U.S. President Donald Trump told a breakthrough in U.S.-China trade talks, and markets breaths for a short period of de-escalation in tensions between the world’s two biggest economies.
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However, closer perspectives suggest there isn’t much substance, at least not yet, to the temporary truce Trump announced Friday at the White House after the United States and China wrapped up their 13th round of trade talks.
Trump agreed to suspend a tariff hike scheduled for Tuesday on US$250 billion worth of Chinese imports, and in return the Asiatic giant agreed to buy $40 billion to $50 billion in U.S. farm products. But nothing’s on paper and details are scarce. China’s media hasn’t even mentioned the promise to buy all those soybeans and other agricultural products.
The negotiators have delayed dealing with the toughest issues for future talks. Meanwhile, the Washington is still scheduled to target another $160 billion in Chinese goods in Dcemeber 15th, a move that would extend Trump’s tariffs to virtually everything China ships to the United States.
Scott Kennedy, analist from China’s economy at the Center for Strategic and International Studies qualified Friday’s announcement as “a nothing-burger”: “I call it the ‘Invisible Deal.’... The only thing that happened Friday was that the U.S. delayed the tariff increase.”
“We made substantial progress last week in the negotiations,” Treasury Secretary Steven Mnuchin said Monday on CNBC. “We have a fundamental agreement. It is subject to documentation, and there’s a lot of work to be done on that front.”
“It’s curious that Washington and Beijing have not yet put this ‘deal’ in writing,” said Wendy Cutler, a former U.S. trade negotiator now at the Asia Society Policy Institute. “That suggests that the details may not be worked out yet. If that’s the case, we should expect more bumps in the road in the lead up to a mid-November meeting between Trump and Xi.”
Trump emphasized the agricultural purchases he says China has agreed to. If China ultimately buys $40 billion to $50 billion a year, as Mnuchin said, it would mark a significant win for American farmers, who have been hit hard by the president’s trade wars.
U.S. farm sales to China have never exceeded $26 billion a year, according to the U.S. Department of Agriculture.
China already is a major food importer as rising incomes boost its appetite for meat, vegetables and higher-quality grains. The communist government has tried to promote self-sufficiency in rice, wheat, dairy and some other commodities. But with a population of 1.4 billion, it cannot meet all its own needs.
“It’s in the two countries’ interests to dial down the hostilities,” agreed David Dollar, senior fellow at the Brookings Institution and a former official at the World Bank and U.S. Treasury.
The two countries are deadlocked primarily over U.S. allegations that China deploys predatory tactics — including outright theft — in a sharp-elbowed drive to become the global leader in robotics, self-driving cars and other advanced technology.
Beijing has been reluctant to make policy reforms that would satisfy the Trump administration. Doing so would likely require scaling back China’s aspirations for technological supremacy, which it sees as crucial to its prosperity. “I don’t think China is willing to fundamentally change its system,” Dollar said.