she said.
Beijing’s muted response earlier on Friday had raised questions about whether an agreement had been reached. Speaking at a symposium in Beijing, China’s minister of foreign affairs, Wang Yi, did not mention the negotiations.
Instead, he took the occasion to criticise the US for having “seriously damaged the hard-won mutual trust” between the two countries. Wang said the US had “slandered” China by criticising it over its policies in Hong Kong and Xinjiang.
“We will never accept the so-called unilateral sanctions and any acts of bullying,” he said.
For the last year and a half, Beijing and Washington have been locked in a tit-for-tat trade war that has inflicted pain in both economies, caused market uncertainty, and slowed global growth.
Critics say striking a deal now negates the last year and a half of pressure on China to reform practices that give its businesses an unfair advantage.
The US senator Marco Rubio wrote on Twitter that the deal would “give away the tariff leverage needed for a broader agreement on the issues that matter the most such as subsidies to domestic firms, forced tech transfers & blocking US firms access to key sectors”.
Source: The Guardian